“The Clear Ocean is a new direction. It is a new
stage, a new life, a continuation of business.”
Blue Ocean Strategy was published in 2005 but is still
in demand – in 2017, Amazon recognized it as the best business book
of the year. The authors of the book are
W. Chan Kim and Renée Mauborgne. They are professors of Strategy
and Management at INSEAD, and co-directors of the INSEAD Blue Ocean
Strategy Institute in Fontainebleau, France.
In 2008, W. Chan Kim was awarded the Nobels Colloquia Prize for
Leadership on Business and Economic Thinking. In 2019, they were
named the most influential management thinkers in the world by
Thinkers50. In 2022, Harvard Business Review selected Blue
Ocean Strategy as one of the most influential and innovative
articles published in Harvard Business Review over the last 100
years. In 2023, W. Chan Kim and Renée Mauborgne were honored as two
of the four leading thinkers in the 100 years of Harvard Business
Review’s publication for the global impact of their far-reaching
body of research and ideas. Renée Mauborgne is the first woman ever
to secure the top spot as the world’s most influential management
thinker.
W. Chan Kim and Renée Mauborgne analyzed 150 strategic moves in
business over the last century and realized that businessmen
achieve success not in competition with competitors, but in
unoccupied areas – “Blue Oceans”. This is what the authors called
markets without competition, but with clear and stable demand.
What is the Blue Ocean strategy?
The book’s authors divide business into 2 types – red and blue
oceans.
The Red Ocean strategy emphasizes competition and gradual
improvements while taking on established competitors in a
well-known market. On the other hand, the Blue Ocean strategy
stimulates businesses to venture into uncharted territory,
establishing new markets through creative thinking and
originality.3
Red Oceans are all the industries in existence today – the known
market space, where
industry boundaries are defined and companies try to outperform
their rivals to grab a greater share of the existing market.
Rigorous competition turns the ocean red. Hence, the term ‘red’
oceans.
Blue oceans denote all the industries not in existence today –
the unknown market space, unexplored and untainted by competition.
Like the ‘blue’ ocean, it is vast, deep, and powerful in terms of
opportunity and profitable growth.
The table below summarizes the distinct characteristics of
competing in red ocean (Red Ocean Strategy) versus creating a blue
ocean (Blue Ocean Strategy).
Blue Ocean strategy is a fundamentally new approach to business
development that provides a valuable opportunity for a “quick
takeoff” for start-ups or young companies.
Unfortunately, most companies seem becalmed in their red oceans.
In a study of business launches in 108 companies, it has been found
that 86% of those new ventures were line extensions – incremental
improvements to existing industry offerings – and a mere 14% were
aimed at creating new markets or industries. While line extensions
did account for 62% of the total revenues, they delivered only 39%
of the total profits. By contrast, the 14% invested in creating new
markets and industries delivered 38% of total revenues and a
startling 61% of total profits.
Over time, many goods and services fade, and only those who were
able to create a new unoccupied market manage to stay afloat.
Below are several companies that have successfully created a
blue ocean in various industries:
- The famous Cirque du Soleil
A fundamentally new approach to entertainment has become the
brand’s main trump card:
– Without animals – it is inhumane and expensive to keep;
– Original concept – bright plot, beautiful scenery;
– Expansion of the audience – adults also watch Cirque du
Soleil’s spectacular productions with delight.
Circus du Soleil was years ahead of its competitors by simply
abandoning animal performances. This way, it solved 2 problems: it
got rid of criticism from animal rights activists and significantly
reduced costs. Today, Cirque du Soleil’s performances are applauded
in more than 300 cities around the world.
iTunes, launched in 2001 by Apple, made listening to music more
convenient – the service fully covered the needs of music lovers.
Before its release, favorite hits had to be copied onto CDs, stored
on a PC, and transferred to the memory of players. The advent of
iTunes significantly simplified the process: just load the disc,
and you are given lots of options for greater convenience, such as
creating a playlist, dividing it into categories, and many
more.
