Blue Ocean Strategy, Expanded Edition
What if the best way to beat your competition was to stop trying? Instead of building a better circus with more daring lion tamers and famous clowns, Cirque du Soleil created a new market by eliminating the animals and star performers altogether. They blended circus arts with theatre to create a sophisticated spectacle that had no competition, attracting a whole new audience of adults willing to pay a premium for a night out.
Redraw Your Industry's Boundaries
Instead of trying to outperform rivals on existing industry standards, 'value innovation' is achieved by using the Four Actions Framework: Eliminate, Reduce, Raise, and Create. This allows you to reconstruct market boundaries and offer a leap in value.
The budget airline Southwest Airlines eliminated assigned seating and lounges (Eliminate), reduced service frills like meals (Reduce), raised the speed of travel by using secondary airports (Raise), and created friendly, point-to-point service (Create). This broke the industry's rules and offered the speed of a plane at the price of a car.
Visualize Your Competition's Playbook
The Strategy Canvas is a diagnostic tool that maps the current competitive landscape. By charting the factors an industry competes on and where competitors invest, you can visually identify gaps and opportunities to create a new value curve.
In the late 1990s, the US wine industry's strategy canvas showed all players competing on complex factors like vineyard prestige and aging quality. Casella Wines' [yellow tail] created a new canvas by focusing on ease of drinking, fun, and simplicity, making wine accessible to the mass market that was previously intimidated by it.
Your Biggest Opportunities Are Outside Your Current Market
Instead of fighting over existing customers, look to the 'noncustomers' who are currently not served by your industry. Understanding why they don't buy from you can unlock immense, untapped demand.
Nintendo's Wii didn't try to compete with Sony and Microsoft on processing power for hardcore gamers. It targeted noncustomers: families, women, and seniors who found traditional consoles too complex. By creating simple, motion-based games, Nintendo created a massive blue ocean of casual players.
Get the Strategic Sequence Right
A commercially viable blue ocean idea must follow a specific sequence: it must offer exceptional Buyer Utility, be accessible through the right Price, be achievable at the target Cost, and overcome any Adoption hurdles.
Philips launched a video-disc player that offered great technology (utility) but failed because it was expensive (price) and there was a scarcity of movie titles available for it (adoption). A great idea isn't enough if the sequence of utility, price, cost, and adoption isn't sound.
