Business Case Studies, Executive Interviews, W Chan Kim & Renee Mauborgne on Blue Ocean Strategy

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Executive Interviews: Interview with W Chan Kim & Renee Mauborgne on Blue Ocean Strategy
December 2008 - By Dr. Nagendra V Chowdary

W Chan Kim & Renee Mauborgne
Co-Founders and Co-Directors of the INSEAD Blue Ocean Strategy Institute.

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  • Congratulations for becoming celebrated co authors and thanks for giving the corporate world a fresh thinking on creating profitable business. To a large extent you made the corporates realize that their companies were not a large fish constrained in a small pond, but a small fish in a huge pond. Each company was full of talented people butting their heads against a stone wall the inexorable logic of squeezing out drops of market share is a zero sum game. The game involved fighting for tenths of a percent of the market share at an exorbitant cost to the bottomline or defending each tenth of a percent. And all that changed with Blue Ocean Strategy perspective.

    What prompted triggered this pioneering work? What were the roots of this extensive research?

    This journey began 20 years ago by asking a simple question: is there an underlying strategic logic behind breakthrough growth? We have always shared an intellectual curiosity to understand what it takes to stand apart and create strong profitable growth. In search for an answer, we looked back more than 100 years and across more than 30 industries. We asked which industries exist today that were prominent in 1900? It turns out that apart from the basic industries such as cars and steel there were very few other industries. The big growth industries in the past 30 years have been the computer industry, software, gas fired electricity plants, cell phones and the cafe bar concept, for example. But in 1970, not one of those industries existed in a meaningful way, and thats just 37 years back. The pattern continues as you dig into the past. We have a hugely underestimated capacity to create new industries. It is commonly assumed that the number of industries stays the same over time,but it doesnot. And if this is where the bulk of wealth has been created, shouldnot the field of strategy systematically explore and understand the path to new market space creation, what we call blue oceans.

    While our analysis did not reveal any permanently great companies or industries, what we did find is that companies, like industries, rise and fall based on the strategic moves they make. And the strategic move that we foundmatters centrally is the creation and capturing of new market space. In industry after industry we observed high performing companies did not compete but made the competition irrelevant. They were not focused on benchmarking competitors and striving to beat them. Instead of accepting industry conditions, they challenged them and created new demand, or blue oceans. These insights did not square with the red ocean paradigm which views industry conditions and demand as beyond a companys influence. The current strategy paradigm failed to explain how to create and capture this lucrative and growing part of the market universe.

    We continued to work to understand this pattern by which blue oceans are created and captured, and high performance is achieved. We found that those that sought to create blue oceans did not follow conventional strategic logic; instead they pursued a different strategic logic that we call value innovation the simultaneous pursuit of differentiation and low cost. Once we identified the strategic logic, then we set our sights on developing a set of tools and methodologies to support our thesis. It is one thing to say that there is untapped market space devoid of any competition, but it is another thing to have practical tools and methodologies to create blue oceans. We studied companies around the world and developed practical methodologies in the quest of blue oceans. We then applied and tested these tools and frameworks in action by working with companies in their pursuit of blue oceans, enriching and refining them in the process.

  • What if any, according to you were the most defining moments and satisfying moments of your longdrawn research effort?
    The journey of academic research is filled with hard work, intellectual struggles and endless discussions on issues. This journey can be frustrating at times, especially when your hypothesis ends up being different than your findings and you have to start over again. In taking such a long and tedious journey of painstaking research, you find that support and friendship are very important. In fact, without that it is very difficult to sustain your momentum. Therefore, this has been a 20-year effort, first and foremost about friendship, about loyalty, about believing in one another. It was because of that friendship, and that belief, that we set out on the journey to explore the ideas in Blue Ocean Strategy and eventually came to write it. So, to be honest, everyday that we work together is more rewarding and satisfying than the last.

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