Orion Bailey on Developing Successful Business Innovations Using the Blue Ocean Strategy

Today, the Blue Ocean Strategy is well-known as one of today’s leading business philosophies. The strategy has become popular among tech companies and others with a strong focus on innovation.

The Blue Ocean Strategy focuses on getting out of business areas where there are many competitors and expanding past current markets. Companies that practice the Blue Ocean Strategy have forward-thinking innovation and a willingness to move out of known business realms.

Orion Bailey, an expert in the Blue Ocean Strategy, explains the system and how businesses can create successful innovations using it as a model.

What is the Blue Ocean Strategy?

The Blue Ocean Strategy was developed by Chan Kim and Renée Mauborgne. The French professors published their first book together in 2005. Blue Ocean Strategy has sold over 4 million copies, making it one of the best business books of the 21st century. The book has been published in 46 languages.

The core concept of the Blue Ocean Strategy is getting away from crowded business areas -- “Red Oceans” which are already full of competitors and “shark-infested” -- and into uncharted waters where a business can find untapped customer reserves. The simple “blue” and “red” designations help businesses decide whether they are putting themselves into the best possible situation for growth.

The core philosophy of the Blue Ocean Strategy seems self-explanatory but putting this system into play in the real world can be difficult. Orion Bailey understands that many entrepreneurs are not ready to look outside their normal ways of doing business in order to find new and exciting frontiers. Adjusting to the Blue Ocean Strategy means adopting an entirely different business mindset.

The authors of the Blue Ocean Strategy want their readers to focus less on taking pieces of the ever-shrinking existing market but rather going into the future by creating entirely new business areas. Rather than fighting for space and dividing up the economy, the Blue Ocean Strategy focuses on creating a new economy.

Blue Ocean’s Mindset Change

The Blue Ocean Strategy involves a complete alteration in the way that entrepreneurs approach new business challenges. It involves a shift to opportunity-based thinking. Business strategists need to be able to ask a new set of questions, exploring beyond the bounds of their industry and predicting new markets. Entrepreneurs who practice the Blue Ocean Strategy are prepared to let go of the misconceptions and boundaries that have delineated their actions in the past.

Making Practical Sense of the Model

The Blue Ocean Strategy may look great on paper but implementing it could be one of the biggest challenges faced by a business today. Businesses that are mired in “red oceans” are continually focused on fighting off the competition. In order to implement the Blue Ocean Strategy, the company will have to select the right team to make it happen. Forward-thinking business leaders are needed to determine how the Blue Ocean Strategy could be put into play.

Kim and Mauborgne’s second book, Blue Ocean Shift, gives a framework that businesses can adopt in order to make the strategy work in the real world. They provide a five-step process that can help businesses decide on their next move.

The first step is choosing the right team and the right place to start. As mentioned above, not everyone is open-minded enough to adopt this philosophy. The second step is laying out the “current state of play,” or examining exactly how the business works and how it makes money.

The third step goes into depth to uncover hidden pain points. Business leaders are often taught to look for pain points as opportunities for change. These hidden pain points are those that limit the size of the industry. When businesses are able to look further, they could discover an untapped “ocean” of customers.

The fourth step involves reconstructing the boundaries of the market in a systematic fashion. Business leaders then need to develop the opportunities that the Blue Ocean philosophy makes clear. Fifth, companies need to select what moves they will make and conduct market tests. Finally, the move can be put into play.

Shifting from “Settlers” to “Pioneers”

In the Blue Ocean philosophy, “settlers” are companies that are content to stay within the boundaries of their current industry. “Migrators” are willing to move toward greater-value propositions. “Pioneers” are those who are able to create new value outside their existing customer base. Being a pioneer is one of the goals of the Blue Ocean movement.

Examples of Blue Ocean Strategies

One of the best examples of Blue Ocean Strategy in action is the development of the Nintendo Wii. Rather than competing with other console gaming platforms like the Xbox and PlayStation, the Wii was targeted at non-gamers and families with small children. The company completely reimagined the game controller, making it easier for non-gamers to use.

Another great example of Blue Ocean Strategy is the transportation company Netjets. Netjets discovered a new market in fractional ownership of private jets. The company was one of the first to apply the “sharing economy” to transportation.

Making Sense of the Blue Ocean Strategy

Orion Bailey believes that all businesses would benefit from studying Blue Ocean Strategy. If businesses apply creativity to their market possibilities, they can depart the crowded “red oceans” and find entirely new markets. Studying this strategy could present a significant advantage in the business world.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes