Renee Mauborgne, Kim Chan Blue Ocean Strategy. How to find or create a market free of other players

27.09.2019

World Festival of Youth and Students Youth Festival of Students

Vienna Classical School: Amadeus Mozart A short message about Wolfgang Amadeus Mozart

Composition: Yolkov in the piece "Pomegranate Bracelet" (A

This book is about how to get out of the ocean of competition and create a new market niche for yourself. The blue ocean strategy allows us to abandon the struggle for diminishing demand in developed markets and create growing demand in new ones. This book has been translated into dozens of languages, published in millions of copies and is regularly included in the ratings of the best business publications of our time. The work of Chan Kim and Renee Mauborgne will be useful for both experienced entrepreneurs and those who are just thinking of starting their own business. With permission from SmartReading, we are publishing a summari ("condensed" version) of this publication.

SmartReading- a project of the co-founder of one of the leading Russian publishing houses of business literature "Mann, Ivanov and Ferber" Mikhail Ivanov and his partners. SmartReading publishes so-called summari - texts that summarize the key ideas of the bestselling nonfiction genre. Thus, people who, for some reason, cannot read full versions of books quickly, can get acquainted with their main ideas and theses. SmartReading uses a subscription business model in its work.

Creation of blue oceans

Former accordionist, acrobat and fire eater Guy Laliberté is today the head of Cirque du Soleil, one of Canada's largest companies and the most famous circus show in the world.

From the very beginning, Cirque du Soleil did not compete with traditional circuses. Instead, the company formed a new market free from competitors. It was aimed at a completely new group of consumers: adults who are willing to pay several times more than a ticket to a regular circus in order to see a new, unparalleled performance. The name of one of Cirque du Soleil's first projects spoke for itself: “We reinvent the circus”.

To understand what Cirque du Soleil has achieved, imagine a market universe made up of two oceans: red and blue. The scarlet oceans symbolize all the industries that exist at the moment. This is the part of the market we know. Blue oceans represent all industries that do not yet exist today. These are unknown areas of the market.

From a company and an industry to a strategic step

A strategic step is a set of actions and management decisions associated with the development of a large business proposal that will shape a new market.

For example, Compaq was acquired by Hewlett-Packard in 2001 and lost its independence. As a result, many have labeled the company as a failure. However, this did not invalidate Compaq's strategic blue-ocean strategy to shape the server industry. These strategic moves were not only part of the company's powerful return to the market in the mid-90s, but also paved the way for a new multi-billion dollar computer manufacturing market.

There are no consistently successful companies or industries. However, the strategic moves that have created blue oceans and new trajectories of strong profit growth are strikingly similar.

The authors examined more than 150 strategic steps taken from 1880 to 2000 across more than thirty industries and studied the business players involved in each of these events in an in-depth way. The industries were very diverse - hospitality, film industry, retail, air transportation, energy, IT industry, television and radio broadcasting, construction, automotive, steel industry, etc. The authors analyzed not only the winners who managed to create blue oceans, but also their less successful competitors.

The fundamental difference between the winners and the losers in creating blue oceans was in the approach to strategy. Companies stuck in the crimson ocean have followed the traditional approach of beating the competition and positioning themselves in an easy-to-defend position within the industry. But those whose aspirations were determined by the blue ocean strategy did not equal their competitors. Instead, they subordinated their actions to a different strategic logic called value innovation.

Value innovation implies that the same emphasis is placed on both value and innovation. Value without innovation, as a rule, does not allow you to stand out from the competition. Innovation without value often leads to a futile fascination with technology. All of this often turns out to be outside of what buyers are willing to accept and what they are willing to pay for.

Value innovation is a new way of thinking and executing strategy that creates a blue ocean and moves away from competition.

Let's go back to the Cirque du Soleil example. We can say that this company offers the best that there is in the circus and in the theater, and all other elements are minimized or reduced to zero. With this unprecedented offer, Cirque du Soleil has created a blue ocean and invented a new kind of live entertainment that is very different from both traditional circus and traditional theater. At the same time, by ditching many of the more expensive parts of the circus, the company was able to dramatically reduce its costs, thereby achieving both differentiation and low costs.

Scarlet Ocean Strategy	Blue ocean strategy
Struggle in the existing market space.	Creation of a new market space.
Victory over competitors.	An opportunity not to be afraid of competition.
Exploiting existing demand.	Formation and receipt of new demand.
A trade-off between value and cost.	Breaking the trade-off between value and cost.
Construction of the entire system of the company's activities, depending on the strategic choice, focused on differentiation or low costs.	Building the entire system of the company's activities in accordance with the task of simultaneously achieving differentiation and reducing costs

Cirque du Soleil has taken a strategic step by bringing its ticket prices closer to theatrical ones. Ticket prices were several times higher than those in the circus industry, but prices were attractive to adult audiences accustomed to theater ticket prices.

Strategic canvas

The strategic canvas is an analytical model central to value innovation and the creation of blue oceans.

The strategic canvas is both a diagnostic tool and blue ocean strategy building. It reflects the current state of affairs in a known market space. This allows you to understand where competitors are investing, what the characteristics of the products that are competing in the industry are, what service and delivery are, and what competing offerings customers are getting in the market.

To fundamentally change the strategic canvas of an industry, it is necessary to start by shifting the strategic focus from competitors to alternatives and from customers to non-customers in the industry. In order to simultaneously work on value and costs, it is necessary to abandon the outdated idea of equalizing with competitors in the existing field and stop making a choice between differentiation and low costs.

Development and implementation of a blue ocean strategy

The development and implementation of the approach, which is commonly referred to as the blue ocean strategy, is based on the following principles:

Design principles	Risk factor for each principle
Reconstruction of the market border	Search risk
Focus on the big picture, not the numbers	Planning risk
Going beyond existing demand	Risk of scale
Maintaining the correct strategic sequence	Business model risk
Overcoming major organizational hurdles	Organizational risk
Embedding implementation in the strategy	Management risk

1. Reconstruction of the market boundaries

The first principle of the blue ocean strategy is to reconstruct the boundaries of the market in order to break out of the world of competition and create a blue ocean.

In the course of research, it was possible to find clear patterns in the creation of blue oceans. The authors identified six main approaches to reconstructing market boundaries and called this the six paths model.

Way one: consider alternative industries

In a broad sense, companies compete not only with other companies within their own industry, but also with companies in other industries that produce alternative products and services.

