Blue Ocean Strategy

Go where the profits and growth are - and where the competition isnt

W. Chan Kim & Rene Mauborgne

The Strategy Canvas of Cirque du Soleil

hi
Ringling Brothers

Cirque du Soleil offering level

Smaller Regional Circus

lo
Price Animal Shows Star Performers Aisle Concessions Multiple Show Arenas Thrills & Danger Fun & Humor Unique Venue Theme Multiple Productions Artistic Music & Dance
Kim & Mauborgne 2006

Refined Viewing Environment

The Strategy Canvas of Cirque du Soleil

hi Eliminate
Ringling Brothers

Reduce

Raise

Create

Cirque du Soleil

offering level

Smaller Regional Circus

lo
Price Animal Shows Star Performers Aisle Concessions Multiple Show Arenas Thrills & Danger Fun & Humor Unique Venue Theme Multiple Productions Artistic Music & Dance
Kim & Mauborgne 2006

Refined Viewing Environment

Personal Finance Software Industry

hi Quicken

Personal Finance Software

offering level

The Pencil

lo
Price Ease of Use Optional Features Speed Accuracy
Kim & Mauborgne 2006

Red Ocean Versus Blue Ocean Strategy

Red Ocean Strategy
Compete in existing market space

Blue Ocean Strategy

Create uncontested market space

Beat the competition

Make the competition irrelevant

Differentiation or low cost

Differentiation and low cost

Competitive Advantage

Value Innovation

Segment existing customers

Attract noncustomers

Exploit existing demand

Create and capture new demand

Kim & Mauborgne 2006

Substantially Higher Returns from Investments in Blue Oceans

Business Launch
86% 14%

Revenue Impact

62%

38%

Profit Impact
Red Oceans Market-Competing Business Launches

39%

61%

Blue Oceans Market-Creating Business Launches

Kim & Mauborgne 2006

Is there a pattern to blue ocean creation?

Kim & Mauborgne 2006

Researching the History of Blue Ocean Creation

Data: 150 blue ocean creations, more than 30 industries, over 100 years (1880-2000)
hotel, cinema, retailing, airline, energy, computer, broadcasting, home construction, automobile, steel manufacturing, chemicals, cosmetics, software, etc.

Variables considered: industrial, organizational, strategic variables

Kim & Mauborgne 2006

Innovation
Random
Entrepreneur Entrepreneurial Risk Trial & Error Learning from Failures DNA / Culture Units for Experimentations (Spin-offs) Risk Taking or Risk Avoiding Schumpeterian School Value Innovation School
Kim & Mauborgne 2006

Systematic
Pattern A way of Thinking Theory Methodologies Analytical Frameworks Opportunity Maximizing & Risk Minimizing

Minimizing Risks and Maximizing Opportunities in Formulating and Executing Blue Ocean Strategy
Formulation Principles
Reconstruct market boundaries Focus on the big picture, not the numbers Reach beyond existing demand Get the strategic sequence right

Formulation Risks
Search Risk Planning Risk Scale Risk Business Model Risk

Execution Principles
Overcome key organizational hurdles

Execution Risks
Organizational Risk

Build execution into strategy

Management Risk

Kim & Mauborgne 2006