Chan Kim and Renee Mauborgne argue that one way out of today’s hotly contested industry spaces defined by conventional boundaries is to develop what they call blue oceans , previously unknown market spaces as yet undiscovered by existing competition. Rather than focusing on “beating the competition ,” they argue , managers should focus more of their strategic efforts on finding markets where there is little competition – blue oceans- and then take steps to exploit and protect these oceans.
Their research found that companies that were effective in creating blue oceans never used the competition as benchmark. Instead, they made competition irrelevant by creating a huge leap in value for both the new buyers it served. Henry Ford’s Model T automobile created a blue ocean, an automotive industry that barely existed at the times. So , too, did Federal Express in overnight package delivery , Cirque du Soleil in circus (or is it theater? ) ,and CNN in news broadcasting.
A key tenet of all these companies is that they rejected the notion that there must be a trade-off between value and cost, an inherent assumption that’s all too frequent in strategic circles. Rejecting the tried strategic logic of red oceans – overcrowded industries where companies seek ways of beating one another –can lead, they found, to rapid, profitable, and often uncontested growth for a decade or more.