Introduction
This article is about the Blue Ocean Strategy, a book that was written by two professors from the international graduate school of INSEAD, W. Chan Kim and Renee Marbourgne. This school and research facility is located in France and has satellite offices in Singapore. The idea behind the Blue Ocean Strategy which was created after a thorough 120-year data analysis of 150 strategies moves in 30 industries is that firms create value through the alignment of value propositions and product values. These strategic moves that create value for the firm is coined the Blue Ocean Strategy wherein growth and profitability are achieved by the firm in uncontested market space. According to the proponents of this theory, firms will be successful if they can create their own market spaces instead of competing for it in the existing market.
This article under evaluation is centered on the development and application of the Blue Ocean Strategy, a new and innovative way of looking at firm value creation. The journal focuses on the similarities of successful firms and their strategies that resulted in their success. The journal further acknowledges the firms that have discarded the idea of having fixed industry and market boundaries and instead having recognized the flaw in the conventional competitive strategic thinking (i.e. as espoused by Michael Porter) has explored the alternative approach of creating new needs instead of relying on existing market demands. The article further characterizes the traits of successful Blue Ocean Strategy implementers and processes or drivers that led to the development of new Blue Oceans for these firms.
Analysis of Article - Researches Methodology
This article provides a summation of the Blue Ocean Strategy foundation through the presentation of the analytical tools that the authors used for developing and rationalizing the validity of the theoretical framework. This rationalization is the approach of the authors for explaining the strategy and as the means to introduce the execution principles of the Blue Ocean Strategy. A voluminous collection of data spanning 150 companies from over 30 significant world-wide industries are analysed, with data coming from as early as 1880 (to 2000) used. The analysis and execution principles are further applied using Cirque de Soleil, a popular entertainment company that has “reinvented the circus” to highlight how the company has created a new market for itself despite the confines of the industry it operates in. The research methodology, because it involves factual information of great volume becomes highly credible and the Blue Ocean Strategy highly believable. The authors also differentiated the Blue Ocean Strategy from existing frameworks of corporate success by identifying companies in other strategic framework books that have failed after sitting loftily in their market positions indicating the weakness of the strategic reasoning behind these firm’s success.
Analysis, Significance of the findings
The Strengths of the Article
The article is highly technical, although presented in a manner that is simplified and understandable even to the casual reader. The Blue Ocean Strategy’s theoretical framework is straightforward and the technical information used to justify the framework is relevant. The application of the framework for known successful companies such as Cirque de Soleil, Ford, IBM, Apple, Nickelodeon, Dell and others make the Blue Ocean Strategy believable in that it is observable over a wide range of industries. The companies that are presented are highly successful and the pattern of innovation is obvious thus supporting the theory presented in the article.
The Weakness/Limitations of the Article
The article writes a compelling concept of innovation and value but I somehow feel that I have encountered these concepts in other strategic management frameworks thus making the article feel as if it is a largely contrived amalgamation of works. I understand that the article focuses on a relatively new insight, that of isolating innovation as the center of a firm’s success, but because the presentation of the framework is seemingly in a vacuum (i.e. innovation is presented as the major factor but the processes encountered by a firm in developing its ability to innovate stems from its internal capacities or external factors which are conveniently excluded in the analysis). According to Grant McCraken (2013), the “the bad thing about the book (referring to the Blue Ocean Strategy) is that the book is naive. Only academics could have written such a thing. Blue Ocean Strategy acts as if "wishing makes it so," all we have to do is to find an uncontested market space and all the hard work of marketing just goes away”. This statement indicates that the Blue Ocean Strategy is created without the benefit of understanding any underlying cultural implication of competition or that the companies that have successfully innovated are only a handful compared to the number of companies that are actually successful despite the number and ferocity of competition.
Another weakness of the article is that it does obviously presents a “rebranding” of management doctrines (i.e. the term Blue Ocean Strategy is new). According to UNITAR’s book review of the Blue Ocean Strategy, the concept is a combination of “Funky Business” (1999) by Swedish professors Jonas Ridderstrale and Kjell Nordstrom, called “Funky Business” and Sun Tzu’s “The Art of War”. To summarize, the Kraaijenbrink Training & Advies (2012) has identified the four risk of the Blue Ocean Strategy which are ignoring relevant competition, reinventing the wheel, suggesting that companies go too far from their competencies, and getting into markets that may be out of reach for valid reasons. These are the main reasons why I disagree with the Blue Ocean Strategy.
Conclusions
The Blue Ocean Strategy is a powerful concept that management students will find easy to digest. The concept of the Blue Ocean Strategy a concept that was created after a thorough 120-year data analysis of 150 strategies moves in 30 industries is that firms create value through the alignment of value propositions and product values indicates that the strategic moves that create value for the firm is the predictor of growth and profitability in uncontested market space. According to the proponents of this theory, firms will be successful if they can create their own market spaces instead of competing for it in the existing market. The theory is sound from a technical standpoint and is presented in a manner that is simplified and understandable even to the casual reader. The Blue Ocean Strategy’s theoretical framework is straightforward and the application of the framework for known successful companies such as Cirque de Soleil, Ford, IBM, Apple, Nickelodeon, Dell and others make the Blue Ocean Strategy credible, believable and relevant. However because of the shadow of other management frameworks looking over the concept of the Blue Ocean Strategy, students will feel a nostalgic blanket over it, as if it is a mere rebranding of previous concepts and not an insightful perspective of strategic success.
As a student of management I have found the article interesting to read and to digest, although the relevance of this concept, compared to Michael Porter’s Five Forces Theory, lend much to be desired since not a lot of management experts have embraced the Blue Ocean Strategy as applicable in real world settings.
References
Collins, J and Porras, J. I., (1994). Built to Last: Successful habits of Visionary Companies. Harper Business.
Kim, W. C., and Mauborgne, R. (1997) Value Innovation: The Strategic Logic of High Growth. Harvard Business Review. July. 103-112.
Kim, W. C., and Mauborgne, R. (1999). Creating New Market Space. Harvard Business Review. January. 83-93.
Kim, W. C., and Mauborgne, R. (1999). Strategy, Value Innovation, and the Knowledge Economy. Sloan Management Review. Vol. 40 (3). 41-54.
Kim, W. C., and Mauborgne, R. (2005). Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant. Harvard Business School Press, Boston, Massachusetts.
Kraaijenbrink Training & Advies (2012). Four Risks Of A Blue Ocean Strategy. Retrieved from http://kraaijenbrink.com/2012/08/four-risks-of-a-blue-ocean-strategy/
Levitt, Stephen D. (2005). Freakonomics: A Rogue Economist Explores the Hidden Side of Everything. Harper Collins, New York.
McCraken, G. (2013). Not Blue Oceans, Blue Planets! Retrieved from http://cultureby.com/2006/02/not_blue_oceans.html
Nordstrom, K., and Ridderstrale, J. (2000). Funky Business: Talent Makes Capital Dance. Financial Times Management, Australia.
Peters, T. J. and Waterman Jr., R. H. (1982). In Search of Excellence. Harper & Row.
Pollard, Wayne E. Blue Ocean Strategy's Fatal Flaw. CMO Magazine, December 1, 2005
UNITAR, (2007). Book Review of Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant. UNITAR E-Journal Vol. 3, No. 2, June 2007 Retrieved from http://myais.fsktm.um.edu.my/8100/1/Book_Review_Blue_Ocean_Strategy.pdf
