One cannot aim to create long term growth for a company if does not understands the premises of business development. Long term growth requires competitive strategies not just tactical proficiency.
Following the previous article published on DigitalbusinessJournal.eu about famous strategist Peter Drucker, we would like review another famous competitive strategy theory in the business consulting world that disrupted the classic perspective of competitive strategy, the Blue Ocean Strategy by W. Chan Kim and Renee Mauborgne.
If Michael Porter’s differentiation theory and Trouts (2004) emphasise the role of competition on developing the competitive strategy for growth, Kim and Mauborgne believes competition does not have to be the centre of strategic thinking. “More to often companies are allowing competition to determine its strategies,’’ they say (W. Chan Kim and Renee Mauborgne, 2015). Because of this companies are most of the time in markets similar to red oceans, full of sharks, a metaphor for mature and competitive markets. They consider that the companies should focus on the client not competition when developing a competitive strategy for growth.
‘Blue ocean strategy’ is the concept that describes the quest to create market spaces where competition is minimised. By comparing competitors according to their performance on key success factors, meaning those product features and business model features with which an organisation must outperform the competition because they are particularly valued by a group of customers, managers are enabled to develop strategies based on creating new market spaces or new blue oceans in a way that will help them maximise the chances and minimise the risks.
The authors believe that focusing on competition and trying to catch up and exceed its critical success factors, will make your company look the same, not different. Blue ocean strategy recommends not looking to the competition but to innovate by adding value. This strategic creativity and innovation value, they believe, can be discovered and achieved systematic, it is not a black box, they are not accidental.
The blue ocean strategy believes no matter the market, through innovation and creativity, which can be achieved systematic, every company can developed and become a leader. Therefore they propose methodologies and instruments in order to achieve just that.
Thinking beyond the conventional limits of competition, the blue ocean strategy can help take strategic measures that will change the conventions and rebuilds the existing borders of the market place thus creating blue oceans. Opposite to Michael Porter’s view, the blue ocean strategy doesn’t not rely on anticipating and discovering the industry trends, this is not a continuum innovation brainstorming but a structured process to restructure the market into a new reality beyond the traditional boundaries.