Blue Ocean Strategy and Key Success Factors
When every rival is fighting over the same slice of the market on price — how do you even win? Sometimes the best move isn't to beat the competition, but to make it irrelevant. Cirque du Soleil didn't try to be a better circus; it created something entirely new. In this lesson we'll meet Blue Ocean
Red ocean = fighting over an existing market against many rivals (blood in the water). Blue ocean = creating a new market with no rivals. You do it through 'value innovation': offering more unique value AND a lower cost at the same time.
- red ocean
- The existing market, where many rivals fight over the same demand — competition erodes profits ('blood in the water').
- blue ocean
- A new, uncontested market space the firm creates, making existing rivals irrelevant.
- value innovation
- The core of a blue ocean: breaking the value–cost trade-off — raising customer value while lowering cost at once.
- ERRC grid (Eliminate/Reduce/Raise/Create)
- A tool for building a blue ocean: which factors to eliminate, reduce below the industry norm, raise above it, and create anew.
- value–cost trade-off
- The 'red-ocean' assumption that more value costs more; value innovation 'breaks' it and achieves both together.
- key success factors (KSF)
- The few characteristics that determine success in an industry — shared by all firms in it, and slow to change.
- uncontested market space
- New demand the firm creates and captures, instead of splitting existing demand with rivals.
- globalization (PESTEL-G)
- An extra macro factor added to PESTEL: deeper economic connectivity between countries, widening the competitive arena beyond borders.