What industries can be called alternative to yours? Why do customers choose between them? By focusing on the key factors that force buyers to choose between alternative industries, and discarding or diminishing all other factors, you can create a blue ocean of new market space.

Path Two: Consider the Strategic Groups of the Industry

Strategic groups are companies that operate in the same industry and have similar strategies.

Thus, Ralph Lauren created the blue ocean of "high fashion without fashion". The name of the designer, the elegant design of the shops and the sophistication of the materials are what distinguishes the company and what most clients value in the field of haute couture. And at the same time, her revamped classic look and pricing take the best that classic lines like Brook Brothers and Burberry have to offer. By combining the most compelling factors of both groups and discarding or downgrading all others, Polo Ralph Lauren not only gained a share in both segments, but also attracted many new customers to the market.

What are the strategic groups in your industry? Why do customers choose higher or lower tier groups?

Way three: look at the customer chain

In most industries, competitors have similar definitions of a target customer. In practice, however, there is a whole chain of "buyers" who are directly or indirectly involved in making purchasing decisions. Buyers paying for a product will not necessarily be its users, in some cases there is also an important category of “influencers”.

What does this chain look like in your industry? What customer groups does your industry typically target? If you were to refocus on a different group of buyers in your industry, how could you create new value?

Way four: consider complementary products and services

Very few products and services are used by themselves. In most cases, their value is influenced by other products and services.

Take cinemas, for example. The ability to invite a babysitter and find parking easily affects the perceived value of going to the movies. However, these value-added services lie outside of the traditional activities of movie theaters. Few of the theater owners care about the difficulty of finding a babysitter. But in vain, because it affects their business.

In what context is your product or service used? What happens before, during and after using it? Can you identify where the pain points are? How can they be eliminated by offering additional products or services?

The fifth way: analyze the functional and emotional attractiveness of the product for buyers

Companies competing in the same industry tend to become more and more similar to each other, not only in the range of products and services they offer, but also in which of the two possible options for the attractiveness of the product to the buyer they choose. In some industries, competition is mainly on the price and usefulness of the product; this is functional attractiveness. In other industries, competition is based on customer sentiment, and emotional attraction is involved.

Is there competition in your industry for functional or emotional attractiveness? If you compete on the basis of emotional attractiveness, what elements can you discard in order to convert it into functional attractiveness? And vice versa.

The sixth path: peering into tomorrow

All industries are influenced by external trends that over time begin to affect the business. Take the rise in popularity of the Internet or the worldwide environmental movement. If you look at these trends from the right perspective, you can see the possibilities for creating a blue ocean.

However, true insights into blue ocean strategy rarely come from simply predicting the trend itself. Rather, it is about getting to the bottom of the trends that can be observed today.

In order to form the backbone of a blue ocean strategy, these trends must be critical to your business, irreversible, and have a clear trajectory.

For example, in the late 1990s, a wave of illegal copying of music files that swept the world came to Apple's attention. With the technology available that allowed anyone to download music for free instead of paying an average of $ 19 per disc, the trend in digital music was clear. This is confirmed by the rapidly growing demand for MP3 players, with the help of which it would be possible to listen to digitized music anywhere.

Apple has capitalized on this enduring trend, which it has experienced on its own and whose focus has been transparent and sustained. In 2003, Apple created the online music store iTunes, which beat free music download providers by providing high-quality recordings and easy browsing and searching.

What trends are most likely to affect your industry? Which tendencies are irreversible, which ones have a clear perspective? How will these trends affect your industry? Can you use them to create unprecedented value for your customers?

2. Focusing on the big picture, not numbers

This principle is fundamental for reducing planning risk. Here we develop an alternative approach to the existing strategic planning process, based not on preparing documents, but on creating a strategic canvas. This approach invariably results in strategies that unleash the creativity of employees, helping the company see blue oceans.

The authors have developed a structured process for depicting and discussing the strategic canvas that pivots the company's strategy towards the blue ocean. One company that has adopted this process is a 150-year-old financial advisory group that we will call European Financial Services (EFS). The strategy she eventually created brought in an additional 30% profit in the first year. This process consists of four main steps.

Step one: visual awakening

Faced with clear evidence of obvious weaknesses in the company, EFS leaders could no longer defend their strategy, which turned out to be weak, unoriginal and poorly formulated. The attempt to build a strategic canvas pushed change more than any other verbal argument, even if supported by numbers. After this exercise, senior management developed a strong desire to seriously revisit the old strategy of the company.

Step two: visual examination

The next step is to get the team to go into the field and work so that managers can see for themselves the results of how people use their products or services.

It is not uncommon for managers to rely on reports from other people (which are often very, very far from the world for which they are reporting). A company should never outsource its own eyes. No one will be able to "personally verify" anything for you.

Step three: visual strategy fair

After two weeks of drawing and redrawing, the groups showed their results at what the authors called a visual strategy fair. The audience included the company's top executives, but the majority of the audience was from EFS's external counterparties — people the managers met while working in the field, including non-customers, rival customers, and some of EFS's most demanding customers.

By piecing together what the majority of the judges liked or disliked, the participating groups found that at least one third of the factors they considered key in the competition were virtually indifferent to customers. Another third of the factors were either poorly stated or left unnoticed during the visual awakening phase. At the same time, it became obvious that the management needed to reconsider a number of their convictions about the services provided that had existed for more than one year.

Step four: visual communication

After the future strategy is developed, the last step is to communicate it within the company in such a way as to make it understandable to all employees without exception.

EFS circulated the old and new strategic profile picture to all company employees, explaining in detail the content of the picture, explaining what should be eliminated, reduced, increased or created in order to achieve a blue ocean. Employees were seriously motivated by a clear action plan, many of them posted a strategic profile picture in their workplaces as a reminder of the company's new priorities and the gaps that need to be filled.

3. Going beyond existing demand

How can you maximize the size of the blue ocean you create? This brings us to the third principle of the blue ocean strategy: going beyond existing demand. It is a key ingredient required to achieve value innovation.

The company must challenge two traditional strategic practices. The first is focusing on existing customers. The second is the pursuit of greater segmentation in order to accommodate differences among buyers.

Consider the Gallaway Golf as an example. By introducing non-customers, the company created new demand for its offer. As the US golf industry battled to expand its existing customer base, Callaway created a blue ocean of new demand by asking why sports enthusiasts and many country club members do not play the sport of golf.

