The word strategy is derived from the Greek word “Stratos” which means “army” and agaîn “to lead”. Its definition according to the Larousse dictionary is: “The art of combining the action of military forces in order to achieve a war goal determined by political power”. Of military origin, the concept of strategy has since been used in many other fields: games, sport and business in particular. The Blue Ocean strategy aims to relaunch an activity in a market deemed saturated and hyper-competitive, with limited growth prospects.

The first theorizations of business strategy appeared in the 1950s (Havard Business School). According to this specialist in economics, a company must build a decisive competitive advantage in order to master the forces of competition. This model of generic strategies offers three distinct options:

• cost domination (offering the same value as that of competitors but at a lower price thanks to a reduction in costs obtained by high productivity)
• concentration (offering targeted to a single segment existing market)
• differentiation (proposing an offer with different characteristics from that of the competition).

Differentiation through purification eliminates elements of the service or product, costs decrease but for a less rewarding offer; while a differentiation by sophistication generates additional costs for the company.

W. Chan Kim and Renée Mauborgne are two researchers at the Blue Ocean Institute at INSEAD. After looking at hundreds of companies over 15 years, they identified what they call the “Blue Ocean Strategy”.

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What is a Blue Ocean Strategy?

The Blue Ocean strategy aims to relaunch an activity in a market deemed saturated and hyper-competitive, with limited growth prospects. For this, the authors advocate abandoning the obsession with confrontation and seeking to create and capture new demand.

The mistake of any company wishing to stand out would be to follow these criteria, that is to say, to take them into account in the marketing strategy. The only solution the company would have left is to overtake its competitors on the basis of these criteria. So if a company’s own strategic framework follows the profile of the market, then it is evolving in a Red Ocean.

In order to get out of it, we must not offer a better solution to the existing one, which would amount to segmenting its offer for a part of the market and increasing its costs. Rather, from the strategic framework, focus on “ non-customers ” (a market which is generally larger than the customer market). By meeting the needs of non-customers, a new very different curve on certain criteria will emerge.

Methodology for leading the creation of strategic space while mitigating risks

How can we concretely obtain a strategic framework that is radically different from the competition and build a profitable and virgin strategic space? The authors of the Blue Ocean strategy identify several principles to follow to create and navigate a safe blue ocean.

a) Capture non-customers (open a new market through an innovation/improvement that creates attractive value for non-customers)

Identification of non-clients

Why attract non-customers? We see that a company has more non-customers than customers. So start by asking yourself how to attract non-customers allows you to create the largest possible market and thus make the investment profitable. Wanting to differentiate itself by specializing is contrary to this idea, in fact in this case the company itself reduces the size of its market by excluding consumers and therefore from the potential outlet.

How to spot them? In the Blue Ocean strategy, we must ask ourselves the question: “Why do people satisfy the same need (for example: playing sport) in a sector other than ours?” “. By then looking for what these non-customers have in common with current customers, and by modifying the offer to meet both particularities at the same time, a much wider demand can be satisfied.

Non-client level Particularity How do you turn them into loyal customers?

Imminent Occasional buyers. Find the reason for their demotivation and respond to it. Find the reason that diverts them from the sector’s offer and respond to it. Those who have never been targeted by the sector because a priori they belong to another market. Find the reason that prompts them to choose another market for the same satisfaction of needs and respond to it.

Valuable research leads for non-clients.

Redraw the boundaries between markets. To get out of the Red Ocean and create new, profitable and sustainable demand, you have to be able to “look elsewhere”. There are five possible avenues for this:

• To see the alternative solutions available on the market. What alternative solutions do non-customers in a sector use to meet an identical need? Example:
• Need Company sector Alternative solutions offered by other sectors
• Move Air Transport Automobile, train …
• To entertain the Circus Cinema, play, comedy music
• The company will then seek to understand the factors that led to non-customers in its sector to opt for this alternative solution. It will thus be able to create or strengthen an element of its offer in order to break down the barriers and transform these non-customers into customers.

To see the other strategic groups in the sector. Within its market, the company will create sub-groups of competitors according to their positioning and their price. A buyer navigates within a sub-group for the customer benefit he offers him, which leads to real competition only between companies of the same sub-group without worrying about other sub-groups. The company will then be able to list the decisive advantages of the different sub-groups and modify its own offer (reduce/exclude) to offer these combined exclusive advantages.

