Blue Ocean Strategy:

FROM THEORY TO PRACTICE

W. Chan KIM

Renée MAUBORGNE

 

The market universe is composed of two types of oceans: red oceans and blue oceans. Red oceans are all the industries in existence today; they are increasingly characterized by bloody competition. Blue oceans are all the industries not in existence today; they are untouched and uncontested. For the past twenty-five years the field of strategy has focused principally on how to compete in red oceans. Taking market structure as given, strategy has focused on how to build competitive advantages to outpace the competition within existing market boundaries. While important, the strategy field has largely overlooked the other, and we would argue more lucrative, half of the market universe -- and that is how to create blue oceans of uncontested market space. With supply exceeding demand in more and more industries, competing for share in overcrowded markets increasingly results in dwindling profit and growth opportunities. To prosper in the future, companies need to go beyond competing; they need to create blue oceans. The issue is how to succeed. In an attempt to make the formulation of blue ocean strategy as systematic and actionable as competing in the red oceans of existing market space, we have spent more than a decade studying over 150 blue ocean creations in over 30 industries spanning more than 100 years from 1880 to 2000. In this process, we developed practical methodologies in the quest of blue oceans. We then applied and tested these tools and frameworks in action by working with companies in their pursuit of blue oceans, enriching and refining them in the process. This article articulates how the field of strategy can move from theory to practise in creating blue oceans through the purposeful application of these analytic tools and framework.

W. Chan Kim is The Boston Consulting Group Bruce D. Henderson Chaired

Professor of International Management and
Professor of Strategy and International Management at INSEAD.

Renée Mauborgne is The INSEAD Distinguished Fellow and

Professor of Strategy and Management at INSEAD.