After analyzing the reasons why people avoid playing golf, the company identified one characteristic characteristic of the mass of non-customers: they all thought that hitting a golf ball with a golf club was very difficult. Due to the small size of the club head, the player needed to have excellent coordination of movements and an excellent eye, as well as to have sufficient time to master the skills of the game and be able to concentrate. As a result, beginners did not have any fun, and it took them too long to learn how to play well.

This discovery allowed Gallaway Golf to determine exactly how to create new demand for its products. The result was the Big Bertha, a big-headed golf club that made hitting the ball much easier. Big Bertha not only turned non-customers in the industry into customers, but also delighted experienced golfers and soon gained widespread popularity. It turned out that, with the exception of professionals, almost all clients were oppressed by the difficulties associated with increasing their level of play, namely, with achieving strike stability.

4. Adherence to the correct strategic sequence

So you've covered ways to discover possible blue oceans. You have developed a strategic outline that clearly articulates your future blue ocean strategy. And you've figured out how to attract as many buyers as possible.

The next challenge is to create a sustainable business model. This brings us to the fourth principle of blue ocean strategy: maintaining the correct strategic sequence.

Correct strategic sequence: value to the buyer, price, cost and implementation.

It all starts with being useful to the customer. Does your proposal contain exceptional value? Is there a compelling reason people will buy your product? Consider your plan until you can answer these questions in the affirmative.

Then move on to the second step: setting the right strategic price. Remember, a company should not rely solely on price to create demand. The main question will be this: can the price of your proposed product attract a lot of target buyers, giving them a tempting opportunity to pay for your product? If not, they won't be able to buy it.

These first two stages deal with the revenue side of the company's business model. With these, you create a leap in net value for customers, where net value to customers equals the value proposition to buyers minus the price they paid.

The third component is costs. Can you manufacture your offering while maintaining target cost levels while still generating solid profits? Can you make a profit by selling a product at a strategic price - a price that is available to the mass of target buyers? Don't let costs drive prices. Nor should utility be downgraded because high costs do not allow you to profit from strategic prices. If it is impossible to maintain the target cost level, you should either discard the idea, as the blue ocean will not bring profit, or change the business model to stay at the target cost level.

The final step is to overcome implementation hurdles. What obstacles will prevent you from putting your idea into practice? Can you overcome them directly? A blue ocean strategy is complete only when you can address implementation issues early on.

The main question is how to make sure that the whole organization, together with you, would be involved in this process.

5. Overcoming major organizational barriers

Companies need to overcome four hurdles.

The first is the internal dissonance of employees. You need to convince them of the correctness and the need to make a strategic change. While red oceans can never lead your company to profitable growth, they keep people at ease.

The second obstacle is limited resources. It is believed that the more serious the changes that the organization is making, the more extensive resources are needed to carry them out. However, in many of the organizations studied by the authors, resource use declined rather than increased.

The third obstacle is motivation. How to motivate key actors to act quickly and purposefully in order to break out of the current state of affairs?

And the last obstacle is political intrigue. As one manager put it: “It’s like this in our company: you still didn’t have time to say anything, but you have already been dealt with.”

While these barriers are complex in each case, and many companies only face a few of the four, the ability to overcome them is essential to reducing organizational risk.

6. Embedding the implementation process into the strategy

The company is not only top management and not only middle management. Only when all employees of the organization unite around the strategy and support it "in sorrow and in joy" - the company stands out from the crowd.

When it comes to blue oceans strategy, the challenge is increasing. As soon as you ask employees to leave their comfort zone and work in a different way, tension begins to build. People are wondering: what are the true reasons for the change? Is management telling the truth about future growth as a result of a strategic shift, or is it just trying to make us redundant and fire us?

Implementation needs to be built into the strategy from the start to build the faith and commitment of employees and inspire them to collaborate voluntarily.

It is a fair process that is the main variable by which one can distinguish successful strategic steps towards the blue ocean from unsuccessful ones. Depending on the presence or absence of fair process, the best efforts of a company can lead to success or complete failure.

Fair process is the practice of procedural fairness theory by managers. As in the legal arena, fair process builds implementation into strategy by engaging employees from the outset. When fair process is at work early in the strategy creation phase, people believe in fair play, and this inspires them to collaborate and volunteer to implement solutions.

Loyalty, trust and voluntary cooperation are not just attitudes or behaviors. It is intangible capital. When there is trust, people are more confident in each other's intentions or actions. If there is loyalty, they are even willing to sacrifice personal interests for the sake of the interests of the company.

Conclusion.
Sustainability and Blue Ocean Strategy Update

The creation of blue oceans is not a one-time achievement, but a dynamic process. Having created a blue ocean, the company is faced with the fact that sooner or later imitators appear on the horizon.

The question is: how soon (or not soon) will they appear? In other words, how easy or difficult is it to imitate the blue ocean strategy? As the company and its early imitators succeed and expand the blue ocean, more and more companies are breaking into it.

This raises a second question related to the first: When should a company create the next blue ocean? To avoid falling into the trap of competition, you need to keep an eye on the value curves on the strategy canvas. Once your value curve begins to merge with the curve of your competitors, you can determine it's time to move to another blue ocean.

Current page: 1 (total of the book has 16 pages) [available passage for reading: 9 pages]

Blue ocean strategy

How to Create Uncontested Market Space and Make the Competition Irrelevant

W. Chan Kim Renee Mauborgne

HARVARD BUSINESS SCHOOL PRESS BOSTON, MASSACHUSETTS

How to create a free market niche and stop being afraid of competitors

W. Chan Kim Renee Mauborn

Wu Chan Kim, Renee Mauborgne. Blue ocean strategy.

Per. from English M .: Н1РРО. 2005-272 p.

ISBN 5-98293-077-6 (Russian)

ISBN 1-59139-019-0 (English)

This book is written to encourage companies to break out of the crimson ocean of competition by creating an unoccupied market niche where competitors need not be afraid. The blue ocean strategy proposes to refuse to share existing - and often diminishing - demand with others, while looking back at competitors, and instead devote ourselves to creating growing demand and avoiding competition.

The book not only encourages companies to take this step, but also explains what needs to be done for this.

This book, Blue Ocean Strategy, is published in accordance with an agreement with the Harvard Wimpesh School Press.

