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114 of 124 people found the following review helpful: |
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To strive, to seek, to find.... |
August 21, 2007 |
| Reviewer:
Robert Morris
from Dallas, Texas
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This is an especially thought-provoking book which, as have so many
others, evolved from an article published in the Harvard Business
Review. According to Kim and Mauborgne, "[in italics] Blue ocean
strategy [end italics] challenges companies to break out of the red
ocean of bloody competition by creating uncontested market space that
makes the competition irrelevant...This book not only challenges
companies but also shows them how to achieve this. We first introduce a
set of analytical tools and frameworks that show you how to
systematically act on this challenge, and, second, we elaborate the
principles that define and separate blue ocean strategy from
competition-based strategic thought." There are six principles which
are introduced and then discussed on pages 49, 82, 102, 117, 143, and
172, respectively.
Frankly, I was somewhat skeptical that this book could deliver on
the promises made in its subtitle. In fact, the material provided by
Kim and Mauborgne is essentially worthless unless and until
decision-makers in a given organization accept the challenge, are
guided and informed by the six principles, and effectively use the
tools within appropriate frameworks. The responsibility is theirs, not
Kim and Mauborgne's. To assist their efforts, Kim and Mauborgne focus
on several exemplary companies which have dominated (if not rendered
irrelevant) their competition by penetrating previously neglected
market space. They include the Body Shop, Callaway Golf, Cirque du
Soleil, Dell, NetJets, the SONY Walkman, Southwest Airlines, Starbucks,
the Swatch watch, and Yellow Tail wine.
Of greatest interest to me is Kim and Mauborgne's assertion that
the innovations which enabled these companies to succeed with a Blue
Ocean strategy did NOT depend upon a new technology. Rather, each
company pursued a strategy which enabled it to free itself from
industry boundaries. For Dell, that meant mass production of computers
sold directly to consumers per each customer's specifications. Quite
literally, each sale is "customized." For Callaway, creating an
enlarged sweet spot to increase the frequency of solid contact for new
or infrequent golfers just as, years ago, the enlarged Head racquet did
so for new or infrequent tennis players. For Starbucks, creating a
congenial environment within which to socialize, go online, or read
while consuming coffee. All of these Blue Ocean strategies created new
or much greater value for customers. Their emphasis is on the quality
of experience, not on the benefits of a new technology.
According to Kim and Mauborgne, their research indicates that "the
strategic move, and not the company or the industry, is the right unit
of analysis for explaining the creation of blue oceans and sustained
high performance. A strategic move is the set of managerial actions and
decisions involved in making a major market-creating business
offering." The cornerstone of a Blue Ocean strategy is value innovation
which occurs "only when companies align innovation with utility, price,
and cost positions. If they fail to anchor innovation with value in
this way, technology innovators and market pioneers often lay the eggs
that other companies hatch." For Kim and Mauborgne, value innovation is
about strategy that embraces the entire system of a company's
activities. It requires companies to orient the whole system toward
achieving a "leap" in value for both buyers and themselves. Kim and
Mauborgne explain HOW to create uncontested market space wherein
competition is essentially irrelevant.
To paraphrase Henry Ford, whether decision-makers think they can or think they can't do that, they're right.
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363 of 369 people found the following review helpful: |
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Value Innovation - strategy book of the year 2005? |
August 21, 2007 |
| Reviewer:
Peter Leerskov
from Denmark
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The authors have published many articles over the last decade on Value
Innovation. This is their first book. It summarizes their extensive
knowledge on out-of-the-box strategic thinking.
What is a BLUE OCEAN STRATEGY? The authors explain it by comparing it to a red ocean strategy (traditional strategic thinking):
1. DO NOT compete in existing market space. INSTEAD you should create uncontested market space.
2. DO NOT beat the competition. INSTEAD you should make the competition irrelevant.
3. DO NOT exploit existing demand. INSTEAD you should create and capture new demand.
4. DO NOT make the value/cost trade-off. INSTEAD you should break the value/cost trade-off.
5. DO NOT align the whole system of a company's activities with its
strategic choice of differentiation or low cost. INSTEAD you should
align the whole system of a company's activities in pursuit of both
differentiation and low cost.
A red ocean strategy is based on traditional strategic thinking - e.g. Harvard's strategy guru Michael Porter.
Some cases:
* Airline industry price wars result in bankruptcies and low profit
margins. Southwest Airlines creates a new market by offering the speed
of air travel with the low cost and flexibility of driving.
* Golf equipment industry competes to win a greater share of
existing golf customers. Callaway Golf creates "Big Bertha", a golf
club with a large head that attracted new customers to golf that had
been frustrated by the difficulty of hitting the ball.
* The cosmetic industry creates a red ocean with models, expensive
advertising, and promises of youth and beauty. The Body Shop creates a
blue ocean that lasts more than a decade by creating functional
cosmetics that defied the industry which sold emotionally appealing
cosmetics.
* The wine industry gluts the market with a red ocean of thousands
of brands competing on the finest oaks and tannins and legacy winey
names. Casella wines creates [yellow tail], a blue ocean wine that
succeeded by eliminating complexity, elitism and consumer confusion and
creating a fun simple image that non-wine drinkers could enjoy.
A blue ocean is created in the region where a company's actions
favourably affect both its cost structure and it value proposition to
buyers. Cost savings are made from eliminating and reducing the factors
an industry competes on. Buyer value is lifted by raising and creating
elements the industry has never offered. Over time, costs are reduced
further as scale economies kick in, due to the high sales volumes that
superior value generates.
Examples of strategic moves that created blue oceans of new, untapped demand:
- NetJets (fractional Jet ownership)
- Cirque du Soleil (the circus reinvented for the entertainment market)
- Starbucks (coffee as low-cost luxury for high-end consumers)
- Ebay (online auctioning)
- Sony (the Walkman - personal portable stereos)
- Cars: Japanese fuel-efficient autos (mid-70s) and Chrysler minivan (1984)
- Computers: Apple personal computer (1978) and Dell's built-to-order computers (mid-1990s).
The INSEAD professors Kim and Mauborgne have written regularly on
the subject of Value Innovation since 1997 in Harvard Business Review.
Being a business development manager, their thought leadership on
strategic innovation has inspired me tremendously over the years. Their
articles have been standard texts for many MBA students for some time
(e.g. "Value Innovation", "Creating New Market Space", "Charting your
Company's Future"). I expect their first book to be just as dominant in
any strategy library as Michael Porter's books (the guru behind the
classic red ocean strategies).
Peter Leerskov,
M.Sc. in International Business (Marketing & Management) and Graduate Diploma in E-business
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