blue ocean digital strategy

Episode 82: The Blue Ocean – Creating Uncontested Market Space In Digital Strategy

In 1997, Apple unveiled its ‘Think Different’ campaign, marking its re-emergence as a powerhouse in the industry. The idea of being different is not only compelling, it’s important. In a crowded marketplace, you can do what everyone else is doing, or you can apply the concepts of the Blue Ocean Strategy and create your own market. These concepts matter today in the practice of digital strategy, and will matter ever more as the space becomes more crowded and competitive.

The book Blue Ocean Strategy was published in 2005 and written by two professors at INSEAD, W. Chan Kim and Renee Mauborgone. Their work argues that rather than fight competitors in a crowded marketplace, a red ocean, it is better for companies to create a blue ocean where they are uncontested. They argue that by doing so, it not only makes the competition irrelevant, it immediately increases the value of the organization to the benefit of the people that work there and their customers.

The book presents the 4 principles of creating a Blue Ocean Strategy. They are:

  1. Creating uncontested market space by reconstructing market boundaries
  2. Focusing on the big picture
  3. Reaching beyond existing demand
  4. Getting the strategic sequence right

It looks at this through the lens of Value Innovation, namely the idea that you can be both differentiated and low cost, a concept that typically flies in the face of traditional strategic frameworks. In doing so, it argues against the conventional approach that most companies take, namely to employ a Red Ocean Strategy. This traditional approach is focused on finding ways to beat the competition in an established market, with the result that value is diminished and profitability is reduced. In the red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known.

The Blue Ocean Strategy looks beyond this, focusing not on the ‘known market space’, but rather trying to identify industries or areas not in existence today. In doing so, the idea of ensuring that the offering is both differentiated and low cost is paramount.

A classic example of a brand that has applied this approach is Southwest Airlines who have developed a model based on the flexibility of bus travel to air travel, all while using secondary airports to keep costs low. Another is Cirque du Soleil who combined opera and the circus while eliminating the need for expensive stars. More recently, Nintendo focused its Wii console on using innovative controls to attract an entirely new audience to gaming.

So what are the opportunities for applying this type of thinking to digital strategy?

First, recognize that if you aren’t thinking this way, someone else is. We work in one of the most innovative and competitive industries worldwide, and a hallmark of this space is that people are constantly striving to use technology to create blue oceans of space to operate in.

Second, in applying the concept, look for a problem that needs solving. Blue ocean strategy is not about innovating for the sake of it, but rather about identifying situations that would benefit from innovation.

Third, don’t worry about having to identify a totally new industry. Rather, look for solutions in other industries and ask yourself how they might be applied to your industry in order to solve the problem. For example, look at how Uber and Airbnb applied the idea of crowdsourcing to disrupt their spaces and create blue oceans for themselves. An example of this thinking is the application of crowdsource solutions to a given problem in digital marketing.

Finally, look for technology to power your solution, since this is the only way to ensure that costs are kept low as you differentiate.

In doing all this, remember that at heart what you are doing is refusing to follow the crowd, refusing to compete on the terms set by others, refusing to accept mediocrity. In charting a course to a blue ocean, you are stepping beyond the pack and finding ways to deliver industry defining value.

Next week on octopus, we will continue to explore the role of the digital strategist. Please be sure to comment below. I’d love to hear from you. Please subscribe for alerts about new episodes and content. Thank you for listening to octopus. I’m Nasser Sahlool.

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