Red Oceans vs Blue Oceans

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W. Chan Kim and Renee Mauborgne studied hundreds of businesses across dozens of industries and found a pattern. Most companies treat the market as fixed: the space is defined, the customers are there, and winning means taking share from competitors. They call this a red ocean, red because competition is so fierce the water fills with blood. The companies that grew fastest and most profitably were doing something different. They were not competing harder for existing demand. They were creating new demand in spaces where competition did not yet exist. The researchers call these blue oceans: wide, open market spaces with enormous potential, relatively free of competition. The difference is not luck. Blue oceans are created through a specific kind of strategic thinking: instead of asking 'How do we beat the competition?' the question becomes 'How do we make the competition irrelevant?' This shift in question leads to entirely different strategies. Companies that create blue oceans often serve customers that existing industry players ignored, combine or eliminate features that the industry assumed were necessary, and offer something so different that comparison with competitors becomes meaningless. Circus du Soleil is the classic example: instead of competing with other circuses by getting better acts and bigger animals, they eliminated the circus conventions that were expensive and controversial and combined circus skill with theatrical storytelling. They created an entirely new entertainment category and made traditional circus comparison irrelevant.