Operational Governance Knowledge Flashcards No. 03/19

Blue Ocean Strategy

From the Operational Governance flashcard deck; today this discipline goes by BizOps. The original card is republished here as a field note.

01 What is it

Red oceans are all the industries in existence today — the known market space.
Blue oceans are all the industries not in existence today — the unknown market space.

Blue ocean strategy is the simultaneous pursuit of differentiation and low cost to open up a new market space and create new demand. A blue ocean is an analogy for the wider, deeper potential to be found in unexplored market space.

02 When is it useful

Helps you rethink your business and understand new options and strategic actions not previously raised. It guides companies toward new markets where there is less competition and more profitability.

This does not necessarily imply the creation of visionary products or new technologies — but the ideal combination of differentiated solutions, fair prices, and attractive features.

03 How to use it

1) Create a strategy canvas

It is designed to give you an immediate snapshot of how your business, product, or service stacks up against the competition:

List the products (or services) you want to compare.
List the attributes, or factors of competition.
Rate each product according to each attribute.
Do a simple graph: value attributes on the horizontal axis, then trace the curve of the company and each of its competitors.

2) Raise, reduce, eliminate, create

The pathway to successful innovation lies in a unique combination of one to four moves on the attributes of your product: raise, reduce, eliminate, and create.

04 Common pitfalls