Applying Blue Ocean Strategy to Architecture and Business Models
The term Blue Ocean is an analogy to describe the wider potential of market space that is vast, deep, and not yet explored. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. To seize new profit and growth opportunities, they also need to create blue oceans.
Red Oceans vs Blue Oceans. A Comparison
Red Oceans: Companies in the red ocean followed conventional approach of trying to out perform their rivals to grab a greater share of existing demand. As market space gets crowded, prospects for profits and growth are reduced.
Blue Oceans: Blue Ocean aims to create uncontested market space and make the competition irrelevant. Creating blue oceans builds brands.
Obstacles to Applying Blue Ocean Strategy.
-Value innovation does not make sense to a company’s conventional logic.
-Blue ocean strategy may conflict with other companies’ brand image
Natural monopoly: the market often cannot support a second player
-Patents or legal permits block imitation
-High volume leads to rapid cost advantage for the value innovator, discouraging followers from entering the market
-Network externalities discourage imitation
-Imitation often requires significant political, operational and cultural changes
-Companies that value innovate earn brand buzz and a loyal customer following that tends to shun imitators.
If you haven’t read about Blue Ocean vs Six Sigma you can visit Blue Ocean vs Six Sigma
If your a Marketing Strategist, you might want to read Six Sigma vs blue Ocean Strategy in my previous Post: Blue Ocean vs Six Sigma.
Thanks to Ramonsito Yandall, Kevin Villavicencio, Noel Liboon and John Trio for their report.