Blue Oceans vs Red Oceans

I picked up another book recommended by a colleague - this time it's only ten years old. The 2004 book Blue Ocean Strategy by W. Chan Kim and Renée Mauborgne has the extra-long subtitle "How To Create Uncontested Market Space And Make The Competition Irrelevant."  The book provides a way of thinking to get out of "red oceans" of violent competition and into "blue oceans" with open horizons and opportunities.

This is an important topic in thinking about any business.  How do you not just "stay ahead" of the competition, but change the playing field so that the competition can't possibly join you (right away).  The easiest example of red oceans are price wars: anyone can change the price of their offering.  Sure, price wars will eventually kill you (thus the "red ocean" in their analogy).  Blue oceans are the places where you select how you want to present your offering to the world and position it in such a way that creates a completely different pull to your business. 

The interesting thing for me was that a lot of what the authors discuss is very similar to the ideas behind the TOC community Viable Vision projects: create a capability and then find a way to capitalize on it that your competition cannot match.  Offer a unique service, speedier delivery, solve a problem for your customers, etc.  All of the ideas focus on building something internally and then finding a way to take advantage of it in a way that is unusual or surprising.  More to the point - take advantage of it in a way that the customers will want more.  Where Viable Vision focuses on creating operational capability and then capitalizing on it in some very specific ways, Blue Ocean offers guidance on how to find the ways to capitalize.

Importantly, Blue Ocean (and Viable Vision) attempt to look at the system in which the company operates: not just manufacturing or sales or the supply chain. The whole company plus its partners and customers.  "Value innovation requires companies to orient the whole system toward achieving a leap in value for both buyers and themselves."

The last third of the book talks about implementing these strategies - and change management in general. There are familiar topics that come about in many change management writings, but the authors also bring in some interesting perspectives.  I particularly liked the discussion around engaging people and the idea of "fair process" or "procedural justice." The short form is that when the process doesn't make sense or appears to be unclear, people will distrust it - and often appear to be "resisting." People are tied into the way an outcome is achieved as well as the outcome itself. 

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