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

Tell A Friend

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.

Download this interview
  • What do you mean by Blue Ocean Strategy? What are its defining characteristics?
    Blue ocean strategy is about creating and capturing uncontested market space, thereby making the competition irrelevant. In more specific terms blue ocean strategy is about a whole system alignment of the value proposition (utility minus price) by creating an offer that dramatically raises buyer utility at the right price for the mass of the market; profit proposition (price minus cost) by creating a leap in value for the company itself by making a tidy profit; and people proposition by practicing fair process and building execution into strategy formulation.

    In short, blue ocean strategy is about creating exceptional value for the buyer and compelling profit for the firm, executed in amotivating fashion for people around it. As far as defining characteristics, a blue ocean strategy must have three key components in order to implement and communicate your strategic move the strategy must be focused, diverge from the competitions strategic profile, and have a compelling tagline that speaks to the market.

  • Can you share with our readers a few examples of how the firms in your study created a BOS? Were there any specific pattern that you noticed in all such firms (for instance, the nature and intensity of competition in their respective industries, the nature of their industry life cycle (introduction, growing, getting plateaued, declining, etc.), the sophistication of the markets, the level of economic development of their country of origin, etc.?
    In our two decades of research we found that there is no pattern of perpetually excellent firms, industries, or correct level of a markets maturity. History shows that companies, industries, and markets are constantly being created and expanded over time and that conditions and boundaries are not given; only individual actors can shape them. Therefore, we believe that the strategic move is the right unit of analysis for explaining the creation of blue oceans and the root of profitable growth. By strategic move, wemean the set ofmanagerial actions and decisions involved in making a major market creating business offering. The strategic moves we discuss in our book moves that have delivered products and services that opened and captured new market space, with a significant leap in demand contain great stories of profitable growth.

  • What distinguishes red oceans from blue oceans?
    Red ocean, or competition based strategy, assumes that an industrys structural conditions are given and that firms are forced to compete within them, an assumption based on what academics call the structuralist view, or environmental determinism. To sustain themselves in the marketplace, practitioners of red ocean strategy focus on building advantages over the competition, usually by assessing what competitors do and striving to do it better. Grabbing a bigger share of the market is seen as a zero sum game in which one companys gain is achieved at another companys loss. Hence, competition, the supply side of the equation, becomes the defining variable of strategy. Here, cost and value are seen as trade offs and a firm chooses a distinctive cost or differentiation position. Because the total profit level of the industry is also determined exogenously by structural factors, firms principally seek to capture and redistribute wealth instead of creating wealth. They focus on dividing up the red ocean, where growth is increasingly limited.

    Blue ocean strategy, on the other hand, is based on the view that market boundaries and industry structure are not given and can be reconstructed by the actions and beliefs of industry players. This is what we call a reconstructionist view. Recognizing that structure andmarket boundaries exist only in managers minds, practitioners who hold this view do not let existing market structures limit their thinking. To them, extra demand is out there, largely untapped. The crux of the problem is how to create it. This, in turn, requires a shift of attention from supply to demand, from a focus on competing to a focus on value innovation that is, the creation of innovative value to unlock new demand. This is achieved via the simultaneous pursuit of differentiation and low cost.

1. Business Strategy Case Studies
2. ICMR Case Collection
3. Case Study Volumes

Previous 1 2  3  4 5 6 7 8 9  Next

Contact us: IBS Case Development Centre (IBSCDC), IFHE Campus, Donthanapally, Sankarapally Road, Hyderabad-501203, Telangana, INDIA.
Mob: +91- 9640901313,

©2020-2025 IBS Case Development Centre. All rights reserved. | Careers | Privacy Policy | Terms of Use | Disclosure | Site Map xml sitemap