Blue Ocean Shift - W. Chan Kim, Renée Mauborgne

Blue Ocean Shift - W. Chan Kim, Renée Mauborgne

Learn the five steps that promise to help you to escape from the red ocean and create a new market without competition.

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After the corporate revolution caused by the success of "The Blue Ocean Strategy", W. Chan Kim and Renée Mauborgne, released the book "Blue Ocean Schift" when many entrepreneurs began to rethink their business in search of the much-desired blue waters.

However, many of them found themselves trapped in red oceans, not knowing how to act out of this situation.

Thinking about it, after more than a decade of research, the authors have formulated this book that promises to present a systematic way to pursue the blue ocean.

In this summary, we'll look at how these steps work to create a new market. Let's go?

About the book "Blue Ocean Shift"

"Blue Ocean Shift" was published in 2017 and since then, the content has already been translated and published in more than 40 languages.

The book features a number of real and inspiring examples of how leaders in diverse industries and organizations have left red oceans of fierce competition and have moved to large blue oceans.

Throughout its 284 pages, five steps are set to reach and take advantage of the new growth.

About the authors W. Chan Kim and Renée Mauborgne

W. Chan Kim and Renée Mauborgne are Strategy Teachers at the European Institute of Business Administration (INSEAD) and International Strategy and Management professors in the Boston Consulting Group.

They are the authors of the international bestseller "The Blue Ocean Strategy".

To whom is this book indicated?

The steps developed by the authors are of extreme importance for every entrepreneur, CEO or manager who wants to understand more about his company, his competitors and, especially, for those who want to optimize their strategy market.

Main ideas of the book "Blue Ocean Shift"

The highlights of the book are:

  • Focusing on competitors can make your business lose big growth opportunities;
  • You need to expand your strategic thinking;
  • Every person in every organization is capable of making the transition from the red ocean to the blue, once he/she takes the necessary actions;
  • People's confidence is key to creating and executing their development strategy;
  • Growth should not be based on existing conditions and environment within your industry. It must be shaped in its favor to reach new heights;
  • The transition process to the blue ocean is based on five systematic steps.

So let's get your hands on! What about analyzing each of the steps formulated by the authors?

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[Book Summary] Blue Ocean Shift - W. Chan Kim, Renée Mauborgne

Overview: Step 1 - Start the Process

The start of the transition to the blue ocean consists of analyzing your portfolio and categorizing your offers according to the value they offer.

W. Chan Kim and Renée Mauborgne suggest classifying their offers as follows:

  • Conformed: those products that are "repetitions" of what already exists in the market, offer only imitation of value;
  • Migrants: offers that are slightly better than those of the competition, providing some additional value to the customer;
  • Pioneers: these are innovative businesses that offer unprecedented customer value.

According to the book, "Blue Ocean Shift", the key to renewing your portfolio lies in your pioneering business, as the nature of these products breaks with the current competition.

From this classification, it is possible to build what the authors call a pioneer-migrant-conformed matrix, which will help you visualize the current state of your portfolio. On page 102 of the book, there is an example of a healthy matrix:

Healthy Matrix

Source: Adapted from the book's site.

It is worth noting that the goal is not to build a portfolio with only pioneers but a healthy balance between "conformed" businesses - which provide some stability and revenue - and the pioneers, who will be the engine of future growth.

Once the scope is defined, you must assemble the blue ocean team. It should rely on representatives from all areas and organizational levels who will play a key role in change.

This allows all sectors to be aligned in order to take a new offer and create a new market.

Overview: Step 2 - Understand Where You Are Now

In the next step, you need to make an assessment of your own company and industry. You should put together a chart that expresses the current situation of your company, its products and services, and how they differ from the competition.

To visualize this, the authors, W. Chan Kim & Reneé Mauborgne, suggest building what they call the "current strategy screen" which will provide the necessary information to the blue ocean team.

The assembly of this screen is done by the following steps:

  • Name the sector in which you are;
  • Identify the key factors in your industry;
  • Decide which key competitors you want to compare with;
  • Evaluate your bid and that of the best competitor along the major competitive factors;
  • Draw your strategy screen.

