Celebrity Strategy Professors’ Latest Book: Blue Ocean Shift

Diarte Edwards: Can you provide an example of a successful implementation of blue ocean shift? Were there cases where it didn’t work? If so, can you illustrate a failure case?

Mauborgne: Blue Ocean Shift is packed with inspiring, real-world examples of how leaders in diverse industries and organizations made the shift from red oceans of crowded competition to wide open blue oceans of new market space by applying the process and tools outlined within. Groupe SEB, the French multinational is one such example. By applying the concept and process of blue ocean shift, Groupe SEB turned the unattractive and shrinking electric fry industry to their favor and grew the industry 40% in value, pulling in all brand-new customers who had never bought an electric fry maker before.

At a time when price seemed to be the only thing driving sales in the electric fry industry, Groupe SEB recognized the need to break out of this intense competition and set out with his team to turn the situation around. Going through the blue ocean shift process, the blue ocean team discovered two facts everyone accepted in the industry without question – that making fresh French fries required frying, and that frying required a lot of oil. Challenging these unexamined assumptions and looking across the key trends of rising obesity and healthy eating led the team to redefine the problem from the one the industry focused on – how to make a best-in-class fryer – to how to make mouth-watering, healthy French fries without frying. The result was ActiFry – a whole new type of French fry maker that requires no frying and cuts down calories and fat content in the fries significantly. Crunchy on the outside and soft on the inside, the lower-calorie yet yummy fries got Oprah tweeting about how much she loves her ActiFry. It took competitors five years to dive into the market, and even so they didn’t succeed in capturing a significant share. To this day, more than ten years out, ActiFry remains the global market leader, thanks to the blue ocean shift approach the company decided to take.

Blue Ocean Shift delves deep into cases of failures as well. A case in point here is the European home appliances manufacturer that set about applying the blue ocean shift process to unlock new demand for the humble iron – that was principally marketed to women. Going through the blue ocean shift process, the team assigned to the task identified a huge opportunity in the growing ocean of noncustomers: men, who stayed single longer and were doing more and more of their own household chores, and hated the tedious task of ironing. The team’s solution: an iron that didn’t require ironing. You simply hang your wrinkled shirt or pants on a clothes hanger or the back of chair, run the small handheld device up and down the garment, and voila, with the help of a strong burst of steam, the wrinkles fall away – in less than half the time ironing takes. No skill necessary. No ironing board either.

The ironless iron targeted for men and young adults of both sexes was designed by the business division without any involvement of the marketing team, that was passed on the baton with the output from the blue ocean shift process to take the product to market. Full of doubts about the new device and its appeal for the existing customers of the industry (the women), the marketing team decided to put it in a box with a striking pink stripe to appeal to women and pitched it as a supplemental iron made for those times when creases weren’t necessary. Packaged and sold that way, women saw the ironless iron as just one more add-on, another thing to store in their already crowded cupboards. They never thought it could replace ironing. It was never sold as if it could. And men and young adults – the ocean of noncustomers who were the prime targets – never gave the pink-striped box a second glance.

The lesson: putting together the right team to carry out a blue ocean initiative is incredibly important. If people are not part of the process and there to discover firsthand the power of the ideas that create blue oceans, it’s too easy for them to dismiss those ideas and bend them right back to the industry’s so-called best practices. This is why Blue Ocean Shift addresses the issue of how to put together the right team upfront.

Diarte Edwards: Why do you think the blue ocean theory has become such a global and mainstream phenomenon? 

Kim & Mauborgne: At a fundamental level, there are three key criteria that we see as central for any theory to create lasting impact. The first criterion is relevance. Does the idea address an issue of central importance to business and to our economies? Does it have a universal appeal and is it relevant for individuals and companies all around the world? However theoretically powerful a concept, it will not gain mainstream acceptance unless it is relevant to real and crucial problems people face. With supply exceeding demand in a wide array of industries, large and small companies around the world increasingly face market share battles, declining profit margins and price wars. Governments like business organizations, face intensifying competitive pressures as well, with more and more expected of them often with fewer resources available to meet those expectations.

The second criterion is actionability. Can you act on the idea? Does it present useful tools and frameworks for organizations and individuals to put it in practice?  While there are many theories that explain why companies fail and succeed, these are mostly descriptive, not prescriptive. There is no step-by-step model that prescribes in specific terms how companies can systematically achieve high performance. The blue ocean theory offers such a model in the context of creating new markets with actionable tools, analytics and frameworks that anyone could apply, regardless of their creative ability.

The third criterion is rigor. Is the idea grounded in robust research? Blue Ocean Shift is a culmination of our nearly thirty-year extensive research journey that initially involved a study of over 150 strategic moves in more than 30 industries over 100 years. Our first book, Blue Ocean Strategy, articulates the underlying patterns that differentiate organizations competing in red oceans from those that create blue oceans. As our database and research have continued to expand and grow over the last decade, we set out to analyze and compare the successes and failures of blue ocean projects across the globe that sprung out of the movement Blue Ocean Strategy started. By studying and understanding what works, what doesn’t, and how to avoid the potential pitfalls in making a blue ocean shift in a variety of sectors from business-to-customer and business-to-business, to public, nonprofit, and governments, Blue Ocean Shift lays out a systematic step-by-step process for inspiring people’s confidence and seizing new growth. The blue ocean theory has been evolved and built systematically over the last thirty years based on rigorous empirical data and field experimentations. Our hypothesis is that the blue ocean theory has made lasting impact as it meets all these three criteria.

Over the last score, the blue ocean concept has penetrated academic, private, and public sectors globally and has become a mainstream phenomenon. In the last year alone, over 700 articles written on blue ocean in over 65 countries around the globe and over 200 companies/organizations have “Blue Ocean….”  in their names. On the academic front, while over 2800 universities in more than 100 countries have adopted blue ocean materials, the Blue Ocean Entrepreneurship Competition has grown to be the America’s largest entrepreneurship competition created and run by high-school students. The impact of the blue ocean phenomenon extends to governments as well. In August 2016, 5,500 people from over 45 countries, including heads of states, members of government, business leaders met in Malaysia to discuss how the public sector can shift from red to blue oceans.

W. Chan KIM and Renée MAUBORGNE are Professors of Strategy at INSEAD, one of the world’s top business schools, and Co-Directors of the INSEAD Blue Ocean Strategy Institute. They are the authors of the international bestseller Blue Ocean Strategy and much anticipated follow-up BLUE OCEAN SHIFT – Beyond Competing:  Proven Steps to Inspire Confidence and Seize New Growth. Kim and Mauborgne are ranked in the top 3 management gurus in the world in the Thinkers50 list and have received numerous awards from across the globe. They are Fellows of the World Economic Forum and the founders of the Blue Ocean Global Network. For more on the authors and their new book, BLUE OCEAN SHIFT, visit http://www.blueoceanshift.com/  Get your copy of BLUE OCEAN SHIFT here.