Publishing house "HIPPO"

www.hippopublishing.com

Phone in Moscow: 775-08-02

Email:

[email protected]

Translation - I. Yushchenko

Scientific edition - M. Drum, I. Galunina, K. Shinkov

Computer layout - L. Kalmykova

Printed at JSC "Typography -News"

105005. Moscow, st. Friedrich Engels, 46

Order No. 1872.

Circulation 3000 copies.

To friends and family who fill our worlds with meaning

Part One: Blue Ocean Strategy

Chapter 1 Making Blue Oceans 3

Chapter 2 Analytical Tools and Models 23

Part Two: Building a Blue Ocean Strategy

Chapter 3 Reconstruction of Market Boundaries 47

Chapter 4 Focusing on the Big Picture, Not the Numbers 83

Chapter 5 Going Beyond Existing Demand 105

Chapter 6 Maintaining the Right Strategic Sequence 121

Part three; The embodiment of the blue ocean strategy

Chapter 7 Overcoming Major Organizational Barriers 153

Chapter 8 Embedding the Implementation Process in the Strategy 179

Chapter 9 Conclusion: Sustainability and Renewal of the Blue Ocean Strategy 195

Appendix A 201

Appendix B 219

Appendix C 223

Notes 227

Bibliography 235

Preface to the Russian edition

We are very pleased that the "Blue Ocean Strategy" has been translated into Russian and the ideas outlined in this book have become available to the Russian-speaking audience. Once we had a chance to visit Russia. This happened in the late 1980s, when we arrived in Leningrad, as present-day St. Petersburg was still called in those years. We were surprised by the entrepreneurial spirit of those with whom we happened to meet then, the energy inherent in Russians and the desire to create new economic opportunities.

The question is as follows. How can those who do business in Russia today devote all their energy and intellect to break out of the competition and create “blue oceans” of such a market space in which there is no place for competition? How can Russian business create products and services that ensure rapid profitable growth for companies and are available to a mass buyer not only in Russia, but also in other countries of the world?

With global competition increasingly fierce and trade barriers crumbling, finding answers to these questions is more important than ever. The book "Blue Ocean Strategy" presents not only the concept itself, but also provides analytical tools and melodies that every Russian company can apply in any field of activity - from the production of industrial products, the creation of consumer goods, the provision of services, retail trade, restaurant services and up to circus performances - in order to solve this most difficult problem. Thanks to our research over the past fifteen years, we have succeeded in defining clear strategic models for creating blue oceans, allowing us to break out of the vicious circle of competitive wars.

We invite you to read this book and put its ideas and concepts into practice, in your company, in your enterprise. Blue oceans of opportunity lie around us. There is no need to compete when you can turn your energy into the work of creation. Use the Blue Ocean Strategy to pave the way for new, profitable markets where everyone benefits - companies, consumers and society at large. We hope this book will help build a thriving Russian economy.

Foreword

This book is about friendship, devotion and faith in each other. It was through friendship and faith that we embarked on a journey, researching the ideas in this book, and then writing the book itself.

Our acquaintance took place twenty years ago in the classroom - one of us was then a professor, and the other was a student. And since then we have been working together, inspiring and supporting each other. This book is not a victory for an idea, but for friendship, which means more to us than any idea from the world of business. Thanks to friendship, our lives have become richer and our worlds more beautiful. None of us were alone.

There is no easy travel; there is no friendship filled with laughter. However, we greeted every day of our path with joy, for we strove for knowledge and perfection. We believed passionately in the ideas presented in the book. These ideas are not for those who only dream of surviving. We have never been interested in survival. If your thoughts are limited only by him, do not read further. However, if you want to take a different path, start a company and use it to build a future in which customers, employees, shareholders and society all benefit, read on.

We do not promise you that IT will be easy, but this path deserves attention.

Our research has confirmed that there are no companies that have made it through without failure, and there is no everlastingly successful industry. We've learned from experience that people, like corporations, sometimes act smart and sometimes not. To be more successful, we need to understand exactly how we managed to get a positive result, and figure out how we can systematically reproduce it. This is what we call smart strategic moves, and we have established that the strategic step towards creating blue oceans is paramount.

The blue ocean strategy aims to induce companies to break out of the red ocean of competition by creating a niche market for themselves where they can be free from competitors. The blue ocean strategy proposes to refuse to share existing and often diminishing demand with others, while constantly looking back at competitors, and instead devote ourselves to creating new, growing demand and avoiding competition. The book not only encourages companies to take this step, but also explains what needs to be done for this. We first bring to your attention a set of analytical tools and perspectives that show you systematic actions to take along the proposed path, and then consider the principles that define the blue ocean strategy and distinguish it from strategic approaches based on competition.

Our goal is to formulate and implement a blue ocean strategy, making it as systematic and effective as competition in the red waters of the market we already know is systematic and effective. Only then will companies be able to intelligently and responsibly approach the creation of blue oceans, maximizing their opportunities and minimizing risk. No company - regardless of size or age - can afford to turn into a river steamer cheating player. It cannot - and should not.

The ideas, models and tools presented in the book have been tested and refined in practice and in various corporations in Europe, the United States and Asia for many years. The book builds on this work and develops it further in a narrative that brings all of these ideas together into a single structure. This structure covers not only the analytical aspects that underlie the blue ocean strategy, but also no less important points related to people, how to send the organization and its employees along this path, how to generate in them the desire to translate these ideas into reality. We emphasize the importance of understanding how to build trust and loyalty, as well as intellectual and emotional recognition. Moreover, this understanding lies at the heart of the strategy itself.

The possibilities of blue oceans have always been close - just reach out. As they were discovered, the market universe expanded. We believe that this expansion is the key to growth. However, both in theory and in practice, people sometimes do not understand how blue oceans can be systematically created and taken over. We invite you to read this book and find out how you yourself can be the driving force behind the expansion of the market space.

A lot of people have helped us in the creation of this book. INSEAD has provided us with a unique research environment. INSEAD's inherent intersection of theory and practice has benefited us a lot, as has a truly international team of professors, students and senior management training there. Deans Antonio Borges, Gabriel Hawavi and Ludo Van der Heyden have provided us with moral and practical support from the outset and allowed us to closely interweave research and teaching. PncewaterhouseCoopers (PwC) and Boston Consulting Group (BCG) provided financial support to our research; Frank Brown and Richard Byrd of PwC, as well as Rene Abath, John Clarkson, George Stock and Oliver Tardy of BCG have become particularly valuable partners to us.

