Book Review - Blue Ocean Strategy

W. Chan Kim and Renee Mauborgne (Cambridge, Mass.: Harvard Business School Press, 2004) : Reviewed by R. Lemuel Lasher

This is one small book that packs one big punch. At a mere 216 pages, including appendices, it’s a delightful and satisfying read. Here’s why.

W. Chan Kim and Renée Mauborgne have made a real contribution to advancing the thinking on business strategy, and they have done so with clear prose and an engaging style. They offer a set of practical frameworks and models that enables one to quickly grasp what appear to be intuitively obvious points, but are in reality profound insights and breakthrough contributions to business strategy literature.

By choosing as the title of their book a colorful metaphor not normally associated with strategy, the authors have given us a simple and memorable way of distinguishing their approach from more traditional ones.

A Blue Ocean is a market space that is created by identifying an unserved set of customers, then delivering to them a compelling new value proposition.

The first chapter, “Creating Blue Oceans,” introduces their thinking in a manner that is engaging and compelling. Their language of “creating” strategy, rather than the more traditional approaches to strategy development, sets the tone for the entire book. This is not just about strategy analysis and formulation; it is about using solid empirical data, rigorous analysis, and a strong dose of imagination.

According to the authors, a Blue Ocean is a market space that is created by identifying an unserved set of customers, then delivering to them a compelling new value proposition. This is done by reconfiguring what is on offer to better balance customer needs with the economic costs of doing so. This is as opposed to a Red Ocean, where the market is well defined and heavily populated by the competition. All parties in these markets are engaged in an intense competitive struggle for the same customers, with different and incremental yet easily comparable, value propositions.

The Blue Ocean is the unserved, unstructured demand that is all around us, if we could only see it. The Blue Ocean strategy is all about avoiding head-to-head competition. Because established markets in the developed world are saturated, head-to-head competition cannot bring attractive returns.