Book Review: Blue Ocean Shift: Beyond Competing

    By: PDMA Headquarters on Feb 15, 2018

    Blue Ocean Shift:  Beyond Competing (Proven Steps to Inspire Confidence and Seize New Growth)

    by W. Chan Kim and Renée Mauborgne.  Hatchette Books:  NY (2017).  319 pages. US$28.00 (hardcover). 

    Written by Klaus Hitzenberger

    Blue Ocean Shift:  Beyond Competing

    In 2005, Professor W. Chan Kim and Renée Mauborgne changed the international business landscape. They presented their theory of “Red Oceans” as the allegory for fierce competition in well-established markets, and of “Blue Oceans” which have almost no competition at all.

    Although their original book “Blue Ocean Strategy” [1] had some tools on moving an organization to blue oceans, there was still a need to get deeper into that subject. Their current book fills this gap. It includes 30 years of experience from the authors on how to apply the blue ocean strategy framework, and fulfill a successful “Blue Ocean Shift”.

    The book starts with a description of the product, Actifry®, where Group SEB escapes the price war in the red ocean of traditional fryers (pg.5-7). 

    “The team redefined the problem from one the industry focused on (how to make a best-in class fryer) to how to make mouthwatering, healthy, and fresh fries without frying.  Actifry requires no frying, and uses only a tablespoon of oil to make two pounds of fries, with roughly 40 percent fewer calories and 80 percent less fat than the same size serving of traditional fries” (pg. 6).  It took competitors five years to dive into the market … and to this day, more than ten years out, Actifry remains the market leader (pg. 7). 

    We see later that this example proves the need for technical expertise to assure a blue ocean shift.

    The book is divided into two main parts. The first part presents the fundamental concepts and background on the blue ocean framework, and the second part details a five-step approach on how to conduct a blue ocean shift.

    Part 1:  Blue Ocean Shift

    The authors define the blue ocean shift as a systematic process to move your organization form cutthroat markets with bloody competition – what we think of as “red oceans” full of sharks -to wide open “blue oceans,” or new markets devoid of competition, in a way that brings your people along (pg. 7).  Following their approach, you will have the possibility to break the value-cost trade off.

    The book cites the following three key components for a successful “blue ocean shift” (pg. 23).

    • Expand your horizon and shift your understanding of where opportunities reside..
    • Apply appropriate and practical tools
    • Having a “humanness” process that uses small steps and firsthand discovery.  This means to “allow people to see things that they never saw before and realize the need for change themselves” (pg. 72) and apply a fair process in the entire journey.

    The book distinguishes between Disruptive Creation and Non-Disruptive Creation (pg. 37). Of course, it is appealing to deal with disruptive innovations, but sometimes it is much easier to identify and solve a brand-new problem or to seize a brand-new opportunity. This means creating a new market space without disrupting an existing one. So now let’s have a look at the five systematic steps that minimize the randomness and trial and error in creating new markets, so you maximize the chances of hitting the bull’s-eye (pg. 72), as discussed in Part 2 of the book.

    Part 2: The Five Steps to Making a Blue Ocean Shift

    Step One - Get Started (Chapters 5 and 6): The Tool “Pioneer-Migrator-Settler-Map” (pg. 89) guides you to target the area where you have the most to gain by the blue ocean shift.  For this transformation project, it is critical to employ the best team possible. The best team includes the right mix of skills, the level of function and hierarchy, and the appropriate characters needed.

    Step Two - Understand Where You Are Now (Chapter 7):  A “Strategy Canvas” (pg. 125) collectively builds a simple picture that captures your current state.  It creates a commonly owned baseline for change, so you easily agree with your team on the need for the shift.

    Step Three - Imagine Where You Could Be (Chapters 8 and 9):  With the “Buyer Utility Map” (pg. 155), you discover the pain points of buyers imposed by the industry.  The buying cycle is broken down into six stages (Purchase, Delivery, Use, Supplements, Maintenance, and Disposal) and set in relation with the following utility levers: Productivity, Simplicity, Convenience, Risk Reduction, Fun and Image, and Environment Friendliness.  Finally, you mark the pain points and the points the industry currently focuses on.  In the next step, you widen your customer perspective. With a model called “The Three Tiers of Noncustomer” (pg. 169), you investigate categories identified as “Soon-to-be noncustomer”, “Refusing customers”, and “Unexploited customers”.

    Step Four - Find How You Get There (Chapters 10 and 11): Now you are ready to investigate systematic paths to reconstruct market boundaries. With “The Six Paths Framework” (pg. 193), you investigate the following strategic paths:

    • Look across alternative industries,
    • Look across strategic groups within your industry,
    • Look across the buyer chain and redefine the industry buyer group,
    • Look across complementary product and service offerings,
    • Rethink the functional-emotional orientation of your industry, and
    • Participate in shaping external trends over time.

    Consequently, you develop alternative strategic options that achieve differentiation and low cost.  “The Four Actions Framework” (pg. 220) helps to decide which factors of your offering needs to be reduced, raised, created or eliminated.  Now you are ready to redraw your “Strategy Canvas” with the new target.

    Step Five - Make Your Move (Chapters 12 and 13):  In the last stage, you select your move at a “Blue Ocean Fair” (pg. 242), conduct rapid market tests, and iteratively refine your move.  This includes formalizing your big-picture business model that delivers a win for both buyers and you.  The initiative is completed with a Launch and Roll Out.

    In my opinion, the book “Blue Ocean Shift” not only provides a proven framework on how to make a shift in an organization’s strategy, it also closes a gap between strategy development and innovation projects. The results are clear areas, where an organization needs to change its product and service offerings. As New Product Development Professionals (NPDP), most of the tools and concepts sound familiar, but the presented process gives a systematic guidance on how to create new markets.

    Personally, I see only one important element missing.  Once you know which factors in your offering need to be changed, you still need additional tools and techniques on how to do the development.  Let’s take the example of Actifry®, once the requirements are clear for the blue ocean fryer, you still need the technical skills to do the invention of hot air frying.  Of course, if your team has followed the whole process of the blue ocean shift, and have gained insight of customers, or potentials customers - which they have never thought of - they are ready and motivated to close that gap.

    “Blue Ocean Shift” is a must read for everyone working in innovation or strategy development.  It is especially suited for people working on the digital transformation, because a transformation of an organization needs to create value innovations – be it digital or analog.

    Mag. (FH) Dipl.-Ing. Klaus Hitzenberger, NPDP

    Innovationsoptimierer e.U.

    [1] W. Chan Kim and Renée Mauborgne, Blue Ocean Strategy: How to Create Uncontested Market Space And Make The Competition Irrelevant.  Boston, MA: Harvard Business School Press, 2005.

    Released: February 15, 2018, 7:10 am | Updated: February 19, 2018, 9:23 am
    Keywords: PDMA Blog | Book Review

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