Blue Ocean Strategy
The Blue Ocean Strategy (BOS) is a strategic organizational approach that focuses on approaching new markets. A conscious decision is made not to compete in existing markets in order to keep costs down. The Blue Ocean Strategy (literally translatable as "the blue ocean strategy") thus focuses on differentiation in creating market space, in contrast to the Red Ocean Strategy. The BOS is a strategic move based on a study of 150 other strategic moves conducted within some 30 industries. The new markets are presented as the blue oceans of innovative value propositions.
The main objective of BOS is to create a development of value for both the organization itself and the target audience. After all, new markets and new opportunities are being captured which automatically creates new demand as well. In doing so, it moves away from the cutthroat competition that exists in many existing markets. In this case, it is referred to as a red ocean.
Value innovation in the application of blue ocean strategies
The application of blue ocean strategies focuses on value innovation in general (i.e., on factors such as utility, cost and price) without an emphasis on reducing time to market (speed-to-market). It does not focus on a dynamic market as a similar Venture strategy does. Here the focus is not on the competition but rather on the customer. This is why the term "value innovation" is inextricably linked to the Blue Ocean Strategy. Therefore, this strategic organizational approach is driven not only by technology but by the factors that add clear value to customers.
The 6 Principles of Blue Ocean Strategy
- The redefinition of market boundaries
- Focusing on a broad perspective
- Looking beyond existing demand
- The idea must add value to the customer
- Overcoming key organizational hurdles
- Integrating implementation as an integral part of the strategy process
To help entrepreneurs think innovatively about how best to tap into a new market, a 4 Actions Framework has been developed. This tool was developed to use the Blue Ocean Strategy to maximize user value, reduce cost, eliminate unnecessary features of the product and increase user gain in the process. This 4 Actions Framework consists of 4 consecutive steps namely: eliminate, reduce, increase and create. Based on this template, the most efficient way to search for the opportunities to be more innovative in producing a specific offering that fulfills the rationale of the Blue Ocean Strategy can be found.