Explore the buyer-user chain. Between prescribers, buyers and users, the motivations for acquiring/using the offer are different (the prescriber seeks an effective solution, the user an easy solution for consumption). So, in a fiercely competitive market, targeting only prescribers is to miss the user’s motivations. By asking what is unsatisfactory for a user in the current prescribed offering and remedying it is creating demand which now influences the prescriber.

Explore complementary products and services. Buyers seek to satisfy their needs with a comprehensive solution that is satisfactory to them. Consequently, the choice of a solution can be made according to the related complementary products or services (the acquisition of any mechanical and / electronic product entails maintenance costs, etc.).

It is up to the company to modify its offer so that the overall solution (acquisition/maintenance costs) is satisfactory over the life of the product.

Explore the functional or emotional content of the sector. This is to ask the question of knowing what can be excluded, mitigated or on the contrary added, reinforced in the characteristics of our offer in order to increase the emotional value of our offer (ecological product for example).

Once the avenues of research have been explored, how to go beyond small improvements and manage to focus on the priority problems to be solved in order to create this demand? Here too, it is necessary to depart from the typical strategic plan (analysis of the current market, propose a solution to gain market share by differentiation or reduction of costs, then set objectives). Of course, some traditional tools are useful. But first, you have to ask yourself the question of how to differentiate yourself. For this, in a Blue Ocean strategy, the procedure goes through the strategic framework mentioned above. Some rules to follow to set it up effectively?

Anticipate. We must not wait for the competition to bring the company up to the wall before opting for a Blue Ocean strategy. To do this, use the wage force that is undergoing the current attacks and the consequences felt by the various services.
Be responsible for analyzing customers and non-customers by the internal strength of the company. Besides the cost reason, this helps to make employees aware that the current situation is not satisfactory.

b) Create financial value

Once the way forward to create a new market has been clearly identified, it is necessary to ensure the profitability and sustainability of the proposed offer, the second characteristic of the Blue Ocean strategy. This involves “strategic sequencing” which aims to combine utility, strategic price and cost control in order to create “ innovation-value ”.

The role of the manager in the success of an Ocean Blue strategy

Getting a Blue Ocean strategy adopted can be a difficult challenge. Once again, we will have to face obstacles.

Employees:
The implication: transparency and the use of internal strength are the keys to the successful implementation of a Blue Ocean strategy. Employees are an undeniable help in pointing out the characteristics to be modified and then putting the new objectives into action. “ Fair management ” consists of involving the employee from the start in the development of the strategy in order to engage them and use their field experience.

But the manager has a good chance of meeting recalcitrant employees. To implement the expected changes, the authors propose a “management by the tipping point”. Identify the group of employees likely to be in favour of a change in order to bring them to be a cooperative, unifying and project-carrying element. For this, the avenues to follow are as follows: meet dissatisfied customers and/or make the employee use of the current offer prove that the current offer is unsatisfactory, obtain the assistance of the cicerone of each team …

The reassignment of posts and / or resources . Mitigating, excluding, strengthening or creating elements of the current offer involves an internal reorganization. Some services need to be restricted, in order to inflate others. Of course the previous point must be validated in order to obtain a salary adoption. When the company belongs to a group, transfers are often more easily possible and therefore negotiable.

Split their work. Frame the changes to be adopted within a restricted scope of actions in order to reassure each employee.
Valuing staff is the keyword to follow. It generates a feeling of recognition and therefore a strong motivation and involvement to succeed in the change strategy.

The partners:
Meet them and reassure them that the change of direction will not be detrimental to them.

Public opinion:
Support it in the adoption of a hitherto unknown strategy (debate to get the refractory accepted, for example, have it tested, etc.).

Importance and future of the Blue Ocean strategy

A strategy, therefore, consists of a series of coherent actions taking place according to a sequential logic to achieve or to achieve one or more objectives. It is then translated, at the operational level, into action plans. Blue Ocean or strategy Blue Ocean is the strategy of Innovation-value. Of course, imitators would be interested in the business value provided by this strategy. According to the authors who rely on their observations, the arrival of serious competitors will not be done until a few years later (about ten). Here is a list of elements likely to slow down their arrival in the Blue Ocean created by a company

Like any theory, this strategy can be criticized. Few companies manage to put it in place.

Fear of the consequences of a pay reorganization.

Difficulty giving up a low-value characteristic. Feeling of loss for the company …
The cumbersome management of some companies, often due to their size and age, makes it impossible to consider radical changes.

The desired effects of the Blue Ocean strategy will only be felt over time. This search for the ideal situation of non-competition is difficult, but it at least allows the companies which are tackling it to ask the right questions to avoid the risks of dispersion and or of simple optimization of the existing one.

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