Over the years, we have been assisted by a group of talented researchers, among whom our dedicated colleagues Jason Hunter and JM, who have worked side by side with us for the past few years, deserve special mention. Their dedication, continued research support, and commitment to excellence have been absolutely indispensable in the writing of this book. We are happy that fate brought us together.

Our colleagues at INSEAD have also contributed to the ideas presented in this book. The teachers of the school, especially Subrama-pian Rangai and Ludo Vam der Heiden, helped us in thinking about our ideas, made valuable comments and provided all kinds of support. Many INSEAD faculty members brought up the ideas and tools outlined here for discussion to their students - future business leaders and business masters - and gave us chain feedback that made us think more clearly. Many others gave us intellectual support and nourished us with benevolent energy. Here we would like to thank, among others, Ron Adner, Jean-Louis Barça, Vienna Bensau, Airy-Claude de Costigny, Mike Brimm, Lawrence Capron, Marco Chekaiolli, Karel Kula, Arpode Meillet, Ingmar Dirix, Rareth Diaz, George Nol Epeia. Charlie Galunncha, Annabelle Gower, Havs Jimepo, Dominic Eo, Neil Jones. Philippe Lasserre, Jean-Francois Mapzoni, Pence Meyer, Claude Michaud, Deegan Morris, Kaya Nguyen-Haya, Subramania na Rangana, Jonathan Storey. Heinz Tanhanser, Ludo Bai der Heyden, David Yamka, Peter Zemsky and Min Zen.

We were fortunate enough to interact with a large number of practitioners and analysts from around the world. They were very helpful in illustrating how the ideas in this book work in real life, and in preparing case studies for our research. Among these people, Marc Beauvois-Coladon deserves a special mention, who has worked with us from the very beginning. Through his experience in implementing our ideas in various companies, he made a significant contribution to the writing of the fourth chapter. Among others, we would like to thank Francis Guillard and his colleagues; Gavin Fraser and colleagues; Wayne Mortsisen; Brian Marks; Kenneth Lo; Yasushi Shnin; Jonathan Lyandri and colleagues; Jupana Jiaiga; Ralph Trombett and his colleagues, Gabor Nart and his colleagues; Shangarama Venkatesh; Miki Kawawa and colleagues: Atula Sinha and colleagues; Arnold Itzhak and his colleagues; Volcker Westermann and his colleagues; Matty Williamson; as well as Caroline Edward and her colleagues. In addition, we appreciate the collaboration with Accenture, which began with Mark Spelman. Omar Abbosh, Jim Sayles and their team. Thanks also to Lucent Technologies for their support.

During our research, WE met with corporate and government officials from all over the world who generously donated their time and knowledge to help shape the ideas in this book. We are grateful to all of them. Among the many private and public initiatives to put our ideas into practice, the largest sources of inspiration and knowledge were the Value Innovation Program (VIP) Center at Samsung Electronics and the Value Innovation Action Tank (VIAT) in Singapore. I would like to especially mention Josh-Yoig Yoon of Samsung Electronics and all the Permanent Secretaries of the Government of Singapore as great partners. We also extend our warmest thanks to the members of the Value Innovation Network (VIN), a global community that promotes the concept of Value Innovation in practice - especially all those we could not mention here.

Finally, we would like to thank Melinda Merino, our publisher, for the wise comments and editorial judgment, and all of the Harvard Business School Publishing staff for their dedication and genuine enthusiasm for their support. Thanks to our current and past editors at Harvard Business Review especially David Champion, Tom Stewart, Nap Stone, and Joan Magretta. We are deeply grateful to the Masters of Business and Doctorates, as well as executives trained at INSEAD. Particularly patient were the Strategy Innovation Study Group and Value Innovation Study Croup (VISG) troupes as we tested the ideas outlined in this book. Their challenging questions and meaningful feedback helped us refine and refine our ideas.

PART ONE

Creation of blue oceans

Former accordionist, acrobat and fire eater Guy Laliberté is today the head of Cirque du Soleil, one of Canada's largest cultural exporting companies. Founded in 1984 by a group of street actors, the company has already introduced its productions to nearly forty million people in ninety cities around the world. In less than twenty years of its existence, Cirque du Soleil has begun to generate profits that Ringling Bros and Barnum & Bailey, world champions of the circus industry, managed to achieve only more than a hundred years after their inception.

This rapid growth is also notable in that it did not occur in an attractive, but in a fading industry, where traditional strategic analysis indicated limited growth opportunities. Supplier power, represented by performer stars, was as strong as consumer power. Alternative forms of entertainment - from a variety of urban shows and sporting events to home entertainment - have increasingly led the circus industry into the shadows. The children were begging their parents for money for game consoles, and not for a ticket to a traveling circus performance. Partly as a result of this, the circus industry was constantly losing customers and, as a result, revenue and income fell. In addition, animal rights groups have increasingly opposed the participation of animals in circus performances. Ringling Bros. and Barnum & Bailey set the tone, and competing small circuses imitated them, creating their own lower-class versions. In general, from the point of view of a competitive strategy, the circus industry looked unattractive.

Another good thing about Cirque du Soleil's success was that it didn't win out by enticing customers from the fading circus industry, historically focused on children. Cirque du Soleil did not compete with Ringling Bros, and Barnum & Bailey. Instead, the company created a new, unoccupied area of the market, free of competitors. It was aimed at a completely new group of consumers: adults and corporate clients who were willing to pay several times more than a ticket to a regular circus in order to see a new, unparalleled performance. The name of one of Cirque du Soleil's first projects spoke for itself: “We reinvent the circus”.

New market space

Cirque du Soleil succeeded because it realized that in order to win in the future, companies must stop competing with each other. The only way to beat the competition is to stop trying to win.

In the red oceans, the boundaries of the industry are defined and agreed upon, and the rules of the game of competition are known to everyone 1. Here, companies are trying to outperform their rivals in order to capture most of the existing demand. As the market gets tighter, the opportunities for growth and profitability diminish. Products turn into consumer goods, and ruthless competitors cut each other's throats, filling the red ocean with blood.

Blue oceans, on the other hand, represent pristine marketplaces, require creativity, and offer the opportunity to grow and generate high profits.Although some blue oceans are created beyond the established boundaries of the industry, most of them still arise within the red oceans, pushing the existing industry boundaries - as Cirque du Soleil did. In blue oceans, competition is not a threat to anyone, as the rules of the game have yet to be established.

