Blue Ocean Strategy
Stop competing in bloody red oceans—create uncontested market space by making competition irrelevant.
W. Chan Kim and Renée Mauborgne introduced Blue Ocean Strategy in 2005, arguing that companies waste resources fighting in crowded markets ("red oceans" bloody with competition). Instead, they should create uncontested market space ("blue oceans") where competition becomes irrelevant. The framework provides tools to systematically discover or create these new markets—not through technological breakthroughs, but by rethinking value propositions and challenging industry assumptions.
Red Ocean Strategy
Compete in existing market space
- Compete in existing market space
- Beat the competition
- Exploit existing demand
- Make the value-cost trade-off
- Align activities with strategic choice of differentiation or low cost
- Focus on customers within industry boundaries
Blue Ocean Strategy
Create uncontested market space
- Create uncontested market space
- Make the competition irrelevant
- Create and capture new demand
- Break the value-cost trade-off
- Align activities in pursuit of differentiation AND low cost
- Reach beyond existing industry demand
Eliminate
Which factors that the industry takes for granted should be eliminated? These are often legacy features that no longer add value but still drive up costs.
Reduce
Which factors should be reduced well below the industry standard? Over-delivery on certain dimensions wastes resources without creating proportional value.
Raise
Which factors should be raised well above the industry standard? These are dimensions where customers are underserved and willing to pay for improvement.
Create
Which factors should the industry have never offered be created? These new value elements attract non-customers and reshape buyer preferences.
Best For:
- Mature, commoditized industries with intense competition
- New product or market entry strategy
- Challenging industry assumptions and conventions
- Finding white space in crowded categories
- Reframing value propositions to attract non-customers
- Breaking out of "compete on price vs. differentiate" trap
Less Effective When:
- Industry is nascent and blue oceans already exist
- Execution is the bottleneck, not strategy
- Regulatory or technological barriers prevent innovation
- Company lacks resources to create new market infrastructure
- Framework feels too abstract without clear action steps
Star performers, animal shows, multiple rings, aisle concession sales. Cirque removed the expensive, ethically questionable, and chaotic elements that defined traditional circuses.
Fun and humor, thrill and danger. Cirque toned down slapstick comedy and risky stunts that dominated traditional circuses.
Unique venue (custom tents, permanent theaters). Created immersive, comfortable, premium environments instead of dusty fairgrounds.
Theme-based storytelling, refined artistic performances, multiple productions targeting different audiences. Cirque became theater—attracting adults willing to pay Broadway prices instead of families seeking cheap entertainment.
Cutting-edge graphics, DVD playback, hard drive, online multiplayer infrastructure. Wii ignored the arms race that Sony (PS3) and Microsoft (Xbox 360) were fighting.
Processing power, storage, graphics fidelity. The Wii was technically inferior to competitors—and that didn't matter.
Ease of use, social/family appeal. Wii Sports made gaming accessible to grandparents and non-gamers. Simplified controllers removed barriers.
Motion control gameplay, party/fitness games, family-friendly positioning. Wii attracted customers who would never buy a PlayStation—expanding the market instead of fighting for existing gamers.
Meals, seat assignments, first class, interline baggage transfers, hub-and-spoke routing. Southwest stripped out everything that slowed turnaround times and increased costs.
In-flight services, lounge access, premium seating. Southwest offered basic transportation—no frills.
Flight frequency, friendly service, operational reliability. Southwest flew more routes with higher frequency than competitors, and built a reputation for on-time performance and employee culture.
Point-to-point routes (bypassing hubs), secondary airport focus, simplified pricing. Southwest made air travel compete with driving—attracting customers who previously wouldn't fly.
Wine terminology, aging qualities, complex varietals, prestige. Yellow Tail removed the intimidation and pretension that kept non-wine-drinkers away.
Wine range (limited SKUs), vineyard heritage storytelling, somm-focused marketing. Simplified everything.
Shelf presence (bold kangaroo branding, colorful labels), retail partnerships (mass distribution), approachability.
Easy-drinking positioning, fun/adventure branding, beer/cocktail-drinker targeting. Yellow Tail grew the wine market by converting non-wine-drinkers—not by stealing share from other wine brands.
W. Chan Kim and Renée Mauborgne are professors at INSEAD who spent 15 years studying high-growth companies and why some succeed while others stagnate. Their research culminated in "Blue Ocean Strategy," published in 2005, which became a global bestseller and introduced the framework to executives worldwide.
The core insight: most strategy focuses on outperforming rivals within existing market boundaries. But the most successful companies don't compete—they redefine the playing field. Kim and Mauborgne analyzed 150 strategic moves across 30 industries over 100 years and found that blue ocean creators consistently outperformed red ocean competitors.
The book provided practical tools (Four Actions Framework, Strategy Canvas, Six Paths Framework) to systematically identify blue ocean opportunities. It wasn't just theory—it was actionable. The framework has been applied across industries, from airlines to wine to technology, and remains one of the most influential strategy books of the 21st century.
Post-Dot-Com Strategy Rethink (Early 2000s): Blue Ocean Strategy arrived after the dot-com crash, when companies realized that "growth at all costs" and "first-mover advantage" weren't strategies—they were gambling. Kim and Mauborgne offered an alternative: systematic innovation through value reconstruction. The framework gave structure to what felt like chaos.
Porter's Influence and Departure: Michael Porter's Five Forces dominated strategy thinking in the 1980s-90s, focusing on competitive positioning within existing industries. Blue Ocean Strategy challenged that paradigm—arguing that the best strategy is to escape competition entirely. It wasn't anti-Porter; it was beyond Porter. The most profitable companies don't fight—they create.
Globalization and Commoditization (2000s): As globalization accelerated, industries commoditized faster. Differentiation became harder. Price wars intensified. Blue Ocean Strategy resonated because it offered an escape: if you can't win the game, change the game. Companies like Cirque du Soleil, Nintendo Wii, and Yellow Tail proved it was possible.
Why It Endures: Blue Ocean Strategy survives because it reframes strategy as creation, not competition. The metaphor is powerful—red oceans (bloody, crowded) vs. blue oceans (clear, open). The tools are practical (Four Actions Framework can be workshopped in an afternoon). And the case studies are inspiring. The framework isn't universally applicable, but when it works, it works spectacularly. It gave executives permission to stop benchmarking competitors and start reimagining industries.