Blue Ocean vs. Red Ocean Strategy Examples: Which One Is Right for You
Industry jargon helps put names to the many faces of innovation concepts and strategies. Unfortunately, it also contributes to much of the abstraction associated with innovation management. The difference between blue ocean and red ocean strategy lies primarily in the target market. Blue ocean strategy opens a new market. Red ocean strategy competes in an existing space.
Sound familiar? Blue ocean and red ocean describe and elaborate upon each type of innovation strategy. Remember our blog post explaining the difference between sustaining and disruptive innovation? Well, if that was Innovation Strategy 101, this is Innovation Strategy 102. Welcome back, dedicated pupils, today we will be discussing blue ocean vs. red ocean strategy examples, and we expect you all to be on your best behavior. We hope that didn't remind you of that terrible substitute teacher we all had in high school.
Blue Ocean Strategy Examples
When searching for blue ocean vs. red ocean strategy examples, you’re likely to come across the same few cases over and over again. Amazon typically tops the charts due to its bookstore-alternative beginnings, followed by Uber. Amazon is an ideal demonstration. By doing some competitor analysis and adding a dash of blue ocean theory, Amazon created a unique offering in a market that didn't yet exist. It all starts with competitor analysis. However, Uber is not an example of blue ocean strategy. As you look over the following examples, try drawing your own conclusion as to why that is.
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The Pocket Radio |
Once upon a time, owning a radio was an expensive endeavor. Companies like RCA worked diligently to create high-quality radios for high-end consumers. Many people could not afford these mainstream luxury radios. Sensing RCA’s failure to detect low-end market value, Sony introduced a low-cost, portable radio. It was marketed primarily to teenagers, a previously ignored and underserved market. Despite the poorer sound quality of the TR-63, it was an enormous success. |
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iTunes |
Before the emergence of Apple’s iTunes, people purchased CDs or burned CD-Rs with sites like Napster that offered downloadable mP3s. That’s right, children. People rode their dinosaurs into the nearest village with a record store to stock up on compact discs. That is until iTunes disrupted the scene with an affordable alternative. Kidding. It’s important to note that the example here is iTunes, not the iPod. The iPod was far from the first portable mP3 player in existence. In actuality, the hardware (iPod) created the demand for the software (iTunes.) Thus, an entirely new market was born. |
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Cirque du Soleil |
Founded in 1984, Cirque du Soleil led to a reinvention of the traditional circus industry. Capitalizing, amongst others, on the fact that there was a growing public concern about the ethics of exhibiting live animals in circuses, they rendered traditional circus elements as unnecessary. By elevating the offering through premium performances that resemble theatrical spectacles, they were able to appeal to an entirely new target market including corporate clients and adults, who were subsequently also able to pay more. To this day, this business model has proven extremely successful. |
Blue Ocean Strategy Checklist
If you haven’t decided why Uber is not an example of blue ocean strategy, try running it through the following checklist:
- Did it create a market where none previously existed?
- Does it pursue differentiation AND affordability by breaking the value-cost trade-off?
- Is the competition non-existent or irrelevant?
According to the checklist above, Uber fails to meet blue ocean criteria on all accounts. It does, however, serve as an excellent differentiator between blue ocean vs. red ocean strategy examples.
Red Ocean Strategy Examples
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Uber |
Uber launched in San Francisco as an on-demand black car service. The market for upscale, on-demand transportation had already existed for a long time. Luxury car services dominated that space but were not accessible through an app. This differentiation led to the successful siphoning of market share from black car and limousine services. Some argue that Uber is disruptive innovation, and therefore, a blue ocean strategy example. However, it exploited an existing market and strategically prioritized differentiation over affordability, upholding the current value-cost trade-off. |
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Zoom |
Video chat platforms were far from a novel idea when Zoom launched. Nonetheless, Zoom has grown to be wildly successful over the competition. This market exploitation was achieved through accessibility and affordability. Zoom’s simplistic design makes for a far superior user experience. Of course, the fact that conference hosting is completely free doesn’t hurt either. |
Red Ocean Strategy Checklist
Red ocean strategy is much easier to demonstrate given the market saturation we see present day. But when discussing blue ocean vs. red ocean strategy examples, it helps to have a standard of comparison.
- Did it fall within an existing market space?
- Does it pursue differentiation OR affordability by creating the value-cost trade-off?
- Did they beat the competition?
Note that the last checkbox indicates that the competition is still relevant. In contrast, blue ocean strategy hinges on the irrelevance of competitors (completely new market, remember?). Also, note that blue ocean strategy examples must be different and affordable while red ocean strategy examples need only be different. Hey, why aren’t you writing this down?
Which Strategy Is Right for My Company?
This question is much easier to answer than it may seem at first glance. It can help to categorize your business goals within the realm of intrapreneurship or corporate entrepreneurship. If you’re having trouble getting started, ask yourself these two questions:
- Does your company prioritize disruptive innovation or sustaining innovation?
- Where do you fit within your industry?
If you’re on the low-end of an existing market looking to move up through strategic enhancements, you’re practicing sustaining innovation. In this case, your business could likely benefit from using the red ocean strategy. Your objectives align with the principles of red ocean strategy: building upon an existing market and differentiating yourselves in such a way that the competitors fall behind. Bye, Felicia.
On the other hand, if you saw question number two and thought, “What industry?” you’re sailing the vast blue ocean of untapped market value. Disruptive innovation is trademarked by its novelty. If your company’s goal is to create something new that revolutionizes the way people do something, you’re practicing disruptive innovation. So embrace the values of the blue ocean strategy. Competitors who?
Pop Quiz: Is Netflix a Blue Ocean or Red Ocean Strategy?
I told you to write that stuff down. Let’s refer back to our checklists and apply them to the beloved streaming service—Netflix!
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Red Ocean Strategy |
Blue Ocean Strategy |
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If you chose the blue ocean strategy, great! If you chose the red ocean strategy, see me after class. Ok, enough blue ocean vs. red ocean strategy examples. Let’s shift focus towards how to implement one or the other in your business.
Implementing an Innovation Strategy with rready
After reading our blue ocean vs. red ocean strategy examples, you probably already have an idea of which route your company should take. Either way, Innovation managers know all too well that implementing an innovation strategy requires a comprehensive inclusive approach. For example, attempting to foster innovation without engaging your employees is a contradiction in itself. Conversely, once your employees are engaged, they’ll need an accessible pipeline to actualize their ideas.
Consultation services can be an excellent form of support, but at rready, we believe ingenuity demands more. Cohesive innovation management is vital to success. You must address engagement (motivation), processes (guidance), and the technology to support it (implementation.) Hence, the creation of the KICKBOX program by rready.
rready provides the platform, methodology, professional services, and strategic support to steer your company’s vessel across the sea of innovation, whether it’s red or blue. Contact us when you’re ready to embark.
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