Blue Ocean Shift

5 Steps to Making a Blue Ocean Shift

W. Chan Kim and Renee Mauborgne’s latest book, Blue Ocean Shift: Beyond Competing –– Proven Steps to Inspire Confidence and Seize New Growth, is a direct response to those companies that found the transition from red ocean (bloody rivals all chasing a shrinking pool of profits) to blue (untapped markets with limited competition) to be more challenging than they first thought.

To successfully create and capture a blue ocean, you don’t need a desperate leap of faith, no matter how red your current ocean may be. By following five systematic steps, you can identify the right opportunity, build the right team to get you there, and make the move with minimal risk:

  1. Get Started. A single product/service company or a startup has no difficulty here. Existing companies with multiple offerings must decide which product line or division within their portfolio to move. The authors provide a tool called the pioneer-migrator-settler map to help with this. Building the right team to lead the move requires a delicate balance between representation from functional departments and the right mix of openness and engagement of all team members.
  2. Understand Where You Are Now. Knowing that you’re in a red ocean is a logical starting point, but the authors advocate the creation of a strategy canvas to fully understand the current state of play. Creating a blue ocean may be a positive step, but you need to understand why it’s your best option. Similar to a SWOT analysis (strengths, weaknesses, opportunities, threats), the strategy canvas serves a vital role in getting everyone on the same page before taking the creative step of building a blue ocean.
  3. Imagine Where You Could Be. Existing companies in well-established industries struggle to see beyond the commonly-accepted boundaries of their markets. The authors propose that identifying pain points that the industry currently imposes on buyers can provide valuable insights into new opportunities and potential blue oceans. The most difficult transition here is the move away from taking customers from your competition to identifying noncustomers who represent a new stream of demand and future growth potential.
  4. Find How To Get There. Rather than plunging straight into the first blue ocean you see, the authors propose a more systematic approach to the reconstruction of market boundaries. They offer six different paths to redraw established boundaries and create your blue ocean. Each path could potentially identify a new blue ocean.
  5. Make Your Move. The final step is to host a “blue ocean fair.” Here, the team creates a one-page strategy canvas for each potential ocean, showing the current reality and the proposed blue ocean offering, including the “leap in value” that will be created. Feedback is calibrated, and the decision is made on which strategic move to pursue.

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