Out of the Blue Magazine (Preview Issue Book 1)

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The book is divided into three parts: The first part presents key concepts of blue ocean strategy, including Value Innovation — the simultaneous pursuit of differentiation and low cost — and key analytical tools and frameworks such as the strategy canvas and the four actions framework. The four actions framework aids in eliminating the trade-off between differentiation and low cost within a company. The four actions framework consists of the following: The second part describes the four principles of blue ocean strategy formulation. These four formulation principles address how an organization can create blue oceans by looking across the six conventional boundaries of competition Six Paths Framework , reduce their planning risk by following the four steps of visualizing strategy, create new demand by unlocking the three tiers of noncustomers and launch a commercially viable blue ocean idea by aligning unprecedented utility of an offering with strategic pricing and target costing and by overcoming adoption hurdles.

The book uses many examples across industries to demonstrate how to break out of traditional competitive structuralist strategic thinking and to grow demand and profits for the company and the industry by using blue ocean reconstructionist strategic thinking. The four principles are:.

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The third and final part describes the two key implementation principles of blue ocean strategy including tipping point leadership and fair process. These implementation principles are essential for leaders to overcome the four key organizational hurdles that can prevent even the best strategies from being executed. The four key hurdles comprise the cognitive, resource, motivational and political hurdles that prevent people involved in strategy execution from understanding the need to break from status quo, finding the resources to implement the new strategic shift, keeping your people committed to implementing the new strategy, and from overcoming the powerful vested interests that may block the change.

In the book the authors draw the attention of their readers towards the correlation of success stories across industries and the formulation of strategies that provide a solid base to create unconventional success — a strategy termed as "blue ocean strategy". Unlike the "red ocean strategy", the conventional approach to business of beating competition derived from the military organization, the "blue ocean strategy" tries to align innovation with utility, price and cost positions.

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The authors ask readers "What is the best unit of analysis of profitable growth? The authors justify with original and practical ideas that neither the company nor the industry is the best unit of analysis of profitable growth; rather it is the strategic move that creates "blue ocean" and sustained high performance.

The book examines the experience of companies in areas as diverse as watches, wine, cement, computers, automobiles, textiles, coffee makers, airlines, retailers, and even the circus, to answer this fundamental question and builds upon the argument about "value innovation" being the cornerstone of a blue ocean strategy. Value innovation is necessarily the alignment of innovation with utility, price and cost positions.

This creates uncontested market space and makes competition irrelevant. The new chapters in the expanded edition of the book deal with the issues of how to develop and align the three strategy propositions of value, profit and people, how to sustain and renew blue ocean strategy at both the business level and the corporate level, and how to avoid red ocean traps that keep organizations anchored in existing market space even as they attempt to create new market space.

The metaphor of red and blue oceans describes the market universe. Red oceans represent all the industries in existence today — the known market space. In the red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known. Here companies try to outperform their rivals to grab a greater share of product or service demand. As the market space gets crowded, prospects for profits and growth are reduced.

Products become commodities or niche , and cutthroat competition turns the ocean bloody; hence, the term "red oceans". Blue oceans, in contrast, denote all the industries not in existence today — the unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over.

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There is ample opportunity for growth that is both profitable and rapid. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. Blue ocean is an analogy to describe the wider, deeper potential of market space that is not yet explored. The aim of value innovation, as articulated in the article, is not to compete, but to make the competition irrelevant by changing the playing field of strategy.

The strategic move must raise and create value for the market, while simultaneously reducing or eliminating features or services that are less valued by the current or future market. The Four Actions Framework is used to help create value innovation and break the value-cost trade-off. Value innovation challenges Michael Porter 's idea that successful businesses are either low-cost providers or niche-players. Instead, blue ocean strategy proposes finding value that crosses conventional market segmentation and offering value and lower cost.

Hill proposed a similar idea in and claimed that Porter's model was flawed because differentiation can be a means for firms to achieve low cost. He proposed that a combination of differentiation and low cost might be necessary for firms to achieve a sustainable competitive advantage. Many others have proposed similar strategies. For example, "competing factors" in blue ocean strategy are similar to the definition of "finite and infinite dimensions" in Funky Business. Just as blue ocean strategy claims that a red ocean strategy does not guarantee success, Funky Business explained that "Competitive Strategy is the route to nowhere".

Funky Business argues that firms need to create "sensational strategies". Kim and Mauborgne explain that the aim of companies is to create blue oceans, that will eventually turn red. This is the same idea expressed in the form of an analogy. Kim and Mauborgne claim that blue ocean strategy makes sense in a world where supply exceeds demand. Kim and Mauborgne argue that while traditional competition-based strategies red ocean strategies are necessary, they are not sufficient to sustain high performance. Companies need to go beyond competing. To seize new profit and growth opportunities they also need to create blue oceans.

The authors argue that competition based strategies assume that an industry's structural conditions are given and that firms are forced to compete within them, an assumption based on what academics call the structuralist view, or environmental determinism. To sustain themselves in the marketplace, practitioners of red ocean strategy focus on building advantages over the competition, usually by assessing what competitors do and striving to do it better.

Hence, competition, the supply side of the equation, becomes the defining variable of strategy. Here, cost and value are seen as trade-offs and a firm chooses a distinctive cost or differentiation position. Because the total profit level of the industry is also determined by structural factors, firms principally seek to capture and redistribute wealth instead of creating wealth.

They focus on dividing up the red ocean, where growth is increasingly limited. Blue ocean strategy, on the other hand, is based on the view that market boundaries and industry structure are not given and can be reconstructed by the actions and beliefs of industry players. This is what the authors call the reconstructionist view. To them, extra demand is out there, largely untapped. The crux of the problem is how to create it. This, in turn, requires a shift of attention from supply to demand, from a focus on competing to a focus on value innovation — that is, the creation of innovative value to unlock new demand.

This is achieved via the simultaneous pursuit of differentiation and low-cost. Competition in the old game is therefore rendered irrelevant. By expanding the demand side of the economy, new wealth is created. Such a strategy therefore allows firms to largely play a non—zero-sum game, with high payoff possibilities. Some examples of companies that may have created new market spaces in the opinion of Kim and Mauborgne include: Reports of businesses using blue ocean strategy concepts include: We will continue to maintain the website and store beyond the expiration date, so stay tuned for news and developments.

It has been completed and is now available in a digital PDF format. To purchase this download visit the Digital Download Section of our store. Then, a few years ago, as I entered my 60s, folks started asking about an exit strategy. Did I have one? Well, that time has come. The handwriting is on the wall. After the Civil War Sesquicentennial the subscriber base has declined to the point we can no longer afford to pay the printer and the post office, the costs of preparing the driving tour — which is the hallmark of the publication — and rising health care costs.

Furthermore, our book business, which helped support our publishing efforts through the years, has all but disappeared with the advent of online discount booksellers, against which we simply can not compete. We are also exploring ways to convert unfulfilled subscriptions into credits that can be used for back issues and our book titles, while supplies last. So, continue to visit the website for updates. This has been a very difficult letter for me to write.

For Those Who Still Hear The Guns!

In the process of correcting the matter, the titles of those Maps were sent to a different layer and, unfortunately, did not print. The titles should have appeared as follows:. The line of blue infantry crested the hill just as the officers gave the order to halt. Men caught their breath and then looked to their weapons in anticipation of resuming the fight.

As his men enjoyed a few minutes of rest, Maj. Mower took stock of the situation.

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