“Blue Ocean Strategy” by Kim and Mauborgne

The book “Blue Ocean Strategy” describes unique strategic frameworks and approaches applicable to modern business and unknown market spaces. The book consists of three main sections and nine chapters devoted to different strategic problems and solutions. Kim and Mauborgne underline that innovations have a profound impact on the competitive advantage of a company creating opportunities in a “blue ocean” environment. These unique strategies lead to new products and services appealing to consumers. Innovations allow the company to attract competitors’ target audiences and propose lower prices and higher quality of products and services. The exact nature of the innovation process may vary in these different settings, as will the problems faced and the solutions required, but economically innovative acts that create value for individuals and society can still take place. It is the act and its outcome, not the environment or the setting that is the essence of innovations. Modern companies succeed with many of their products because of solutions proposed to the target market. First of all, from a marketing and entrepreneurship perspective, an innovation must be defined as having sustainable profit potential, beyond pure windfall profits, and “one-shot” deals.

Kim and Mauborgne create an interesting account of innovations and opportunities available for diverse businesses. From my personal experience, I can say that “pioneers” in the industry always have a competitive advantage over market “followers”. Second, innovations must be defined as a market position, that is, a field of activity in which a company is competitive beyond the short run, and able to reap a profit. The main tools proposed by the authors are “Tipping Point Leadership approach, E principles of Fair Process, Four Organizational Hurdles framework, Kingpins approach, Fishbowl management, atomization and Hot spots, cold spots and consigliere approach” (Kim and Mauborgne 43). The examples of different business innovations show that a market position can be viewed both from its value context and from the perspective of competition. A market position is supported by a combination of resources, and obviously, a market position is only sustainable if the underlying resource combination is competitive. From the perspective of strategic marketing, competitive advantage is normally seen as the domain of business strategy, that is, at the product/market (industry) level, because direct competition takes place at this level. For instance, Toyota and its “green car” are based on innovative solutions in engineering and fuels which take into account environmental changes and an important role in the creation of opportunities, and profound knowledge in the car industry. By strategic thinking managers mean the intuitive ability to understand the dynamics of market structures, competition, customer needs, timing, synergies, and the like. It is an ability to proceed with tentative, incomplete information, always leaving one’s options as open as possible, waiting for the right moment. Formal strategic planning (with its emphasis on the analysis) was only used in two of the case companies and only in the later stages in the life cycle as a matter of setting priorities and securing coordination.

The book has no weak points and would be interesting for every businessman and entrepreneur. I will use a lot of lessons learned from this work in my practice as they allow every company to prosper and compete in unstable market conditions. Innovations matter in public services because innovative solutions and improved quality of services influence customers’ loyalty and satisfaction. For every business, it is crucial to remember that an environmental change demands profound knowledge, innovative behavior, and strategic thinking. If the new venture idea is based on a “new-to-the-world” product or service, then by definition it is unlikely that the entrepreneur will be experienced with the marketplace or how to market the product/service involved. For instance, in public education, innovations help teachers to increase the quality of education and introduce new strategies in the traditional environment: Internet-based education, new learning technologies, and video courses, etc.

After the “blue ocean strategy” has measured the target market, evaluated the competition, and developed a marketing plan, he or she should attempt to integrate these three components in such a way as to arrive at a realistic sales or market-share forecast for the public services. The concept is to start with the size of the entire target market and to realistically reduce that market size to reflect the number and effectiveness of competitors. The “more realistic market potential” arrived at should further be modified to reflect the effectiveness of the marketing plan. In public services, innovations should be considered as an art and a science. Innovations cannot exist without scientific explanations and economic theories (related to price, market structure, and wages, etc). Thus it requires unique and pioneering application of traditional concepts and theories. As the markets change, or the services mature, the role set also shifts. To continue successfully, the entrepreneur must adjust to the emerging managerial role by learning new behaviors. It is important to remember that innovations that once were adaptive may now interfere with the changed expectations. The resulting conflict may contribute to the downfall of the business venture. On the other hand, successful adaptation to the new role expectations can offer new benefits.

In sum, the “blue ocean strategy” is a driver for every business which wants to compete and attract more customers. I agree that one benefit is access to multiple segments of society. These different segments may offer distinct network assets that include resources, monetary (prestige) rewards, and contributions to personal growth and development. In this regard, networks become value-added contacts. Each party to the interaction seeks to maximize outcomes, whether these be social or economic.

Works Cited

Kim, W. Chan, Mauborgne, Renee. Blue Ocean Strategy. Harvard Business Press; 1 editionm 2005.

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