Strategy in Turbulent Markets: Beyond the Blue Ocean Dichotomy

Blue Ocean Strategy gives leaders a disciplined way to stop benchmarking competitors and reconstruct market boundaries around new value. That is still essential. But markets are not static diagrams. Customers learn, technologies diffuse, regulation shifts and competitors respond.

In turbulent systems, the strategic task is therefore larger than finding a differentiated position. Leaders must connect that position to a capability system, make explicit commitments about what the organisation will and will not do, and keep testing whether the underlying assumptions remain true.

Competitors can usually see a new offer. They can copy features, pricing, store design, messaging and channels. What is harder to see — and much harder to reproduce — is the accumulated system beneath the offer: supplier relationships, operating rhythms, proprietary knowledge, trusted communities, data, talent and decision rights.

This distinction matters because a strategy canvas describes the factors on which an industry competes. It does not automatically reveal whether an organisation can deliver a new curve consistently or profitably.

The Australian Masters Home Improvement story is a useful warning. Its stores were visibly different from Bunnings, but the strategic contest involved much more than store presentation. Bunnings had accumulated a connected ecosystem of supplier relationships, trade-customer habits, local knowledge and community presence. Reproducing visible retail choices did not reproduce that system.

Competitive advantage asks how an organisation can outperform alternatives in a chosen arena. Comparative advantage asks a prior question: given our particular assets, relationships, knowledge and constraints, where are we unusually well equipped to create value?

The distinction prevents leaders from choosing an attractive market position that requires capabilities the organisation does not possess and cannot reasonably build. It also reveals opportunities that generic market analysis misses because those opportunities are valuable specifically in combination with what this organisation can do.

For Australian organisations operating in relatively concentrated markets, comparative advantage can be especially important. The aim is not simply to imitate the category leader more efficiently. It is to identify an arrangement of customers, capabilities and value that fits the organisation better than the conventional game does.

Successful blue oceans do not remain empty forever. Once a new value proposition proves demand, competitors arrive and imitation begins. The market becomes neither entirely blue nor conventionally red: it is a contested space shaped by the category creator and the organisations trying to appropriate its value.

We use the term “purple ocean” for this transition. It is not part of the original Blue Ocean Strategy framework; it is a practice-based description of what leaders face after category creation. At that point, renewal depends on more than adding features. The organisation must understand which elements of its advantage are visible choices, which are reinforcing capabilities, and which commitments would be damaged by chasing every competitor move.

An annual strategy document can create false certainty. A better approach is to express strategic choices as hypotheses: which non-customers will respond, which factors can be eliminated or reduced, what new value will matter, and which capabilities will make the offer difficult to copy.

Each hypothesis needs evidence, an owner and a decision date. Some can be tested through customer conversations; others require a prototype, a commercial pilot or a change to operating practice. The purpose is not to make strategy tentative. It is to make the reasoning explicit enough to learn before a large commitment becomes irreversible.

Turbulence does not make strategy irrelevant. It makes superficial strategy dangerous. Leaders still need a coherent view of where to play and how to create value, but they also need a living understanding of the system that will support or frustrate those choices.

The best strategy work therefore combines market reconstruction with capability realism. It creates ambition without pretending uncertainty has disappeared — and it gives the leadership team a shared process for deciding what new evidence means.