As a designer, he conjures up all that is dear to every
American: native lands, shrouded in fog in the mornings, summer
evenings, endless distances, horses, corn fields, green gardens,
warm fireplaces, and Jack Russell terriers. His works are not
limited to fashion trends and fleeting moments – they are about the
meaning of life and established values. Not only did he create an
entire concept of fashion and style but also protected it with his
consistency and impeccable reputation. It constantly reminds us of
the best moments in life. It’s enough to just say “Ralph Lauren”,
and everyone immediately understands what we’re talking about.
He adored old things. He loved cowboy boots and cars and was
inspired by them. As a result, all this was somehow embodied in
clothes. He said that he did not work in the fashion industry. He
was often called a “fashion designer”, but he hated the word. By
doing this, he was showing his resistance to being an inhabitant of
the Red Ocean. Anti-fashion is what has always inspired Ralph
Lauren.
Ralph Lauren had incredible imagination and creativity, which
are vital for the Blue Ocean. He said, “You must always strive for
more, you must dream. You look at the world and realize that you
can live better.” He created a suit made of linen. Before this, no
one dared to sew loose, wrinkled suits. He understood the power of
the American dream. Ralph Lauren was the first fashion designer to
present a complete home collection and to open a chain of retail
stores.
Ralph Lauren had the audacity to open an amazing store on
Madison Avenue, a few blocks from Bloomingdale’s. He sold not only
clothes but also saddles and all kinds of riding crops. Most of the
people who entered the store had similar interests with Ralph
Lauren, as with all Americans, who loved horse riding. They were
happy to buy everything from socks to jackets; they were not averse
to buying cowboy boots and even a saddle just to look like a tough
guy. Ralph Lauren’s clothes instilled confidence and prestige and
created a true concept of American style for the whole world. By
purchasing a polo T-shirt, foreigners became a part of America.
Ralph Lauren was the first American designer to be knighted. He
was presented with the Lifetime Achievement Award.
He is a patriot. All his work is imbued with love for America.
Thanks to him, the concept of the American Dream will never
disappear.
We all are consumers. Create what you are comfortable with and
you will see how people will be drawn to what you have created.
Ralph Lauren started with clothes that he enjoyed wearing himself.
That’s the whole secret. While all the fashion designers were
swimming in the Red Ocean, drowning each other, Ralph Lauren was
leisurely enjoying his swim in the Blue Ocean.
The Clear Ocean
Having studied and absorbed every line of the best-selling book
Blue Ocean Strategy, where the world’s giant management thinkers
describe the market universe, I dare to propose my own strategy:
The Clear Ocean.
The Clear Ocean is a “new market space”.
From my point of view, the Blue Ocean strategy is only
applicable to those who are just starting to take their first steps
in business.
My strategy is the Clear Ocean, the inhabitant of which is a
company that has been a proud representative of the Blue Ocean.
Stifled by competition in the Red Ocean, it, with renewed vigor,
creates a new product, different from the one with which the
business began. A company with a reputation that consumers value
only needs advertising. The consumer will be happy to purchase a
new product.
Let’s look at several examples:
Shell’s history began in 1833, when English merchant Marcus
Samuel opened a small shop in London with an emblem of a shell
selling a variety of seashell jewelry and other exotic oriental
items.
The enterprise turned out to be profitable, and, soon, he
managed to build a profitable trading business focused on the
countries of East and Southeast Asia, thereby laying the foundation
for its export-import business. Ships going from metropolises to
colonies carried various cargoes on board, including petroleum
products. Having started from the Blue Ocean, the company got into
the Red Ocean, as the antiques business had expanded by then.
Marcus Samuel, being a talented businessman, saw a great future
for the oil business during the period of its birth. He and his
sons decided to change the type of activity of the company and
began transporting oil. Thus, they smoothly passed into the Clear
Ocean.
After the death of Marcus Samuel senior in 1870, his sons took
over the business. The brothers wanted to create a full-fledged
international trading company and began to import rice, silk,
porcelain, and copper products into the country. They founded their
own company in 1878. In 1897, Marcus and Samuel renamed the tanker
syndicate Shell Transport and Trading.
