“Blue Ocean Shift”, the sequel to the bestseller on innovation
Article originally published by the author in Forbes France. In 2005, two INSEAD strategy professors, W Chan Kim and Renée Mauborgne, published a bestseller of innovation, “Blue Ocean Strategy”, that sold to 4 million copies and has been translated into 43 languages. “Blue Ocean Shift”, the sequel, was just released this fall. It cites new examples related to the creation of new markets based on the Blue Ocean methodology, it is accessible to everyone, based on12 years of experience, studying companies, governments and associations. Review and interview of the authors.
The methodology aims to identify “Blue Oceans”, which are areas of value creation where there is no competition, based on the detection of what the customer really believes in, and where players can stand out from competitors, who are mired in a “Red Ocean”. From the study of 150 organizations, the authors have highlighted outstanding cases where organizations, large and small, have launched major innovations that have made all competition irrelevant, creating low cost but high differentiation for buyers. Through creative strategies, their method shows how to unlock new value-for-money frontiers, with new profitable growth horizons even in declining industries.
Primary examples of new “Blue Ocean” markets
The examples of 2005, which have since become famous, include Cirque du Soleil, which created a new market far from where the historical competition of the circuses. Other examples include Viagra that also created its market, and Grameen Bank, a microcredit innovation, or online dating sites which made marriage agencies obsolete. But these organizations practiced the Ocean Blue method without knowing it because then it did not exist.
The new book is based on examples of successes that genuinely come from the method, in very different worlds, including:
- The development of a fryer that drastically reduces oil consumption.
- Malaysia has reduced the cost of detaining short-term prisoners and improved their reintegration by using rural military zones.
- A new chain of “affordable luxury” hotels that has greatly streamlined the customer experience.
- The Iraqi National Youth Orchestra, which has been built on a message of peace and cultural union in order to stand out from the mainstream of international musical talent.
The 3 methodological axes of the Blue Ocean Shift
Accessible to all, the method has 3 axes:
- Placing oneself in the position of creative thinking in order to escape the traditional “Value-Cost” equation on which the current market is established
- Relying on tools and a process to objectify the perception of a market and its extensions made possible by the reformulation of the value proposition, in particular by looking for non-customers.
- Creating trust in the organization to orchestrate change, including merging strategy and project execution. This is one of the major new lessons of the book, widely illustrated.
The authors show that the creation of value can be done by replacing existing markets (ex: the arrival of mp3 …), but also by non-disruptive innovations, especially when it comes to identifying and solving a new problem or a new opportunity (micro-credit …).
The book highlights the fact that technology creators often fail if they do not focus on perceived value. MITS, the company that created the first microcomputers has been forgotten in favor of Apple who has been able to highlight uses for the computer. From Segway to Tivo, many technologies have been forgotten for the same reasons.
The Blue Ocean methodology is widely taught today, especially by the authors themselves, and practiced by thousands of people. In addition to the many new examples, the new book highlights the conditions of success of the method and in particular the establishment of trust in organizations in order to carry out a project, a key success factor identified through years of practice.
Blue Ocean Shift also gives illustrations on the possibility of building its growth strategy by shaping the market conditions in its favor. The method, now proven, is even the subject of a start-up challenge that has highlighted great successes like Le Compte Nickel in recent years: the Blue Ocean Awards, whose 2017 laureates are revealed on December 15th.
Several new innovation methods have emerged successfully over the last twelve years, such as The Lean Start-up and Design Thinking. The world has changed, especially in the digital space, but the Blue Ocean method remains a reference and certainly the most appropriate method to open up to new market opportunities, especially for existing businesses.
Since the fantastic success of Blue Ocean Strategy, BLUE OCEAN SHIFT brings new examples where the methodology has been applied successfully, and you focus on the necessary confidence in organizations in order to achieve a Blue Ocean project. Besides, new platforms (Facebook…), Artificial Intelligence and other mega trends have brought new horizons to Blue Ocean Strategists (“Imagine where you could be”) but do they impact the methodology?
W. Chan Kim and Renée Mauborgne: We are very excited about BLUE OCEAN SHIFT because it shows how an average organization — facing obstacles and constraints like we all do — can shift from competing in crowded markets to creating new market space. You don’t need to be born Steve Jobs to make a blue ocean shift. Anyone can do it. With a clear roadmap, easy-to-use market-creating tools with guidance, along with an understanding of how to bring your people along and build their confidence, making a blue ocean shift becomes possible for organizations of every stripe, allowing them to reach new heights of market creation and growth. And that is what BLUE OCEAN SHIFT brings.
With respect to new technologies and platforms, they don’t impact the methodology of opening up new markets. Artificial Intelligence, social media, virtual reality and other new platforms are all exciting, but they will not open new markets unless they are tied to overwhelming value for the users. You have to remember, that technology matters but it is not the defining factor in creating commercially compelling new markets. It can be a great enabler, but it does not open up new markets on its own. While anyone can leverage a new technology platform, the real question is how to link it to unprecedented value for buyers to ensure its commercial success. And that is what the blue ocean shift process drives you to do.
Since BLUE OCEAN STRATEGY has been written, other customer centric innovation methods have spread as Design Thinking or Lean Start-Up. Are there connexions with some of them and if yes how would you describe them in simple words ?
W. Chan Kim and Renée Mauborgne: People are much more creative than they think. Yet, most people have fear and anxiety about how to create. They don’t know how to channel their creativity to open up new growth opportunities. BLUE OCEAN SHIFT provides a methodology to bring that creativity out and direct it to growth opportunities. It moves you, your team, and your organization to new heights of confidence, market creation and growth and guides you step-by -step how to shift from cutthroat markets to wide-open new markets. It allows you to open up new value-cost frontiers that deliver unprecedented value for buyers while simultaneously lowering costs for you, thereby creating win-win outcomes.
It differs from lean startup methodology in that lean startup provides a framework to test, validate and refine new ideas based on rapid experimentation, customer feedback and iterative releases in the marketplace. But, how do you come up with those market-creating ideas in the first place? Lean startup does not address this. So if you have a red ocean idea to begin with, lean startup methodology will optimize it effectively. However, it will rarely lead you to uncovering blue ocean opportunities. Where we found lean startup methodology can complement blue ocean shift, is in the market testing stage. Once you have gone through the blue ocean shift process and are ready to roll out your blue ocean idea, lean startup approach can help you optimize and refine it fast and at low cost.
Related articles in English from the author
In preparation of a Post Corona Crisis (Forbes, April 2020)
After a record breaking year, how should you invest in start-ups in 2019? (Forbes, February 2019)