Red vs Blue
Red ocean companies try to outperform their rivals to grab a greater share of existing demand. As the market space gets crowded, prospects for profits and growth reduce. Products become commodities and cut throat competition turns the ocean bloody red.
Blue oceans, in contrast, are defined by untapped market space, demand creation, and the opportunity for highly profitable growth. Most are created from within red oceans by expanding industry boundaries. In blue oceans, competition is irrelevant. Yes, imitators arise, but experience shows there is a wide window of opportunity to stay ahead of imitators.
What consistently separates winners from losers in creating blue oceans is their approach to strategy. Creators of blue oceans do not use the competition as their benchmark, but follow a different strategic logic that we call value innovation.
Instead of focusing on beating the competition, make them irrelevant by simultaneously creating a leap in value for buyers and your company, thereby opening up new and uncontested market space.
Source: Extracted from Kim &Mauborgne, 2005. Blue Ocean Strategy. Boston. Harvard Business School Publishing
