- About Us
- Knowledge Center
- News & Updates
The Red Ocean:
The concept is quite simple to understand. The Red Ocean is where every industry is today. There is a defined market, defined competitors and a typical way to run a business in any specific industry. The researchers called this the Red Ocean, analogous to a shark-infested ocean where the sharks are fighting each other for the same prey.
The Blue Ocean
The Blue Ocean, on the other hand, is calm, smooth, with lots of food and little or no competition. This is where everyone would like to be and it is possible for you to have a Blue Ocean.
what does this mean? Let’s take the differences one at a time.
Compete in existing markets vs. Create uncontested markets to serve. Hmmm..how do you create an uncontested market?
Existing markets are all the customers doing business in the industry right now, whether they are doing business with you or your competitors. If someone wins a customer, then it is assumed, someone will lose a customer. For someone to win, someone must lose.
In uncontested markets, there is only a winner, you. No one else is fighting for the business because either they don’t know about it, or they don’t know how. They will try, of course, but if you have done things the Blue Ocean Strategy way, they will not be successful for a very long time.
Beat the competition vs. Make the competition irrelevant. The competition becomes irrelevant because they cannot duplicate the ideas in a way that is a commercial success. Remember, the whole idea of Blue Ocean Strategy is to have high value at low cost. If you are doing that, how can anyone compete with you? All the would-be competitors fall by the wayside.
Exploit existing demand vs. create and capture new demand. You will be creating value so high that you will be attracting customers that never before would have considered entering the market.
Make the value-cost tradeoff vs. break the value-cost tradeoff. You understand that there were only two strategies to chose from, value or low cost. It was understood that you could not have both value and low cost. We can implement a new concept which can have high value and low cost and new tools to do it. In fact, if you don’t break the value-cost tradeoff, competitors will easily duplicate what you are doing and the ocean will once again be very red.
Align the organization with differentiation OR low cost vs. aligning the organization with differentiation AND low cost. You can’t just say you are going to have differentiation and low cost. You must search every nook and cranny of your processes and organization to strip away unnecessary cost. The entire organization must be aligned this way…anything that doesn’t create or contribute to value, gets eliminated or reduced. It is just the most efficient way to run an organization whether in a blue or red ocean.