In the red oceans, the most important thing is always the ability to swim, outrunning your competitors. The scarlet oceans will never lose their significance and will remain a fact of business life. However, when supply begins to outstrip demand in a wide variety of industries, fighting for market share, while necessary, is no longer enough to sustain sustainable growth 2. Companies need to go beyond competition. To receive new profits and opportunities for further development, they need to create blue oceans.

Alas, maps of blue oceans are practically non-existent. All strategic approaches of the last twenty-five years have been focused primarily on competition in the scarlet oceans. As a result, we are pretty good at dealing with competitors in red waters, from analyzing the underlying economic structure of an industry, choosing a strategic position - low cost, differentiation or focus - all the way to competitive benchmarking. The Blue Oceans Debate Continues 4. However, there are very few practical guidelines for creating such oceans. Without the appropriate analytical tools and developed principles for effective risk management, creating blue oceans remains something of a dream and seems to managers an overly risky strategy. This book offers you just such practical charts and analytical tools for the systematic search for blue oceans and their conquest.

Blue oceans have always been created

Although the term "Blue oceans" fairly new, the oceans themselves cannot be said to be. They are an integral part of the business world, past and present. Look at the world a century ago and ask yourself; how many of the current industries were then unknown to anyone? The answer is that fundamental industries such as automotive, recording, aviation, oil refining, healthcare and management consulting were never heard of, at best, these areas were just beginning to emerge. Now let's move the arrow back just thirty years. Again, there are a myriad of multi-billion dollar industries to list such as investment funds, cell phones, gas-fired power plants, biotechnology, discount retail, courier mail, minivans, snowboards, coffee bars, and home video recorders - far from it. all. Just three decades ago, none of these industries really existed.

Now let's move the clock twenty - or fifty years ahead and ask ourselves how many industries unknown today will appear then. If, based on historical experience, it is possible to predict the future, the answer is unambiguous - there will be a lot of them.

The truth is, industries never stand still. They are constantly evolving. Their work improves, markets grow, and players come and go. From the lessons of history, it becomes clear that we have a seriously underestimated opportunity to create new industries and recreate existing ones. Even the Standard Industrial Classification (SIC) system proposed by the U.S. Census, in 1997 gave way to the North America Industry Classification Standard (NAICS). Under the new system, ten industry sectors proposed by SIC have been transformed into twenty to reflect 5 new emerging industries. For example, the service sector that existed in the old system has now been transformed into seven business sectors, from information to health care, and the welfare sector has also emerged 6. When you consider that these systems are created to standardize and maintain continuity, such changes indicate how significant the expansion of blue oceans has been.

However, until now, the main emphasis in strategic thinking has been on the competitive strategies of the red oceans. This is partly due to the fact that corporate strategy is highly influenced by its progenitor, the military strategy. The very language of strategy is heavily saturated with military terms: Chief Executive Officers are at the Headquarters, and Troops are at the Front Line. The strategy described in such terms is aimed at a clash with the enemy and at the battle for a limited piece of land of a strictly defined size 7. However, in contrast to war, the history of industry shows that the market universe has never been strictly limited; on the contrary, blue oceans were constantly being created in it. Thus, focusing on the red ocean meant accepting the basic factors of war (limited space and the need to defeat the enemy in order to survive) and deny the obvious advantage of the business world: the ability to create a unique market space where there will be no competitors.

Impact of blue oceans

In a study of the business ventures of 108 organizations, we attempted to quantify the impact of blue oceans on profits and earnings (see Figure 1-1). It turned out that 86 percent of the beginnings were linear expansion, that is, they implied gradual improvements within the red oceans of the existing market space. They accounted for only 62 percent of total income and 39 percent of total income. The remaining 14 percent of the initiatives were aimed at creating blue oceans. They generated 38 and 61 percent, respectively. Given that business endeavors included all the investments made in the creation of red and blue oceans (regardless of the amount of income and profits they brought, including completely unsuccessful projects), then the benefits of creating a blue ocean are obvious. Although we do not have data on the success rates of initiatives in the red and blue oceans, the above global differences in their effectiveness speak for themselves.

The growing need for blue oceans

There are several driving forces behind the growing need to create blue oceans. Advances in technology have significantly increased productivity and enabled suppliers to produce unprecedented volumes of products and services. As a result, it turns out that in various industries supply more and more often exceeds demand 8. The situation is aggravated by globalization trends. As borders between countries and regions blur and information on products and prices spreads instantly around the world, niche markets and monopoly areas continue to disappear 9. Supply is growing under the influence of global competition, but there is no evidence of an increase in demand around the world, statistics even indicate a decrease in the number of participants in many developed markets 10.

The result was an ever-increasing transformation of goods and services into consumer goods, an intensification of price wars and a decline in profits. Recent studies of major US brands within the same industry have confirmed this trend 11. According to research, brands in the main categories of goods and services are becoming more and more similar to each other, and as their similarity grows, people increasingly make their choice based on price 12. Unlike in the past, the consumer no longer intends to wash exclusively with Tide. And he will not cling to Colgate if the sale of Cross is announced at discounted prices - and vice versa. In overcrowded areas, brands are becoming increasingly difficult to distinguish in both boom and bust conditions.

All of this means that the business environment that gave birth to much of the strategic and managerial approach in the twentieth century is gradually disappearing. There is more and more blood in the crimson oceans, and managers should pay more attention to blue oceans than those to which the whole host of current managers are so accustomed.

From a company and an industry to a strategic step

How can a company break out of the crimson ocean of fierce competition? How can she create a blue ocean? Is there a systematic approach that can ensure the company achieves this goal and thereby maintain high performance?

When we started looking for answers, our first step was to define a basic unit of analysis for our research. To understand this, where high efficiency comes from, the business literature usually uses the company as the main unit of analysis. People continue to admire how companies achieve significant growth and profitability with a sophisticated set of strategic, operational and organizational characteristics. However, we asked a different question: are there “exceptional” or “visionary” long-lived companies that constantly outplay the market and creating blue oceans over and over again?

Take books for example In Search of Excellence and "Built to Last" (Bwh To Last) 13 . Best-seller "In search of excellence" was published twenty years ago. However, two years after its publication, some of the companies researched by the author - Atari, Cheseborough Pond 's, Data General, Fluor, National Semiconductor - have sunk into oblivion. As stated in "The Art of Management at the Turn of the Century" (Managingon the Edge), Two-thirds of the exemplary companies listed in the book have lost their industry leadership within five years of the publication of this work.

