Strategy

Don’t you just hate when people make up terminology to suit their purpose? You may think that Chan Kim and Renee Mauborgne may fall into the category of trying to coin new words to set their concepts apart, but there is method to the madness.

The concept is quite simple to understand. The Red Ocean is where every industry is today. There is a defined market, defined competitors and a typical way to run a business in any specific industry. The researchers called this the Red Ocean, analogous to a shark infested ocean where the sharks are fighting each other for the same prey.

A couple of years ago, my husband and I vacationed in Tahiti and went on a shark feeding dive. It was amazing to see how the sharks tore apart the chum and beat each other up over every morsel. Isn’t this much the same behavior we see in our industries? Thus the term, Red Ocean.

The Blue Ocean, on the other hand, is calm, smooth, with lots of food and little or no competition. This is where everyone would like to be and it is possible for you to have a Blue Ocean.

Consider some of the well known Blue Oceans created by the New York Police Department, Southwest Airlines, Cirque du Soleil, Casella Wine [yellowtail], Nintendo (Wii), Cemex Cement, and The Body Shop. These organizations created their blue ocean and so can you.

Here are the differences between the Blue and Red Oceans.

So just what does this mean? Let’s take the differences one at a time.

Focus on current customers vs. focus on noncustomers. In most industries there is little effort to attract new buyers to the industry, thus the focus on the customers currently purchasing in that industry. In the Blue Ocean, there is a focus on trying to increase the size of the industry by attracting people who have never purchased in that industry.

Compete in existing markets vs. Create uncontested markets to serve. Sounds good, right? But how do you do that? Existing markets are all the customers doing business in the