Blue Ocean Strategy

Hey there,

Welcome to Week 18 of TechExec - the newsletter that turbocharges your growth to become a Tech Executive!

As always, we are sharing a new set of BLTs this week

• 💼 B - a Business concept / theory / story

• 💝 L - a lifestyle advice

• 🤖 T - a Tech explainer

Here is the schedule:

Monday —>💼 B - a Business concept / theory / story

Wednesday —> 💝 L - a lifestyle advice

Friday —> 🤖 T - a Tech explainer

This week we will cover the topic of the Pomodoro Technique on Wednesday and introduce you to Wireframing on Friday.

Today’s Business Concept is the Blue Ocean Strategy!

💼 B - Gift Cards

Most B-school strategy classes extensively focus on building a competitive advantage, whether it comes in the form of a vastly superior product, an impossible-to-copy distribution channel, or an incredible cost structure built through economies of scale. However, recent times have seen an emphasis on finding your niche market and positioning accordingly. The mesmerizing concept of the Blue Ocean Strategy belongs to that class. It is a powerful strategy that encourages companies to create new industries and break away from the competition. In the vast business seascape, two types of oceans exist - red oceans and blue oceans. Red oceans are all the industries in existence today, filled with sharks battling over the same prey. It's a dog-eat-dog world where competition is fierce, and the bloody red ocean grows crowded. The blue oceans, however, are untapped, unexplored, and filled with abundant opportunities. They are the future, waiting to be created.

The Blue Ocean Strategy was coined by W. Chan Kim and Renée Mauborgne in their book titled "Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant." 

The essence of this strategy is not about doing better than the rivals or stealing customers from them, but about creating a new market space that makes the competition irrelevant. It's about innovation and growth rather than survival.

A quintessential example of the Blue Ocean Strategy is Cirque du Soleil. The traditional circus industry was dying, with declining audiences and increasing costs. But Cirque du Soleil revolutionized the industry by eliminating elements like star performers and animals, focusing on adults instead of children, and adding elements from theater and opera. They created an entirely new market—a sophisticated theatrical show, making traditional circuses irrelevant.

Another example is the Nintendo Wii. In the highly competitive video game industry dominated by PlayStation and Xbox, Nintendo didn't try to compete with better graphics or more processing power. Instead, they introduced a motion-sensitive controller that appealed to non-gamers and casual gamers, expanding the market beyond hardcore gamers.

Despite its allure, the Blue Ocean Strategy is not without pitfalls. One major challenge is execution. Creating a new market space requires creativity, risk-taking, and substantial resources. There's also a risk that competitors will quickly imitate your innovative offering once you've demonstrated its viability.

Furthermore, while the Blue Ocean Strategy advocates making competition irrelevant, it doesn't mean competition doesn't exist. Even in blue oceans, there are threats like substitute products or new technologies that can disrupt your business model.

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Until next time!

Gaurav