Chapter 9 Conclusion: The Sustainability and Renewal of Blue Ocean Strategy

1. Chapter 9Conclusion: The Sustainability and Renewal of Blue Ocean Strategy Kelly Bredensteiner Christine Cox Caitlin Greenwood Michele Haynes

2. Barriers to Imitation • A blue ocean strategy brings with it considerable barriers to imitation • A blue ocean strategy can go without credible challenges for ten to fifteen years • This was the case with Cirque du Soleil, Southwest Airlines, Federal Express, The Home Depot, Bloomberg, and CNN.

3. Barriers to Imitation • This sustainability can be traced to the following imitation barriers rooted in blue ocean strategy: • A value innovation move does not make sense based on conventional strategic logic. • Brand image conflict prevents companies from imitating a blue ocean strategy. • Natural monopoly blocks imitation when the size of the market cannot support another player. • Patents or legal permits block imitation.

4. More Barriers to Imitation • The high volume generated by a value innovation leads to rapid cost advantages, placing potential imitators at an ongoing cost disadvantage. • Network externalities also block companies from easily and credibly imitation a blue ocean strategy. • Because imitation often requires companies to make substantial changes to their existing business practices, politics often kick in, delaying for years a company’s commitment to imitate a blue ocean strategy. • When a company offers a leap in value, it rapidly earns brand buzz and a loyal following in the marketplace.

5. When to Value-Innovate Again • Eventually, almost every blue ocean strategy will be imitated • Result: you may fall into the trap of competition • Overtime, you may focus on the competition and not the buyer • If you stay on this course, the basic shape of your value curve will begin to converge with those of the competition • To avoid the trap of competing you need to monitor value curves on the strategy canvas • Monitoring value curves signals when and when not to value innovate • Also, it keeps you from pursuing another blue ocean when there is still a profit stream to be collected from your current offering • When the company’s value curve still has focus you should resist the temptation to value innovate again • However, you should focus on operational improvements and geographical expansion to achieve the maximum economies of scale and market coverage

6. When to Value-Innovate Again Continued • As rivalry intensifies and total supply exceeds demand, bloody competition commences and the ocean will turn red • Plot your own and your competitors’ value curves on a strategy canvas to determine when you should create a new blue ocean • This allows you to see the extent to which your blue ocean is turning red

7. The Six Principles • The 6 principles of blue ocean strategy proposed should serve as essential pointers for every company thinking of its future strategy

8. Conclusion • To obtain high performance in this overcrowded market, companies should go beyond competing for share to creating blue oceans. • Because red and blue oceans have always coexisted, reality suggests that companies succeed in both oceans and master strategies for both. • Companies need to learn how to make competitors irrelevant • This book aims to help balance the scales so that formulating and executing blue ocean strategy can become as systematic and actionable as competing in the red oceans of known market space.

9. Good to Great and Blue Oceans Strategy • One of the pillars of Good to Great: keeping it simple. • “The point is to realize that much of what we’re doing is at best a waste of energy. If we organized the majority of our work time around applying these principles and pretty much ignored or stopped doing everything else, our lives would be simpler and our results vastly improved.” Pg 205 GTG • Blue Oceans Strategies keep it simple by mitigating the effects of hyper-competition in red oceans • Both agree that structure, but not bureacracy, maximize output from scarce resources, and as in GTG, the biggest resource is human capital