TURNIN

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TRADITIONAL MARKET SPACE

• Competition is at the heart of corporate strategy

• Traditionally, markets are defined by boundaries

• Organizations enter markets and employ various strategies to carve out market share from an existing space

• Grabbing market share is a zero-sum game with winners and losers

• Defensible positions are created and jealously guarded from other competitors

WHAT IS A RED OCEAN?

• Represents all of the industries in a given market space at a specific point in time

• Industry boundaries are strictly-defined and accepted by all players in the space

• The goal is to beat the competition by exploiting existing demand in your favor via all “appropriate” means

• Value / Cost paradigm is seen as a trade-off

• Cutthroat competition turns the ocean Red

RED OCEAN EXAMPLES

• Hewlett Packard / Dell• Bank of America / Citigroup• ATT / Verizon• Dish / Direct TV• St. Vincents Hospital / Billings

Clinic

THE GOOD…POSITIVE ATTRIBUTES OF RED OCEAN STRATEGY

• Market forces and competition can negatively affect pricing

• Insures that organizations pay attention to input costs

• Reduces excess capacity and waste

• “Culls the Herd”

• Attempts to match consumer demand with provider supply

…THE BAD, AND THE UGLY

• Excludes Collaboration• Service Duplication• Often Marginalizes Consumers• Wastes Resources• May Stifle Innovation

WHAT IS A BLUE OCEAN MARKET SPACE?

• Denotes all the services or products not in existence today- i.e. Unknown Market Space

• Identified by untapped demand or demand creation

• Most are created from within red oceans by expanding boundaries

• Competition becomes irrelevant

BLUE OCEAN EXAMPLES

Henry Ford “Model T”

Thomas Edison and the Electric Bulb

Henry Kaiser and the prospective payment model

Steve Jobs and Apple, Inc.

Google

Cirque du Soleil

Minute Clinics

CORE CONCEPTS FOR BLUE OCEAN STRATEGY• Blue Oceans are often created from within core

businesses

• Blue Oceans are not defined by technology innovation

• Blue Ocean strategy does not use the competition as a benchmark

• Blue Ocean strategy marries cost reduction and innovation to yield total value

• Blue Ocean strategy does not recognize boundaries

• Blue Ocean strategy builds brands

LOCAL EXAMPLES OF BLUE OCEAN INITIATIVESMissoula Bone and Joint Musculoskeletal

Urgent Care Clinic- Missoula, MT

Rocky Mountain Surgical Center- Bozeman, MT

Orthopedic Center of Montana- Great Falls, MT

St. Vincents Orthopedic Center of Excellence- Billings, MT

KEYS TO SUCCESS IN BLUE OCEAN STRATEGY• Be Appropriately Bold• Think Outside the Box• Be Disruptive• Listen but do not worship the

“nay” Sayers• Dare to Dream• “First to Market” is very powerful

CONSUMER PREFERENCES

Source: Advisory Board Presentation: Blueprint for Growth 2020; 2014 Primary Care Consumer Choice Survey, Marketing and Planning Leadership Council

FINAL THOUGHTS

• Red Oceans will always matter and successful organizations will still need to outcompete rivals in defined market spaces

• As markets consolidate and margins tighten, competition alone will be insufficient

• Identifying and then seizing uncontested market space is a means by which organizations can benefit from new growth and profit opportunities

CITATIONS

Chan Kim, W., and Mauborgne, R. (2004) Blue Ocean Strategy. Harvard Business Review. October 2004, p. 2-10.

Chan Kim, W., and Mauborgne, R. (2005) Blue Ocean Strategy: From Theory to Practice. California Management Review. Vol. 47(3), p. 104-121.

Gunther McGrath, R., and MacMillan, I., (2005) Marketbusting: Strategies for Exceptional Business Growth. Harvard Business Review. March 2005.

Chan Kim, W., and Mauborgne, R. (2004) Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant. Harvard Business School Publishing. December 2004