Blue Ocean Strategy: Redefining Market Boundaries for Expansive Growth

Many companies — whether startups or established industry players — will find themselves struggling against the tide of competition at some point, unable to break free from the stagnation of flat growth or penetrate new markets.

This is where Blue Ocean Strategy sails in, offering a lifeline to businesses trying to circumvent these challenges and propel themselves into uncharted waters of opportunity.

The Dilemma of Business Growth

It’s a juncture virtually every growing business will face eventually: the dreaded plateau where traditional growth strategies no longer yield results, leaving executives scrambling for ways to reignite their expansion engines. Startups, on the other hand, may aim for triple-digit growth but find themselves stalled in the single or double digits due to an inability to gain traction in new or existing markets.

With many U.S. businesses still dealing with the lingering economic effects of the pandemic as well as supply chain interruptions, a tight labor market and rising interest rates, many midsize-business owners see trouble ahead, an annual survey by J.P. Morgan Chase shows. Despite this slowdown, there are elements of resilience, such as continued consumer spending and growth in exports, buoyed by a relatively strong job market​ according to Deloitte.

Amid these conditions, businesses face must be prepared to manage challenging conditions for growth:

1. Flat Growth: established companies often hit a growth plateau, and struggle to reignite upward mobility and engage new prospects
2. Underwhelming Market Entry: startups and expanding businesses may find it difficult to gain a foothold in new markets, with a pace of growth far below the potential
3. Competitive Myopia: many businesses obsess over their competitors' moves, leading to a destructive price war and a lack of true differentiation
4. Misaligned Pricing Strategies: adding value often translates to higher prices, potentially alienating customers if the perceived value does not align with market demand
5. Market Saturation: companies that have fully tapped their current markets face the critical question of "what next?"

What is Blue Ocean Strategy?

Blue Ocean Strategy challenges traditional competitive strategies by advocating for the creation of new market spaces—termed as "blue oceans"—that are ripe with opportunity and devoid of competition. The strategy is built around the concept that businesses can achieve high growth and profitability not by battling competitors, but by systematically redefining market boundaries.

This strategy debunks the common misconception that to grow rapidly, businesses must add excessive value and correspondingly charge more. Instead, blue oceans of demand are achievable by increasing value for your ideal client profiles (ICPs) and charging less than strategic alternatives, which may include direct competitors as well as alternative solutions the market hasn’t yet considered.

Key to this strategy is the ERRC grid, which stands for:

• Eliminate and Reduce: cut down on factors that the industry takes for granted but that offer little value to customers
• Raise and Create: enhance elements that deliver greater value, and introduce new features that the market hasn’t yet seen or that address unmet needs

By focusing on what customers truly value and de-emphasizing less significant factors, companies not only save on costs but also offer their products or services at a lower price point or with greater value, making the competition irrelevant.

For example, a company that specializes in cloud storage solutions might find that their small business clients highly value data security and easy access over advanced, yet seldom-used, features.

By simplifying their interface and enhancing their security protocols while removing underutilized functions, they can reduce costs and focus on providing exceptional value in areas that matter most to their clients — distinguishing themselves from competitors who offer more complex yet less tailored solutions.

The Three Tiers of Non-Customers

An integral part of the Blue Ocean Strategy is targeting not just the existing customers in your market (often referred to as the "red ocean" of fierce competition) but also reaching out to "noncustomers." These are segmented into three tiers:

1. “Soon-To-Be” Non-Customers: those who use the current market offerings but are dissatisfied or see little differentiation
2. “Refusing” Non-Customers: those who consciously choose against your market’s offerings because they do not meet their needs or expectations
3. “Unexplored” Non-Customers: those who have never considered your market’s offerings as an option

By understanding and converting these noncustomers, businesses can tap into new demand, creating a blue ocean of potential growth.

Practical Steps to Navigate the Blue Ocean

For businesses keen on adopting this transformative strategy, the journey begins with education and expertise:

• Read & Learn: while "Blue Ocean Strategy" was the groundbreaking text, I recommend reading its more current sequel "Blue Ocean Shift" to understand the foundational concepts and recent advancements to the strategy
• Consult with Practitioners: partner with experts who specialize in implementing Blue Ocean Strategy — these professionals offer invaluable insights and can guide you through the complex process of redefining markets and breaking away from competition

Developing a deeper understanding of your ICPs through a brand story process and through strategic market research is essential before embarking on a Blue Ocean Strategy. This strategic orientation is vital for companies that aspire to navigate the complexities of today's economic landscape and emerge as market leaders in newly created blue oceans.

Blue Ocean Strategy offers a powerful framework for companies that aspire to break away from the norm and explore new growth avenues. It encourages businesses to shift their focus from competing within confined market spaces (red oceans) to creating new spaces (blue oceans), where the potential for growth is vast and largely untapped. For businesses ready to venture beyond the horizon, Blue Ocean Strategy is not just a tool, but a compass guiding them to success in the uncharted waters of the global market.

To learn more about Blue Ocean Strategy, read the books or connect with a B2B marketing agency and Blue Ocean practitioner.