Book "Built to Last" continued the same theme. In it, the author sought to identify the “successful habits of companies with vision,” with a long history of high performance. However, in order to avoid mistakes made in the book "In Search of Excellence", the study period in the book "Built to Last" was expanded to the size of the company's life cycle and only companies that had already existed for at least forty years were subjected to analysis "Built to Last" also became a bestseller.

Once again, however, close examination revealed some of the flaws of the visionary companies discussed in the book. As shown in the recently published work “ Creative destruction "(Creative Desiiuction), no small part of the successes that the author “Built forever ”attribute to exemplary companies were more the result of an entire industry than the fruits of the labors of the companies themselves 15. For example, Hewlett-Packard (HP) met the criteria in the book "Built to Last" because for a long time it was ahead of the whole market. In practice, at the same time as HP, the entire PC component industry was at the forefront of the market. What's more, HP didn't even outperform all of its competitors in the industry. Pay attention to this and other examples, the authors of the book " Creative destruction " asked the question: were there any “visionary” companies that had been ahead of the entire market for a long time? Besides, all we had the opportunity to observe the stagnation or decline in the activities of Japanese companies, which, just in time for their heyday, in the late 1970s and early 1980s, enjoyed the fame of “revolutionary” strategists.

If there are no eternally high-performing companies, and if the same company both achieves unprecedented success, then falls into decline, it turns out that the company cannot be considered a suitable unit of analysis when exploring the sources of high performance and blue oceans.

As stated above, history also shows that industries have never stopped emerging and expanding, and that industry conditions and boundaries are not constant, they are set by individual actors. Companies do not need to clash their heads in the space of a particular industry, Cirque du Soleil has created a new market space in the entertainment sector and has achieved strong profit growth as a result. It turns out that neither the company nor the industry can be considered the optimal unit for analyzing the sources of profitable "growth.

Renee Mauborgne, Kim Chan

Blue ocean strategy. How to find or create a market free of other players

W. Chan Kim, Renee Mauborgne

Blue ocean strategy

How to Create Uncontested Market Space and Make the Competition Irrelevant

Reprinted with permission from Harvard Business Review Press and Alexander Korzhenevsky Literary Agency

Legal support of the publishing house is provided by the law firm "Vegas-Lex"

This book is well complemented by:

Finding a business model

How to save a startup by changing plans on time

John Mullins and Randy Komisar

Second space

The art of management and strategies for the future

Jeffrey Moore

Impulse effect

How to survive in the "blue ocean"

Jean-Claude Lareche

Friends and family who give meaning to our worlds

Preface to the Russian edition

We are very pleased that the "Blue Ocean Strategy" has been translated into Russian and the ideas presented in this book have become available to the Russian-speaking audience. Once we had a chance to visit Russia. This happened in the late 1980s, when we arrived in Leningrad, as present-day St. Petersburg was still called in those years. We were surprised by the entrepreneurial spirit of those with whom we happened to meet then, the energy inherent in Russians and the desire to create new economic opportunities.

The question is this: how can those who do business in Russia today channel all their energy and intelligence to break out of the competition and create blue oceans of such a market space in which there is no place for competition? How can Russian business create products and services that provide companies with fast profitable growth and are available to mass buyers not only in Russia, but also in other countries of the world?

With global competition increasingly fierce and trade barriers crumbling, finding answers to these questions is more important than ever. The book "Blue Ocean Strategy" not only presents the concept itself, but also provides analytical tools and techniques that every Russian company can apply in any industry - from the production of industrial products, the creation of consumer goods, the provision of services, retail, catering and to circus performances - in order to solve this most difficult problem. Through our research over the past fifteen years, we have identified clear strategic models for creating blue oceans to break the vicious circle of competitive wars.

We invite you to read this book and put its ideas and concepts into practice: in your company, in your enterprise. Blue oceans of opportunity lie around us. There is no need to compete when you can turn your energy into the work of creation.

Use the Blue Ocean Strategy to pave the way for new, profitable markets where everyone benefits - companies, consumers and society at large. We hope this book will help build a thriving Russian economy.

Foreword

We do not promise you that it will be easy, but this path deserves attention.

Our research has confirmed that there are no companies that fail, and there is no eternally successful industry. We've learned from experience that people, like corporations, sometimes act smart and sometimes not. To be more successful, we need to understand exactly how we managed to get a positive result, and figure out how we can systematically reproduce it. This is what we call smart strategic moves, and we have established that the strategic step towards creating blue oceans is paramount. Blue ocean strategy aims to induce companies to break out of the scarlet ocean of competition by creating a market niche for themselves where you can not be afraid of competitors. The blue ocean strategy proposes not to share existing - and often diminishing - demand with others, while constantly looking back at the competition. Instead, she proposes to devote herself to creating new, growing demand and avoiding competition. The book not only encourages companies to take this step, but also explains what needs to be done for this. We first give you a set of analytical tools and perspectives that show you systematic actions to take along the proposed path, and then we look at the principles that define the blue ocean strategy and distinguish it from strategic approaches that are based on competition.

Our goal is to formulate and implement a blue ocean strategy, making it as systematic and effective as competition in the red waters of the market we already know is systematic and effective. Only then will companies be able to intelligently and responsibly approach the creation of blue oceans, maximizing their opportunities and minimizing risk. No company - regardless of size or age - can afford to become a river steamer cheating player. It cannot and should not.

This book is the culmination of fifteen years of research and data exploration over the past 100+ years. It was preceded by a series of articles published in the Harvard Business Review and academic publications on various aspects of the topic. The ideas, models and tools presented in the book have been tested and refined in practice for many years in various corporations in Europe, the United States and Asia. The book builds on this work and develops it by integrating all these ideas into a common structure. It covers not only the analytical aspects that underlie the blue ocean strategy, but also the equally important points related to people, how to send the organization and its employees down this path, how to generate in them the desire to translate these ideas into reality. Emphasize the importance of understanding how to build trust and loyalty, as well as intellectual and emotional recognition. Moreover, this understanding lies at the heart of the strategy itself.

