Blue Ocean Strategy: Innovation or Re-tread?
According to the “Blue Ocean Strategy”, 2015, organizations should find a way of working in a market place that is free of competition. Which is better referred to as an “uncontested market space”. Most business are known to work in “red ocean” conditions where businesses viciously fight against each other for a share of the marketplace. According to the blue ocean strategy, companies should look for other strategies that enables them operate in a market place free of competitors. In the book Blue Ocean Strategy, the author studies 150 strategic moves that have been observed for more than 100 years and in 30 different industries. In this case such companies succeed not by engaging in competitive processes in the market but by systematically creating systems that create uncontested market spaces that enable growth of businesses.
This system seeks to pursue high product differentiation and low cost of products thus making the need of competition irrelevant. The author goes on to say that this strategy has been successful because it attracts a large number of customers and at the same time raising the cost of competition.
So as to efficiently use this strategy, businesses and entrepreneurs should consider a “Four Actions Framework”. According to authors this would reconstruct buyer value elements in crafting a new value curve. The four actions are based on what factors should be raised well above the industry’s standard, what factors has the company competed on and the ways through which they should be eliminated, what factors should be reduced that are below industry standard and also what factors should the business create that it has never created before. These methods enable re-engineering of its products and push market leaders to practice differentiation and low cost in order to break off from value-cost trade-off.
Business practices that can be employed in the blue ocean strategy are many. Colman and Buckley (2005), the blue ocean strategy enables companies to develop innovation in its operations and Kim and Mauborgne (2005) continue to affirm this by saying that it enables a company to bring new products to markets. This brings a competitive advantage of such a company Moyer (2006). This strategy also enables market identification. This is according to Madden (2009) who says that, this strategy enables to define clearly the market since this method considers consumer demand impacts. The strategy can also be used when identifying consumer preferences. Sheehan and Vaidyanathan (2009) this strategy enables managers to capture unique requirements of customers and to capture the value of these customers to the company. This enables these customers to effectively satisfy their customers, Kim and Baik (2008).
The Blue Ocean Strategy has mitigated current business trends by creating a unique business avenue that is undisputed. Meaning it is free of competition. In such a market, companies can fix all the rules of engagement, criteria and factors that can affect the market in one way or the other. This strategy introduces innovation which serves to add value to a product produced and thus do away with the need of competition in the market space. The strategy enables people to understand the company’s strategic position in the market. This enables various stakeholders to know what the business is dealing with. Also these stakeholders after understanding this position need to share it and own it so that they form part of the bigger plan of making the business successful. This also enables them to share the same vision and focus on main issues affecting the business.
This strategy, also enables employees to share their skill, talents and ideas. With the sole goal of making the business more successful. In this case, the employees collaborate on the basis of their different talents. This variety of knowledge and skills ensure efficient operation in the company. Thus enabling certain factors such as innovation who’s main is to drive the company success chances high and in the process increase the company’s profits. This also enables employees to share ideas of ways in which they can increase opportunities of the business in the market. The system also increases communication systems between various business units in the company. This can only mean increased efficiency in the business since various department are able to communicate in time and response is in real time. For example the supply department, is able to communicate with the sales department efficiently so the two departments are able to communicate on the nature of the market and the two departments are able to take quick action.
It can be argued that the Blue ocean strategy is a value innovation. In fact it forms the cornerstone of the Blue Ocean Strategy. Since it involves a series of strategic actions that result in a product or service that is different from that being provided elsewhere. This strives to create a value added advantage on a product based on innovative methods. This creates a unique market share for any company that adopts this strategy. Under this value innovation, certain practices are adopted that show innovation such as pursuit of differentiation and low cost and also creating a leap for buyers and also the company. This means that a company is breaking out of market boundaries and creating a value for its own buyers that would make them only want the product of your company and is willing to be loyal to only the product from that particular company.
These ideas usually challenge the normal way of thinking and are usually accompanied by extensive research. This research is geared at capturing the market and ensuring that a company always remains relevant in the market place. This increases a company’s profit margins and can only mean success for a company. Since the company has conquered the market and has created uncontested market and with this value innovation it means a company can also reach out for other new blue ocean to ensure that it remains relevant at all times.
REFERENCES
– – The evolution of strategic thinking and practices : Blue ocean strategy- Linnaeus University – Gallaume Nicholas
– The Ethics of Sustainability- Charles J. Kibert, Leslie Thiele, Anna Peterson.
– Blue Ocean Strategy- How to Create Uncontested Market Space and Make the Competition Irrelevant.- W Chan Kim, Renee Mauborgne
– Value Innovation: a leap into the Blue Ocean. W Chan Kim, Renee Mauborgne
