Nothing is more powerful than the strength of example. Here are six examples from Blue Ocean Shift, the latest book by INSEAD professors Chan Kim and Renée Mauborgne, the minds behind Blue Ocean Strategy. The book provides concrete methods and tools to move your company from red oceans filled with competition and price wars to a blue ocean, largely free from both. Here, you can read about companies that have “done it.”
30 years of research – hundreds of examples
A Blue Ocean Strategy sounds compelling, to say the least, and millions of readers worldwide embraced both the concept and the book, which was published in 2005. Blue Ocean has become a staple term in the business world and, like few buzzwords, has proven to be enduring. Many companies have also attempted to craft their own Blue Ocean Strategy. However, many have failed in the implementation.
Kim and Mauborgne have spent the years since the publication of their first book studying both the companies that have failed and those that have succeeded. This research led to the release of Blue Ocean Shift last year, which primarily consists of concrete tools for both devising and implementing the strategy.
Here are some of the companies that the authors themselves use as examples of successful Blue Ocean Shifts; that is, companies that have succeeded, at least for a time, in creating their own market. Their own Blue Ocean:
Example 1: Ford T
Almost 100 years before anyone had considered the concept of Blue Ocean, Henry Ford challenged the burgeoning market for automobiles in the USA with the introduction of the Ford Model T in 1908. His goal, which would become his Blue Ocean, was to make cars accessible to the average American middle class. At that time, the 500 existing car manufacturers in the US were producing vehicles that cost twice the total income of an average family.
Henry Ford streamlined production, introduced the assembly line, and dramatically reduced production costs compared to competitors. Production time was significantly shorter, and labor costs were also lower because Ford could employ unskilled workers to assemble the simple yet reliable car. By 1909, the Ford Model T’s market share was 9 percent, and by 1921, it had risen to a staggering 61 percent. The price of a Model T decreased as production became more efficient, dropping from $850 for the first model in 1908 to $609 the following year and down to $240 in 1924. The car became widely owned and was virtually without real competition. It even outpaced the horse-drawn carriage as the primary mode of transportation in the US.
Example 2: Canon
Canon made a classic Blue Ocean Shift when they created their own market for small photocopiers for office and later private customers. The shift involved changing the target audience for photocopiers from procurement officers in large companies to end users, and developing a product directly aimed at them.
Canon’s strategic move went against the industry’s logic and conventions, allowing the company to create its own market. It is a prime example of creating new value by looking unreservedly, not just at the product, but also at both customers and overlooked potential customers. Canon’s Blue Ocean Shift fits perfectly into the third path of the Blue Ocean Strategy’s Six Paths Framework.
Example 3: Cirque du Soleil
Twenty years ago, Cirque du Soleil revolutionized the circus industry by fundamentally redefining the concept of circus. Since then, their spectacular shows have been seen by over 150 million people in more than 300 cities around the world. Over these 20 years, Cirque du Soleil has achieved profit margins that have taken other players in the circus industry more than 100 years to reach.
This was achieved in a market that was pressured by new forms of entertainment, especially video and computer games. Most children would rather stay home in front of the computer than be taken to the circus.
The remarkable aspect of Cirque du Soleil’s success is that it did not steal customers from other struggling players in the circus industry. Instead, it created its own new market, rendering the competition irrelevant. Traditional circuses are primarily aimed at children, while Cirque du Soleil is designed for adults and corporate clients who are willing to pay a premium to see a spectacular show.
You can find a detailed description of Cirque du Soleil’s Blue Ocean Shift here.
Example 4: JCDecaux
The French outdoor advertising provider, JCDecaux, created its own Blue Ocean by considering a range of different parameters. Firstly, many advertisers were hesitant about outdoor advertising because customer exposure was brief, which provided limited opportunities to deliver a message and sell products. Secondly, there were limited options for posting ads unless temporary stands and billboards were erected.
JCDecaux brought outdoor advertising into the urban landscape by offering municipalities to provide so-called “street furniture,” such as bus shelters. The provision was free of charge and included free maintenance. In return, the company gained the rights to and all revenue from advertising on the furniture.
In this way, JCDecaux created its own advertising spaces—and its own market. Outdoor advertisements could now be placed in locations where people actually had time to study them. As a result, this form of advertising suddenly became attractive to many businesses that had previously rejected it.
The JCDecaux case is a good example of how it is often necessary to look at one’s “non-customers” in order to challenge the conventional market and create new value.
Example 5: Novo Nordisk
Danish company Novo Nordisk made a Blue Ocean Shift many years ago that is similar to the Canon example and still proves its worth. In the early 1980s, Novo had already developed a synthetic insulin that was an exact copy of the insulin produced by the human body and that diabetic patients lacked. With the first competitors already in the market, Novo needed to think innovatively to secure its leading position and market share.
The company shifted its focus from the traditional target group for insulin—the doctors who prescribed the medication—to the patients themselves. With a series of innovations like the NovoPen, NovoLet, and Innovo, the Danish pharmaceutical company made patients its target audience by making it easier for them to both dose and administer their medication. Novo transitioned from being just an insulin producer to a company that cared for diabetes patients and remains a leader in the global market to this day.
Example 6: Pfizer
We conclude our collection of examples with another pharmaceutical company. When Pfizer created Viagra, it represented a paradigm shift from medicine as primarily functional to something equally emotional. Viagra is a so-called lifestyle drug designed to improve the quality of life for men with erectile dysfunction.
Pfizer initially targeted doctors with a professionally rational marketing approach but did not achieve success with that strategy. It was only when they shifted to a more emotional and slightly humorous approach that they finally gained traction.
The product was not only a Blue Ocean for Pfizer but also opened up a myriad of new opportunities for the entire industry. It is also a prime example of the fifth path in Blue Ocean Strategy’s Six Paths Framework, which involves daring to challenge both the functional and emotional appeal of your products and industry in relation to customers.
In the same way, many functionally oriented industries and companies could breathe new life into existing products and create renewed demand by adding an emotional dimension.
More about Blue Ocean Strategy and Blue Ocean Shift
You can read more about these—and other—examples of successful Blue Ocean Shifts here. You will also find a wealth of additional information about both Blue Ocean Strategy and Blue Ocean Shift.
Learn more about our leadership program, the Executive Management Programme INSEAD, which extensively embraces Blue Ocean Strategy.
