Product #105

Blue Ocean Strategy Renée Mauborgne and W. Chan Kim · 2004

Blue Ocean Strategy provides a systematic way to escape overcrowded industries (“red oceans”) by creating uncontested market space (“blue oceans”). Instead of competing for a bigger slice of existing demand, organisations can expand the market frontier and make rivals irrelevant. This approach hinges on value innovation—the pursuit of both differentiation and low cost—to unlock significant buyer value while reducing cost structures.

Value Innovation: The Core Concept

Blue ocean strategy focuses on value innovation, rejecting the conventional trade-off between higher value and lower cost. By aligning a company’s entire system of activities in pursuit of both, organisations can attract new demand and render competition moot. In practice, value innovation involves:

• Eliminating: Which of the factors that the industry takes for granted should be eliminated?
• Raising: Which factors should be raised well above the industry's standard?
• Reducing: Which factors should be reduced well below the industry's standard?
• Creating: Which factors should be created that the industry has never offered?

This “eliminate-reduce-raise-create” formula shapes a brand-new value curve that offers buyers a leap in utility at a lower cost.

Key Tools and Frameworks

1. The Strategy Canvas

A diagnostic and action framework that shows where current competitors invest and which elements matter to customers. The horizontal axis plots competitive factors, while the vertical axis indicates offering levels. By highlighting a company’s and rivals’ value curves, the strategy canvas pinpoints where the field is crowded and how to stand apart.

2. Four Actions Framework & ERRC Grid

The four actions (Eliminate, Reduce, Raise, Create) encourage companies to rethink deeply held assumptions about what their industry competes on. The complementary ERRC grid (Eliminate-Reduce-Raise-Create) structures these moves, ensuring balanced attention to both cutting costs and adding innovative features.

3. Buyer Utility Map

Explores the full buyer experience cycle (Purchase, Delivery, Use, Supplements, Maintenance, Disposal) across six utility levers (Productivity, Simplicity, Convenience, Risk, Fun/Image, Environmental Friendliness). This helps identify hidden pain points and new angles for delivering unprecedented utility.

4. Pioneer–Migrator–Settler (PMS) Map

Classifies existing and new offerings by their degree of innovativeness.

• Pioneers create unique value curves that can unlock new demand.
• Migrators improve on existing industry offerings but don’t reshape boundaries.
• Settlers stay mired in me-too strategies and offer marginal gains.

The Eight Principles of Blue Ocean Strategy

Blue ocean strategy principles guide both formulation and execution in an integrated way, ensuring minimal risk and maximum opportunity.

Formulation Principles

1. Reconstruct Market Boundaries

Rather than accepting industry conditions as fixed, systematically look beyond conventional boundaries through six paths: alternative industries, strategic groups, the chain of buyers, complementary offerings, functional/emotional appeal, and time-based trends.

2. Focus on the Big Picture, Not the Numbers

Conventional planning often gets lost in data. Instead, use visuals—like the strategy canvas—to see how the current strategy compares and develop a clear picture of your new value curve.

3. Reach Beyond Existing Demand

Don’t just fight over current customers; unlock non-customers. Examine the three tiers of non-customers (“soon-to-be,” “refusing,” and “unexplored”) to identify major commonalities that can spark new demand.

4. Get the Strategic Sequence Right

The strategic sequence flows as follows:

1. Buyer Utility: First, assess if your business idea provides exceptional value to buyers. If no, rethink your concept. If yes, proceed.
2. Price: Determine if your price point is easily accessible to your target mass market. If no, reconsider your pricing strategy. If yes, continue.
3. Cost: Evaluate if you can achieve your cost targets while maintaining profitability at your strategic price. If no, revisit your cost structure. If yes, move forward.
4. Adoption: Identify potential adoption hurdles that might prevent your idea from succeeding in the market and ensure you’re addressing them proactively. If no, rethink your adoption strategy. If yes, you’ve reached the final stage.

Execution Principles

5. Overcome Key Organisational Hurdles

Execution often stalls due to four hurdles:

1. Cognitive: People underestimate the need for change.
2. Resource: Scarce budgets force trade-offs.
3. Motivational: Resistance or foot-dragging in the ranks.
4. Political: Internal or external opposition from vested interests.

Tipping point leadership helps tackle these by focusing on the few key influencers, using fishbowl management for transparency, and neutralising detractors while building coalitions of support.

6. Build Execution into Strategy

Integrate fair process to earn trust and voluntary cooperation:

1. Engagement in decisions that affect people
2. Explanation of why decisions are made
3. Expectation Clarity on roles, goals, and performance measures

Fair process ensures buy-in, speeding and improving execution quality.

7. Align the Value, Profit, and People Propositions

A compelling offering (value proposition) is not enough; you also need a solid profit proposition (achieving target costs and margins) and a people proposition (motivations, incentives, credibility). When all three align around differentiation and low cost, imitation becomes harder and sustainability improves.

