Red Ocean versus Blue Ocean Strategies - Creating New Market Spaces

Rather than competing within the confines of the existing industry or trying to steal customers from rivals (Bloody or Red Ocean Strategy) in the HBR of October 2004 W. Chan Kim and Renée Mauborgne suggest Blue Ocean Strategy: developing uncontested market space that makes the competition irrelevant.

According to Kim and Mauborgne, competing in overcrowded industries is no way to sustain high performance. The real opportunity is to create blue oceans of uncontested market space.(Disruptive innovations)
Of course competition matters. But by focusing on competition and "competitive advantage", according to Kim and Mauborgne, scholars, companies, and consultants have ignored two very important - and far more lucrative - aspects of strategy:
- 1. Find and develop blue oceans, and
- 2. Exploit and protect blue oceans. These challenges are very different from those to which strategists have devoted most of their attention.
In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid.

There are two ways to create blue oceans:
1. Launch completely new industries, as eBay did with online auctions.
2. Created from within a red ocean, when a company expands the boundaries of an existing industry.

Certainly Kim and Mauborge deserve credits for having made the point of the over-focus on competitive advantage and also for their beautiful metaphor of the two types of oceans. Hopefully, the authors will provide more specific tools to find, create, develop, exploit and protect blue oceans in their forthcoming book (2005).

They define red oceans as all industries in existence today, where industry boundaries are defined and accepted, and the competitive rules are well understood. In red ocean industries, the authors contend that companies attempt to outperform their rivals in order to grab ever greater share. This competition turns products into commodities and pricing takes a hit. The water gets increasingly red from price wars and the lack of true innovation.

The authors contrast red oceans with blue oceans, or those industries that don't exist yet, often in an unknown market segment where demand is created rather than battled over.

Interpersonal Communication - When Delivering a Report

When delivering effective reports for clients its important to keep them as concise and clear as possible. Here are some tips for writing in my experience:

- Write for the reader
Put yourself in the readers shoes as you write. If you were him, what information and angle is important to you.

- Use the CASED methodology
Critically examine the alternative to your suggestion
Analogy or Example to help in understanding
Support your suggestion with emperical evidence, charts and graphs. Don't overkill though.
Executive summarys should be provided at the beginning.
Diagnos based on proven frameworks and practices.