About marketing in general "url =" http://marketnotes.ru/about_marketing/blue-ocean/ ">

The idea of a blue ocean is not new at all and has been touched upon in one form or another by many marketing professionals. But it is precisely this name that has become entrenched in the minds, instead of "new niches", "free cells", "unoccupied segments". And it sounds, you see, much better. So what is a blue ocean strategy? This issue is discussed in detail in the book of Chan Kim and Renee Mauborn in the book of the same name.
The authors regard all markets as scarlet, i.e. highly competitive (associated with bloody battles in highly competitive markets) and blue, i.e. free, deep, where there is no one but you.

What is the idea of a blue ocean, and what are you the smartest? It is clear that anyone wants to find such an ocean. Why do some find it while others get more and more bogged down in competitive wars? The fact is that you need to move away from the usual views, and assess the situation as a whole, from the outside.

Well, for example, in the book I really liked the example with wines. Wine, as you know, is a noble drink and a very small number of people can truly appreciate it. When evaluating a wine, they look at the year, grape variety, aftertaste, aroma and much more. And if you consider that there are also many varieties of each type ... in general, it is easier to take beer.

One company decided to do just that - they made just a few types of simple wine, in simple bright bottles. Now the buyer did not have to walk long between the rows, from one variety and producer to another. They took one of two types (sweet or dry) and went to the checkout.

Creating a new blue ocean requires a clear understanding of the consumer value scale and where each competitor is. To better understand this situation, consider a hypothetical example.
Let's say we have a task to find a blue ocean in the market of printing services in our city. First of all, the key customer values should be highlighted:

order processing speed;
print quality;
information about the status of the order;
transparency of settlements;
- price;
work with the customer;
layout approval process;
quality assurance.

Let's say there are several competitors in the market (often similar competitors with the same strategy can be combined into one group).

Each of the characteristics can be divided into scales (high / medium / low), and competitors can be displayed on this graph. It will turn out something like this:

Those. for each of the competitors, we set points for these parameters and look at the free niches. As you can see, at the moment in this market, no one is engaged in urgent low-cost orders. At the same time, the calculations are not transparent, and customers do not know about the status of the order until it is fully ready. This may be our blue ocean. The main thing is not only to declare these values, but also to convey them to our clients and actually fulfill them.

As you can see from the example, there is nothing complicated about it. The main thing is a competently drawn up map of competitors and a real assessment of your values in the eyes of customers. When in doubt or guesswork, do additional research. Just don't ask closed questions. Let your client talk. They will surely tell you where to look.

Another option is to look at adjacent areas: what can you borrow from there? Or perhaps how to apply their advances to your market (wine as beer).

Of course, one should calculate everything, and not rush into every vacant niche (for example, the niche of low-quality and very expensive goods is probably free. But is there a demand for such goods?). In other words, the blue ocean strategy shows you the possibilities. And already their implementation is completely on your shoulders.

I hope this article will help you decide on your strategy, and it will help you find your blue ocean.

Sep 26, 2017

Blue ocean strategy. How to find or create a market free of other players Renee Mauborgne, Kim Chan

(No ratings yet)

Title: Blue Ocean Strategy. How to find or create a market free of other players
By Renee Mauborgne, Kim Chan
Year: 2005
Genre: Job search, career, Marketing, PR, advertising, Foreign business literature

About the book “Blue Ocean Strategy. How to find or create a market free from other players "Rene Mauborgne, Kim Chan

“Blue Ocean Strategy. Finding or Creating a Market Free of Other Players by Rene Mauborgne and Kim Chan is a popular book on the rules of business. It offers a unique model for creating and developing startups.

Written in simple, living language, this book has been translated into 40 languages and has a circulation of over 2 million. Moreover, it was twice in the top ten business books of the decade. In the several years since its publication, this work has not left the Top 10 best business publications on Amazon.com.

The Blue Ocean Strategy ... is not just a manual for doing business. This is a kind of philosophy that offers a completely different approach to the process of doing business.

Today, many works say that in order to create a successful project, it is necessary to go beyond the market. However, only the Blue Ocean Strategy explains how to make this breakthrough.

So, the book “Blue Ocean Strategy. How to find or create a market free of other players ”by authors Rene Mauborgne and Kim Chan is actually divided into two parts. The first acquaints the reader with the very concepts of "blue" and "scarlet" oceans. The authors believe that modern business is built in the "scarlet ocean", that is, in an environment full of competition. Here each new participant tries to "bleed" a competitor colleague.

While the "blue ocean" is a place where there is no competition. In fact, every entrepreneur who does not want to compete with competitors must open his own "blue ocean". In addition, this half of the work will tell you how to create your own unique strategy, which will lead to success in the future.

The second part of the book will discuss how you can avoid failure. The fact is that quite often mediocre execution of tasks leads to serious problems. This half of the book is about effective human resource management.

The book “Blue Ocean Strategy. How to find or create a market free of other players ”from Rene Mauborgne and Kim Chan are distinguished from similar ones by several important points: a living language, systematization of the experience of various companies that are dissimilar to each other, creative motivation for entrepreneurs, the commercial side of the issue is detailed.

On our site about books site you can download for free or read the online book "Blue Ocean Strategy. How to find or create a market free from other players ”Rene Mauborn, Kim Chan in epub, fb2, txt, rtf, pdf formats for iPad, iPhone, Android and Kindle. The book will give you a lot of pleasant moments and real pleasure from reading. You can buy the full version from our partner. Also, here you will find the latest news from the literary world, find out the biography of your favorite authors. For novice writers, there is a separate section with useful tips and advice, interesting articles, thanks to which you yourself can try your hand at literary skill.

Quotes from the book Blue Ocean Strategy. How to find or create a market free from other players "Rene Mauborgne, Kim Chan

A company should never outsource its own eyes.

The key to defeating opponents, or demons, is to know all the possible directions of attack and be able to build counterarguments, backed up by irrefutable data and logic.

Louis Pasteur "Fate bestows only prepared minds"

However, with an emphasis on early adopters, senior management should be aware that colonists, despite their low growth potential, are often the main cash flow generators for a company today. Pioneers, on the other hand, have the highest growth potential, but in the early stages of growth and expansion, they require a significant investment of cash.

Renee Mauborgne, Kim Chan Blue Ocean Strategy. How to find or create a market free of other players

Read also

About the book “Blue Ocean Strategy. How to find or create a market free from other players "Rene Mauborgne, Kim Chan

Quotes from the book Blue Ocean Strategy. How to find or create a market free from other players "Rene Mauborgne, Kim Chan