#28 Moving Industry Boundaries with Insight and Innovation
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Blue and Red Oceans
A blue ocean strategy restructures an industries boundaries to create a new area of industry where there are no competitors. A red ocean strategy means competing in a crowded industry, where the “ocean is red with the blood of competitors.”
One of the blue ocean examples in the article is the circus industry. In the 1980’s, the industry had been declining from the increase in other forms of entertainment and from animal rights protests. But whoever said circuses have to have animals or be targeted towards children? Enter Cirque de Soleil. This company created a blue ocean strategy and became successful in an area where there was no competition. In overcrowded industries, differentiating brands becomes harder. The Wii was a blue ocean strategy for Nintendo. Instead of making the console ($300) more complicated and expensive, like Xbox and Playstation ($600), it made it simple and enabled the whole family to play, even grandma & grandpa.
The Paradox of Strategy
Most companies are comfortable in their red ocean partly because: Corporate strategy is heavily influenced by its roots in military strategy. Described this way, strategy is all about red ocean competition. It is about confronting an opponent and driving him off a battlefield of limited territory. But blue ocean strategy is about doing business where there is no competitor. It is about creating new territory, not dividing up existing territory.
Kim, W. Chan and Mauborgne, Renée, “Blue Ocean Strategy,” Harvard Business Review, October 2004, Vol. 82 Issue 10, p. 76, 8.