What was the impetus for you two to write Blue Ocean Strategy?
W. Chan Kim: As we look back at the last 100 years of business history, companies from diverse industries have repeatedly broken away from the competition to create new market space with tremendous growth and profit opportunities. Yet, no theory existed to explain such strategic moves or to provide a systematic approach to reproduce such successes. Innovation was often viewed as a “black box,” a result of entrepreneurial instinct, or the chance result of numerous trial and error experiments. The result: Strategy research over the last 25 years focused not on how to create these blue oceans of new market space, but rather on how to out-compete rivals in existing industries. Under this view of strategy, industry structure is seen as given and the best a company can do is to maximize its share of existing demand.
Blue Ocean Strategy was born out of the question, “Is there a pattern to the creation and capturing of uncontested market space? And if so what is it?” To answer these questions we studied more than 150 strategic moves spanning more than thirty industries over some fifteen years. Our research revealed that there are indeed common patterns behind the creation and capturing of blue oceans. Blue Ocean Strategy is the articulation of the theory, tools, and frameworks behind those patterns. It offers a systematic way to open up new market space that companies, organizations, and governments can all apply.
Why do you think the book was so successful and resonated with the business world?
Renée Mauborgne: Our book answered the research questions we had studied for decades–Is there any common pattern behind how to break away from the competition and create new demand and strong profitable growth? And what is the methodology for systematically pursuing blue oceans of uncontested market space? We believe these are also the questions that every company needs to ask as they try to survive the intense competition of the real business world. These questions have become more acute than ever in recent years. Developments such as globalization of production and exchange of goods, world-wide flow of information and capital, as well as accelerated technological advancement have improved industrial productivity, permitting suppliers to produce an unprecedented array of products and services while removing niche markets and monopoly havens, making competition in the global market increasingly intense. At the same time, there is little evidence of any increase in demand in developed markets. In more and more industries, supply is outstripping demand, resulting in hastened commoditization of products and services, intensified price wars, and shrinking profit margins. It is more imperative than ever for companies to move from red oceans of bloody competition to blue oceans of profitable growth. This, we believe, underlies the success of this book and its popularity among the business communities.
In the years since the book’s release, do you feel more companies are using a blue ocean approach?
Kim: In fact, blue ocean strategic moves have taken place throughout the history of industry evolution. What our research focused on was uncovering and decoding the underlying pattern behind these strategic moves. Of course, with the publication of Blue Ocean Strategy, this approach is systematically laid out to business practitioners so that they have a roadmap, tools and frameworks to create blue oceans in an opportunity maximizing, risk minimizing way. The objective is to make the formulation and execution of blue ocean strategy as systematic and actionable as competing in the red oceans of existing market space. The response from enterprises has been incredibly powerful. If you visit our website on the front page there is an ever-changing list of articles on companies, non-profits, and even governments pursuing blue ocean strategy and the results they are obtaining. We would invite any of Fast Company‘s interested readers to visit the site to see the rich array of applications in organizations. Currently, for example, there are a number of articles on the front page on how the Malaysian government is applying blue ocean strategy.
Which companies today are good examples for succeeding with blue ocean strategies?
Mauborgne: Again, we refer to the front page of our website www.blueoceanstrategy.com so that they can see and read about what the global press is reporting on this topic. This cover blue ocean strategic moves being made across the globe in corporations, nonprofits, governments and education. There is also a link on the website to all back articles in the press, which highlights numerous applications of blue ocean strategy in diverse settings scattered across the five continents. More than that, however, we are now documenting how organizations–both big and small–have been applying the ideas, the challenges they have faced, the key insights they have gained, and the results they are generating. We look forward to releasing this in our next book.
How has your writing process changed between working on Blue Ocean and now?
Mauborgne: The writing process has remained the same in the sense that as business scholars, we always begin with empirical research. We believe that any conclusion we draw from inductive research should be based on solid methodological design. To this end, we have been spending the last five years further building our global database, developing and refining our hypotheses, comparing and contrasting different units of observations in comparable contexts to identify which key factors or mechanisms account for the success or failure of a business move when other conditions are properly controlled for. We then set out to record our findings and further explain them in our writings. The main difference since the publication of the book, if any, is that before we summarized and integrated our findings in the book, we had written a series of articles, each tackling one key dimension of what we called blue ocean strategy. The writing process was therefore one of progressing towards an integrated theory. After the publication of the book, we have been devoting more attention to testing our integrated theory in new real-life settings. With inputs and feedback about the processes and results of blue ocean creation in practice from companies and other organizations around the globe, we reevaluate our theory and framework and further refine them in our writings. Our aim, however, has been unwavering: to address an issue that has central importance to economic growth and prosperity and that is based on research that is as much empirically/theoretically grounded as it is managerially applicable and actionable in practice.
What makes a good business book stand out from all the others?
Kim: First of all, a good business book should correctly identify and address the critical questions that the business world is concerned about. Secondly, it should not only offer clear and credible explanations about business phenomena, but also offer practical and actionable frameworks and tools for business practitioners to adopt in order to improve their performance results. Thirdly, what the book offers should have lasting relevance for the business world. This requires the author(s) to uncover the underlying and fundamental patterns behind business successes or failures, rather than follow the fad and fashion of the time and come up with only skin-deep analyses.
What are your three favorite business books, and why?
Mauborgne: We would like to mention two works that have impacted our research and thinking process and inspired us. One is Thomas Kuhn’s The Structure of Scientific Revolutions, which has influenced our professional outlook and attitude towards scientific research. His work inspired us to always ask if what we are studying is a big issue that can have a transformative impact in life and in business, and not just an academic question of marginal real-life significance. Kuhn’s work also drove home the need to have an independent point of view on an issue and not assume that just because the research world says to date that something must be, to accept that conclusion without question. Joseph Schumpeter’s works on entrepreneurship and innovation also inspired us with his intellectual inquiry about structural change. However, while Schumpeter focused on “creative destruction” brought about by random innovations, we have been searching for a systematic approach of value innovation to make the pursuit of structural change systematic and reproducible.
W. Chan Kim and Renée Mauborgne are the authors of Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant. Kim and Mauborgne are professors of strategy and co-directors of the INSEAD Blue Ocean Strategy Institute based in Fontainebleau, France.