Red and Blue Oceans

It's not about republicans and democrats; it's about one of that metaphors that you can find in management literature on business and strategy. This week I've found this article - "Blue Oceans Strategy" - in HBR.



The authors present this concept of the Blue Oceans Strategy, BOS, versus the traditional Red Oceans Strategy, based on competition, with the red color referring to the bloody waters of the battlefield. BOS is about making the competition irrelevant and breaking the value vs. cost trade-off. But there is a paradox in the name selected, that the strategy itself is a military concept directly related with the competition, so you have that the corporate strategy needs an enemy to fight with in order to make any sense.



The article offers you some examples of BOS extracted from three important industries: automobiles, computers and Theatre&Entertainment; but, the "case study" used by the authors for developing their arguments is the one from 'Cirque du Soleil', the Canadian company that has reinvented the Circus business. And, in fact, they extract a consistent pattern for that kind of strategy from the Cirque du Soleil and Ford Model T paralelisms.



Some of the key findings extracted from the article:



- BOS are not about technology innovation.

- Incumbents often create blue oceans, and usually within their core business.

- Company and industry are the wrong units of analysis. The most appropriate unit of analysis for explaining the creation of blue oceans is the strategic move.

- Creating BO build brands; so, BOS creates considerable economic and cognitive barriers to imitation, and contributes to the increasing of loyalty within the buyers.



From a philosophical point of view, it's a question of shifting our mindset from a structuralistic view to a reconstructionist one, abamdoning the environmental determinism of the classic corporate strategy, as the authors themselves state in the article.



At the end of the day it's all about innovation, and the way you must embed it within the business processes and the corporate culture itself. I think that the importance of this concept of BOS is in the metaphor itself and its usefulness to communicate the power of innovation as a competitive strategy, expressed in the traditional and well-known military strategic terms.