Blue Ocean Strategy is a strategic approach founded by W. Chan Kim and Renée Mauborgne, Professors at INSEAD and Co-Directors of the INSEAD Blue Ocean Strategy Institute.
It is based on the results of a cross-industry study of 150 strategic moves made by relevant business players in each industry during over 100 years.
According to this approach, organizations have to shift their focus from competing in existing “Red Oceans” –where all the actors in play struggle on price to grab a slice of shrinking demand – to creating “value innovation”, in order to attract new demand and capture uncontested “Blue Oceans”. This means that a Blue Ocean is a business or an industry that still does not exist, where demand must be created and rules of the game, too. However growth and profit opportunities are far superior here.
“Value innovation” is a strategic move that is able to simultaneously create new value for the market, and reduce costs for the organization. It follows that Blue Ocean Strategy challenges all the cornerstones of traditional competitive strategy, such as the differentiation vs. low cost trade off, and the assumption according to which an industry structural conditions are given and not changeable.