Interview with the author's of Blue Ocean Strategy

I have been hearing a lot about the book "Blue Ocean Strategy" and for some unknown reason did a google search for it. I landed up on the official page and found a very interesting interview with the two authors of the book. A sampling of the first two questions is below:

1) What is a blue ocean strategy?

Kim & Mauborgne: Blue Ocean Strategy is a way to make the competition irrelevant by creating a leap in value for both the company and its customers.

2) What are red and blue oceans, and why do you use the colors red and blue?

Kim & Mauborgne: We use the terms red and blue oceans to describe the market universe. Red oceans are all the industries in existence today—the known market space. In the red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known. Here 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 are reduced. Products become commodities, and cutthroat competition turns the red ocean bloody. Hence, the term “red” oceans.

Blue oceans, in contrast, denote all the industries not in existence today—the unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. Blue ocean is an analogy to describe the wider, deeper potential of market space that is not yet explored. Like the “blue” ocean, it is vast, deep, powerful, in terms of profitable growth, and infinite.

The interview is a pretty good one and I have linked to it below. I haven't read the book but based on the interview it seems things like the low cost PC launched by ASUS could be classified as a Blue Ocean strategy. The start of the pure play foundry business model by TSMC in 1987 could also be considered a Blue Ocean strategy.

It seems this would be the right approach for the high tech industry in Taiwan. Many high tech products are being commoditized and there is very little differentiation between the products. The difference is brand and reputation but this is becoming less of a market force than before. Seeking new markets and creating demand as the authors of Blue Ocean Strategy suggest seems to be the way to go.

I have certainly seen this approach in my own industry with the explosion by industrial PC companies into medical computers, digital signage players and point of sales (POS) systems. This type of strategic thinking will become increasingly important for CEOs in Taiwan in the future. The rise of China and India in the tech sector will force them to think out of the box and to leverage their own and their staffs' creativity in seeking new places to apply their products and services.

Hopefully I will have time to read this book in the near future, maybe you will too. In the meantime, enjoy the interview.

Blue Ocean Strategy: A Conversation with W. Chan Kim and Renee Mauborgne
authors of BLUE OCEAN STRATEGY [Opens a Word document]