Book Summaries Business

Blue Ocean Strategy Summary (9/10)

Blue Ocean Strategy is a book that argues for a better strategy in business, finding uncontested space rather than join the fierce competition that already exists.

When a market is crowded, products become like commodities – they lose value and it becomes difficult to stand out. If you want to join the competition, you will be competing for a tiny share of a market.

But there is an alternative. Instead of thinking about beating your competition the way a typical business logic would suggest, you should be thinking about how to create value by establishing new industries.

Think about the hotel industry. For decades, hotels were competing against each other in terms of location, price, quality of service, and many factors. This industry became a Red Ocean. But some companies found a Blue Ocean around the same customers.

Hotel Review sites conveniently provides its visitors a way to compare prices of different hotels and view pictures of the hotel rooms themselves as well as reviews from other visitors. Airbnb created a new industry. Instead of looking for a hotel to stay in, people now have the choice of renting a room or an apartment for lower prices. This two sided marketplace allows the owners to make money, and the renters to find more convenient alternatives.

There are still customers who will prefer to stay in a traditional hotel, but the democratization of this space has made it possible for a wider range of customers to meet their needs.

Blue Ocean Strategy is about finding these new ways of innovating for customers. And to do establish a successful blue ocean, you need to make sure that you are 1) Increasing value substantially for the customer 2) Are doing things in a new way.

"A gilded No is more satisfactory than a dry yes" - Gracian

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