“Blue Ocean strategy” is a term that was coined in 2004 by leading Management Thinkers Chan Kim and Renée Mauborgne. The idea – which is now recognised as one of the most iconic business strategies ever written – is for companies to swim to ‘Blue Ocean’ to avoid head-to-head competition in the overdeveloped, saturated and bloodied ‘Red Oceans’ (the known market space); instead, they should focus on finding and developing unexplored industries and markets in the blue oceans. Executing this strategy makes the concept of competition irrelevant; companies should therefore have more success, less risk, and increase their profits.

In the example in the graph below, a B2B manufacturing company (Company C – the blue line) is launching a new range of machines. It’s looking to keep the range low intentionally, so it can keep its costs (and the price) lower than the competition, which is hell-bent on offering a very wide range of products. Whilst its competitor Company B (yellow) has decided not to compete on product life, Company A (green) has a good reputation on this. Company C has looked to enter a blue ocean by introducing new elements (built in software, user interface simplicity and a tiny machine footprint)  – these are extensions to the ‘canvas’.

Some ideas on when it’s a great tool to use:

• I once used the Blue Ocean strategy methodology to help a business turnaround its fortunes. Instead of the team tearing our hair out brainstorming with a blank flip chart, we used the Blue Ocean approach to map out how we might be able to steer our business clear of the competitive Red Ocean, towards bluer waters. We thought about our product suite and how we might be able to adapt their ‘factors’ in a different approach, to distinguish ourselves. A couple of the ideas that came out of that session were then developed in the following few months; we took one product to market to test the waters and then developed the plan from there.

Useful links related to Blue Ocean Strategy

• The background story from the authors themselves
• Link to Amazon to buy the original Blue Ocean Strategy book: Kim, W. C., & Mauborgne, R. (2005). Blue Ocean Strategy: How to create uncontested market space and make the competition irrelevant. Boston, Mass: Harvard Business School Press.
• A couple of basic slides which you can use to plot your own strategy (pptx, 68KB). Slide 1 is rendered purely in PowerPoint; slide 2 uses Excel, which some people may prefer (easier to plot the lines and dots).