8. Renew Blue Oceans

Over time, copycats emerge and erode your unique market space, turning the ocean red. Monitor your value curve for convergence with competitors. When it converges, it’s time to pivot or launch another blue ocean move. Multi-business firms can use the dynamic PMS map to keep an optimal mix of settlers (cash now), migrators, and pioneers (growth and renewal).

Ten Common Red Ocean Traps

1. Customer-Led Focus: Fixating on current customers rather than non-customers stifles new demand.
2. Leaving the Core: Believing you must enter far-flung businesses overshoots simpler in-core opportunities.
3. Equating Technology with Value: Technology is only a means; it must link to clear buyer utility.
4. Pushing First-Mover Advantage: Speed matters, but tying innovation to value matters more.
5. Confusing Blue Ocean with Pure Differentiation: Blue oceans pursue both differentiation and low cost, not just one.
6. Equating Blue Ocean with Low Cost Alone: Both buyer value and cost savings must be addressed.
7. Treating Innovation as Inherently Blue: An innovation that fails to offer a leap in value won’t create a new market.
8. Reducing Strategy to Marketing or Niche: Blue ocean moves require holistic alignment, not mere segmentation or marketing.
9. Competition Always Good: Excessive competition can erode profit; blue oceans avoid this trap.
10. Conflating Blue Ocean with Disruption: Blue ocean strategies can create new demand without necessarily displacing existing offerings.

Blue Ocean Strategy elevates your thinking beyond fighting rivals. It is about redefining market boundaries to make competition irrelevant. By linking innovation to value and focusing on non-customers, organisations can simultaneously pursue differentiation and low cost. The ultimate objective is robust, profitable growth driven by true leaps in buyer value, not by incremental enhancements or price competition.

Full Book Summary · Amazon

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Direct Manipulation: A Step Beyond Programming Languages

Ben Shneiderman. 1983. (View Paper → )

Certain interactive systems generate glowing enthusiasm among users-in marked contrast with the more common reaction of grudging acceptance or outright hostility. The enthusiastic users' reports are filled with positive feelings regarding

• mastery of the system,
• competence in the performance of their task,
• ease in learning the system originally and in assimilating advanced features,
• confidence in their capacity to retain mastery over time,
• enjoyment in using the system,
• eagerness to show it off to novices, and
• desire to explore more powerful aspects of the system.

These feelings are not, of course, universal, but the amalgam does convey an image of the truly pleased user. As I talked with these enthusiasts and examined the systems they used, I began to develop a model of the features that produced such delight.

The pleasure in using these systems stems from the capacity to manipulate the object of interest directly and to generate multiple alternatives rapidly.

Direct manipulation systems offer the satisfying experience of operating on visible objects. The computer becomes transparent, and users can concentrate on their tasks.

This paper coined the term "direct manipulation" as a new paradigm for human-computer interaction at a time when most computing required complex command languages. Shneiderman observed that direct manipulation software generated glowing enthusiasm from users compared to traditional interfaces.

The four key principles that produced user delight:

1. Continuous representation of objects of interest
2. Physical actions (e.g., mouse movements) instead of complex syntax
3. Rapid, incremental, reversible operations with immediate visible results
4. Layered learning approach that allows novices to become experts gradually

The brilliance of direct manipulation is that it reduces the need for syntactic knowledge by making semantic operations directly visible and manipulable on screen. The interface becomes "transparent," letting users focus on their tasks rather than on how to communicate with the computer.

Book Highlights

Do not have “required questions” There are no required questions in questionnaires. They are all optional, always Caroline Jarrett and Steve Krug · Surveys That Work

Facebook started as a service for just one university campus before it spread to other schools and then the entire world Peter Thiel · Zero to One

To be specific, the point of greatest peril in the development of a high-tech market lies in making the transition from an early market dominated by a few visionary customers to a mainstream market dominated by a large block of customers who are predominantly pragmatists in orientation. Geoffrey A. Moore · Crossing the Chasm

Product marketing worked with the product team to come up with compelling positioning and spearheaded everything else to bring Word to market: coordinating a product launch, creating sales tools for the field, readying customer testimonials, influencing pricing, enabling product evaluations, preparing competitive response tools, educating channel partners, and working with direct marketing and advertising teams to create compelling campaigns Martina Lauchengo · Loved

Quotes & Tweets

What matters more than anything else is to have clarity about what you truly want out of your work & life over the long-term and what that means for the trade-offs you must make right now in the present. Without that clarity, most people get too carried away (I might even say, manipulated) by the seduction of getting to the next rung of the ladder, or getting the rare "greatly exceeds expectations" rating in Q3, or soothing the envy you experience on LinkedIn when a former classmate becomes CPO of a fancy AI startup. Shreyas Doshi

Look at your habits: Are they the product of innumerable little cowardices and lazinesses or of your courage and inventive reason? Nietzsche