With the strategy screen made, the team is aware of the current situation in the sector, the competitive factors and the degree of convergence between your strategic profile and the profiles of your competitors (the convergence is responsible for the red ocean present in the sector).

Overview: Step 3 - Figure Out Where You Could Be

In the next step, you should uncover the "pain spots" in the current industry that are limiting the demand for your offer and excluding prospective buyers.

The authors explain that, in the process of transition to the blue ocean, these limiting points should not be seen as constraints but rather as clear opportunities to change the strategic field.

To identify such points, Kim and Mauborgne teach, in "Blue Ocean Shift, that it is necessary to create a" utility map for the buyer "."

Initially, you should know the six "levers" of utility to the buyer:

  • Customer Productivity: Every characteristic related to efficiency in meeting buyers needs (less time, effort and/or money);
  • Simplicity: features that minimize complexity;
  • Convenience: when and where the buyer wants something (Example: 24 hours, every day of the year);
  • Reducing risks: they may be financial, physical or emotional risks;
  • Fun and image: the aesthetic and sensorial aspects that an offer conveys;
  • Environmental preservation: Is the supply ecologically sustainable?

The activity to be done now is to analyze what are the obstacles by limiting each lever and discovering the reasons why these impediments are occurring. This evaluation should be made from the point of view of each stage of purchase (purchase, delivery, use, supplements, maintenance, discart).

Overview: Step 4 - Find Out How You Get There

At this point, you already have a sense of how your business and your industry work. You also understand the new potential demand that can be released with a recreated offer.

So the next step is to actually rebuild market boundaries and create a new space. With this in mind, W. Chan Kim & Reneé Mauborgne have listed six "paths", which are systematic means of opening a new value-cost frontier.

The model is as follows, comparing the behaviors between the search for blue oceans and the focus on the current competition:

Behaviors between the search and the focus

Source: adapted from the book site.

With this market exploration, the team will acquire new insights on how it is possible to offer value in innovative ways. To use this information in the best way, the authors suggest the "four-action model."

This model is based on four key questions that help to challenge an industry's business model. The actions and their respective questions are:

  • Eliminate: what factors considered "definitive" by the sector should be eliminated?
  • Reduce: what factors should be reduced well below the industry standard?
  • Raise: what factors need to be raised well above the industry standard?
  • Create: What factors that the industry never offered should be created?

Overview: Step 5 - Make Your Move

At the final step of your journey across the blue ocean you must plan your move correctly, test it in the marketplace, adjust it according to the feedback received, and refine it, always striving to maximize your potential.

Testing is essential to confirm your blue ocean's market potential, ensuring that you will not only deliver value innovation to your customers, but will also ensure economic stability for your business.

At the end, "Blue Ocean Shift" shows that you need to formalize your business model in order to maximize your return to minimize the risk of your grand launch.

What do other authors say about it?

In the book "Zero to one", the author Peter Thiel gives the following tip: when there is competition, companies do not have power over the market. Therefore, they must sell their products at the market-regulated price, or they will be massacred by the competition. When you get the monopoly, you are the one who dictates the rules.

In "Built to Last", Jim Collins and Jerry I. Porras say that the focus of visionary companies lies in overcoming themselves. Be better than the competition ends up being a consequence of this behavior.

Finally, in the book of Brazilian businessman Flávio Augusto, "Value Generation", he shows how rather than just working for capital, it is important to generate value for customers. By generating value in other people's lives, they will generate value for you.

Okay, but how can I apply this to my life?

The content of the book "Blue Ocean Shift" is a step-by-step guide to identify a red ocean, and from this, all phases of the development of a new market are explained, that is, the creation of a blue ocean, on which your company goes navigate without relevant competitors.

The practices suggested by W. Chan Kim and Reneé Mauborgne require great effort and discipline by those who want to implement them, but those attitudes promote proven results for the establishment of a new business model that is innovative and sustainable.

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Book 'Blue Ocean Shift'