Blue Ocean Strategy summary

by W. Chan Kim and Renée Mauborgne · 2005 · 7 key ideas · 18-minute read

Instead of fighting rivals in crowded markets, create uncontested market space by offering a leap in value at lower cost — making the competition irrelevant.

Why read it

For founders, product leaders and anyone stuck in a price war. It gives practical tools — the strategy canvas and the four actions framework — for redesigning an offer rather than just doing the same thing slightly better.

Blue Ocean Strategy in brief

Kim and Mauborgne divide the business world into two kinds of space. Red oceans are existing industries, where boundaries are accepted and companies fight over a fixed pie until the water turns bloody with competition. Blue oceans are markets not yet in existence, where demand is created rather than fought over.

Based on a study of strategic moves across many industries and more than a century, they argue that lasting success comes less from beating rivals than from making them irrelevant. The cornerstone is value innovation: raising value for buyers while lowering costs, breaking the usual trade-off between differentiation and low cost.

The book supplies tools for doing this. A strategy canvas maps how an industry competes. The four actions framework asks which factors to eliminate, reduce, raise and create. Six paths help you look across industry boundaries, and a focus on noncustomers widens the market. A strategic sequence checks utility, price, cost and adoption in that order.

Finally, the authors address execution: how leaders with limited resources can overcome organizational hurdles by focusing on what matters most, and why fair process — engaging people, explaining decisions and clarifying expectations — earns the cooperation a new strategy needs.

The 7 key ideas

1. Red oceans and blue oceans

Don’t outswim the sharks. Find new water.

2. Value innovation

Cut what buyers don’t value; invest in what they do.

3. The strategy canvas

If your curve looks like theirs, you’ll fight on price.

4. Eliminate, reduce, raise, create

Subtract before you add.

5. Look across boundaries

Look sideways, not just ahead at rivals.

6. Reach beyond existing demand

Your next market is the people who said no.

7. Tipping point leadership and fair process

People back decisions they helped shape and understand.

Key takeaways

• Draw a strategy canvas for your market and look for sameness.
• Use the ERRC grid to rebuild an offer, cutting cost as well as adding value.
• Study noncustomers to find what the industry gets wrong.
• Look across alternative industries and buyer groups for new space.
• Execute through fair process: engage, explain, set clear expectations.

Our take

Blue Ocean Strategy offers practical, memorable tools, and the strategy canvas and ERRC grid are genuinely useful in workshops. But critics note the examples are chosen with hindsight, and it is hard to know how many failed attempts to create blue oceans there were. Blue oceans also don’t stay blue: successful ideas attract imitators, and Cirque du Soleil itself filed for creditor protection in 2020 when the pandemic shut its shows. The approach works best as a creative discipline, alongside the competitive analysis it sometimes dismisses.

About W. Chan Kim and Renée Mauborgne

W. Chan Kim and Renée Mauborgne are professors of strategy at INSEAD, the business school in Fontainebleau, France. They later wrote a follow-up, Blue Ocean Shift (2017).

If you liked this

• Competitive Strategy by Michael E. Porter
• Zero to One by Peter Thiel with Blake Masters
• The Innovator's Dilemma by Clayton M. Christensen
• Good to Great by Jim Collins
• Built to Last by Jim Collins and Jerry I. Porras
• Good Strategy Bad Strategy by Richard Rumelt