The international bestseller, Blue Ocean Strategy, has become a must-read for business school students around the world since its 2005 publication by INSEAD professors W. Chan Kim and Renée Mauborgne. The book surged into a global and mainstream phenomenon by delivering a clear framework for organizational transformation: making the shift from a blood-red ocean of rivals fighting over a shrinking profit pool towards blue oceans of untapped new market spaces ripe for growth. Lauded as one of the most influential strategy books ever written, Blue Ocean Strategy sold 3.6 million copies, topped bestseller lists for over 100 weeks and was translated into 44 languages. This begins to explain the fervor of anticipation surrounding Kim and Mauborgne’s new book, BLUE OCEAN SHIFT – Beyond Competing: Proven Steps to Inspire Confidence and Seize New Growth.
From governments to start-ups, blue chip corporates to churches and orchestras, Kim and Mauborgne’s pioneering work catalyzed a sea-change (apologies for the pun), sparking transformation across an array of institutions. Back in 2003 when I was an MBA student at INSEAD, I had the fascinating experience of working with professors Kim and Mauborgne through their elective based on Blue Ocean Strategy (BOS). Our team’s project concerned an Asian government looking to use BOS to redefine the country’s economic platform. Kim and Mauborgne consult with companies and government worldwide, and their new book lifts up lessons learned from decades of firsthand experience and scrupulous analysis. It’s the kind of deep dive that brings alive the key tenets of BOS in tangible, accessible and actionable ways.
I had the opportunity to catch up with Kim and Mauborgne about the newly released Blue Ocean Shift. In our interview, the duo speaks to opening up a new value-cost frontier, the importance of having a humanistic process and Oprah’s love for ActiFry.
Diarte Edwards: Blue Ocean Strategy came out 12 year ago. How has the concept evolved? What’s new in Blue Ocean Shift?
Kim: At the risk of oversimplification, if Blue Ocean Strategy is the what, Blue Ocean Shift is the how. Blue Ocean Strategy went on to sell over 3.6 million copies and become a bestseller on five continents. With a speed we hadn’t expected, a tidal wave of interest grew as individuals, governments, companies, and nonprofits started to look at their world through the lens of red and blue oceans. Suddenly people the world over were identifying themselves as in red oceans of crowded competition with a call to action to get out and create blue oceans of uncontested market space.
This raised the conversation and questions to a whole new level: from “what is blue ocean strategy?” to “how can I shift my organization from the red ocean to the blue?” Established companies were unsure of how to start the process of moving to blue waters, which would often require getting the members of their team to buy into a concept that directly conflicted with the long-established rules of their industries. Entrepreneurs were looking for concrete steps and a systematic process they could follow to create and capture blue oceans at minimal risk.
Hence, what people were keenly interested to understand were the dynamics of actual transformation. What does it take to change, to move an organization – be it corporate, an upstart, government, a non-profit, even an individual from the red ocean to the blue. Achieving that requires a shift. Not just in strategy. But also in mindset and culture.
To address this challenge head-on we spent the last decade analyzing and comparing the successes and failures of blue ocean projects across the globe that have sprung out of the movement that Blue Ocean Strategy started. Analyzing a variety of sectors from business-to-customer and business-to-business, to public, nonprofit, and governments and studying what worked and what didn’t, we developed a concise understanding of the process of new market creation and growth that unlocks people’s creativity as much as their confidence to act. The result of this new research is Blue Ocean Shift.
Diarte Edwards: Why is the message of Blue Ocean Shift so important in today’s business climate?
Mauborgne: In short, we believe that blue ocean shifts are needed to create future growth of our economies and a leap of value for addressing some of the greatest challenges that confront us. This has led us onto a passionate journey to uncovering the logic and formulas of making blue ocean shifts.
We are living in a world of both abundance and scarcity. On the abundance side, the past decade has seen intensified competition in red oceans as supply continues to overtake demand in many industries. Pick any existing industry you can think of and ask if it isn’t in need of a blue ocean shift. How does its demand pair against its supply? Today tighter profit margins, rising costs, stagnant or declining sales and market share battles are hitting industries across the board, from construction to hair salons, advertising to law firms, paper mills to publishing. Even in public and nonprofit sector industries, like post offices, museums, libraries, charities, and classical orchestras, demand is down, costs and competition are up, and organizations are struggling financially. In other words, we are all paying for the red oceans around us. To turn things around, we need to produce more creative strategies that can unlock new demand and with them profitable new growth horizons, making blue ocean shifts that much more important.
At the same time, scarcity remains at the core of many of the world’s problems such as poverty, famine, depletion of natural resources, etc., all calling for innovative solutions and transformative changes. Industrialization and economic development have improved people’s living standards in emerging economies like China and India, but have also exerted further pressure on the world’s limited resources. In the past decade alone energy consumption per capita more than doubled in China and increased by over 50% in India. How could we meet the aspiration of people for living a better life without getting countries around the world trapped in competition or even confrontation over the limited amount of resources? Blue ocean shifts are needed here to unlock innovative value at low cost, creating blue oceans for our planet earth.
Diarte Edwards: What are the key components of making a successful blue ocean shift?
Kim: Succeeding in the blue ocean shift process comes down to three key components: adopting a blue ocean perspective; having practical tools and methodology for market creation with proper guidance; and having a humanistic process.
The first component, adopting a blue ocean perspective, opens your mind to what could be, instead of limiting it to what is. Organizations that shift from the red to the blue ocean ask fundamentally different sets of questions, which in turn enable them to perceive and appreciate the fallacies behind long-held industry assumptions and best practices. Adopting the perspective of a blue ocean strategist expands your horizons and ensures that you are looking in the right direction. Without expanding and reorienting your perspective, striving to open up a new value-cost frontier is like running west looking for the sunrise. No matter how fast you run, you’re not going to find it.
The second component is having practical tools for market creation with proper guidance on how to apply them. If the right perspective is a matter of shifting one’s strategic thinking by asking different questions, market-creating tools and guidance enable you to ask the right questions at the right point in the process and to see the significance of the answers. Taken together, they build people’s creative competence and provide the structure and parameters within which to organize your thinking so you can conceive and discover what others don’t see, and avoid the potential pitfalls that trip up most organizations. Step-by-step, they guide you through the central questions for making a blue ocean shift.
The third component is having a humanistic process, something we have come to call “humanness,” which inspires people’s confidence to own and drive the process for effective execution. To suspend belief in the limits of today so we can see and create new possibilities and new pathways to growth, we need to inspire confidence in ourselves and our people. Without the confidence to act, few will venture down a new path, no matter how clear the roadmap. When creative competence and confidence to act are combined, real results are achievable.
Blue Ocean Shift shows you how to embrace and act on these three key components to successfully carve your path from the red to the blue ocean in a way that people own and drive the process.