The concept of Blue Ocean Strategy (BOS) was first published in 2005 in a book by W. Chan Kim. The concept is the end result of year long studies of 150 strategic straddling more than 130 industries over 100 years (1800-2000). It debated that firms can succeed not just by combating with its rivals, but rather by creating ″blue oceans″ of unconcealed market space or markets that do not even yet exist today. Such tactical moves create a dive in value for the company, its buyers, and its employees, while releasing new demand and making the competition immaterial. For instance, cost saving are made by eradicating and plummeting the factors an industry competes on; consumer value is raised by creating essentials the industry has never offered.
BOS is the concurrent pursuit of segregation and low cost that helps to achieve sustainable competitive advantage for the consumer, the company, and its employees. The aim of value modernization is not to battle, but to make the competition immaterial by changing the playing field of policy. The strategic move must hoist and generate value for the market, while concurrently eradicating features or offerings that are less valued by the existing or future market. A “Four Actions Framework” is utilized to help create value modernization and break the value-cost trade-off. BOS recommends finding values that outweigh conservative market segmentation and offering value and lower cost. BOS stands on “Re-constructionist’s” view. Presuming that formation and market borders exist only in managers’ minds, scholars who hold this view do not let current market structures edge their thinking. To them, further demand is out there, mostly untouched.
A perfect example of BOS practice in context of Bangladesh can be Grameen Shakti project. Grameen Shakti, one of the members of Grameen companies, supplies renewable power technologies to the countryside poor in Bangladesh. It facilitated the poor to procure biogas digesters or solar panels which involved a matching set of innovations making it categorized as a BOS. The panels are accumulated and set up by women given apposite technical training, also generating employment opportunities. The solar panels provide light at night, and enhanced fuel-efficient cooking stoves build a healthier atmosphere.
The BOS skeleton include: strategy canvas, value curve, four actions framework, six paths, buyer experience cycle, buyer utility map, and blue ocean idea index.
Raise: Which issue should be raised well above industry’s standard?
Eliminate: Which issue that the business has long-competed on should be abolished?
Create: Which concern should be addressed that the business has never presented?
Reduce: Which aspect should be condensed well below the industry’s standard?
These structures are premeditated to be visual in order to not only successfully build the communal astuteness of the company but also allow for efficient strategy implementation through simple communication.
BOS covers both strategy formulation and strategy execution. The three key conceptual building blocks of BOS are:
While competitive strategy is a configured theory of strategy where construction shapes strategy, BOS is a reconstructed theory of strategy where strategy shapes construction. The foremost task of a firm’s leadership, therefore, is to decide the suitable strategic approach in light of confronts the firm faces. There are three aspects that determine the right approach: the structural conditions in which the firm operates; its resources and potential, and its tactical approach. Structural conditions are lucrative but players are well-established and the firm lacks the resources or ability to surpass them.
In essence, as an incorporated loom to strategy at the method level, BOS requires firms to expand and ally the three stratagem propositions: value proposition, profit proposition and people proposition. If implemented successfully, firms will have an orientation toward modernization and compliance to practice new prospects.
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