Samsung is a South Korean company that is one of the world’s
largest producers of electronic devices.
Samsung was founded as a grocery trading store on March 1, 1938,
by Lee Byung-Chul.
He started his business in Taegu, Korea, trading noodles and
other goods produced in and around the city and exporting them to
China and its provinces. This made it possible to officially
register the Samsung Trading Company trademark. The company was
swimming in the blue ocean.
After the Korean War, Lee expanded his business into textiles
and opened the largest woolen mill in Korea. In the late 1950s the
company acquired three of Korea’s largest commercial banks as well
as an insurance company and firms that made cement and fertilizer.
Samsung in the 1960s acquired more insurance companies as well as
an oil refinery, a nylon company, and a department store. In 1969,
their first products were black and white televisions. During the
1970s the company began to export home electronics products
overseas.
In 1988, having entered the mobile phone market into the Red
Ocean, Samsung fought a fierce battle for the mobile phone market
share with its competitor Apple. The companies were periodically
blaming each other.
Constant invention and innovation did not allow Samsung to
remain in the Red Ocean. Samsung became an inhabitant of the Clear
Ocean, beginning to supply microprocessors for Apple’s iPhone
models and becoming one of the largest microprocessor manufacturers
in the world in the late 20th and early 21st centuries.
Avon Products Inc., or simply known as Avon, is a London-based
Anglo-American company selling cosmetics, skin care, perfume, and
personal care products. The founder of Avon, David H. McConnell,
was a progressive pioneer, an impressive visionary, a courageous
game-changer, and above all, a champion of women.
Initially, he was engaged in selling books and was in the blue
ocean. After noticing that he was beginning to drown in the red
ocean due to increased competition, in order to attract customers,
he began to put small bottles of perfume with the orders.
In 1886, the first product sold was a rose extract perfume from
the California Perfume Company. McConnell soon realized that floral
scents were more interesting to readers than romance novels. The
perfumes became the first product of the Avon company.
In 1971, Avon began selling jewelry. Therefore, Avon smoothly
and fragrantly moved into the Clear Ocean.
Japanese company Nintendo specializes in creating video games
and gaming systems.
In 1889, Fusajiro Yamauchi, the founder of Nintendo, began
producing Japanese hand-drawn Hanafuda playing cards, which quickly
gained popularity in Kyoto.
In 1953, Nintendo Playing Card Co. Ltd. became the first in
Japan to establish mass production of plastic playing cards.
The company began selling cards featuring Walt Disney
characters, opening up a new market for children’s playing cards,
and thus was a proud member of the Blue Ocean. However, after
competition was created by other companies adopting Nintendo’s
idea, the company found itself in the Red Ocean.
In 1970, the company began selling the Beam Gun series, which
used optoelectronics, introducing electronic technology into the
toy industry for the first time in Japan.
This is how Nintendo became an inhabitant of the Clear Ocean.
Yet, their progress does not end there to this day.
In collaboration with Mitsubishi Electric, Nintendo developed a
gaming system using an Electronic Video Recorder (EVR) for
Japan.
In 1997, the company developed home-use videogames in
cooperation with Mitsubishi Electric: the “TV Game 15” and “TV Game
6”.
Nintendo artist Shigeru Miyamoto created the game Donkey
Kong, the hero of which was a carpenter originally called
Jumpman. In honor of Jumpman’s resemblance to
Nintendo’s office landlord, Mario Segale, Jumpman was
later renamed “Mario”.
Super Mario Bros. is listed in the Guinness Book of
Records as the best-selling game in history.
Conclusion
The company that once was in the Blue Ocean resisting remaining
in the Red Ocean, having proven its innovation, constantly
generating and implementing new ideas, products, or services that
create value for its consumers proudly finds itself in the Clear
Ocean and continues to delight and surprise us, its customers. The
Clear Ocean is a new direction. It is a new stage, a new life, a
continuation of business.
