Hi All,
I have heard these words many times and I wonder what are the real issues here? Are these new really new ideas??? Many MBA students have got this book especially those taking the Innovation and Entrepreneuer subjects?? What are the authors really talking about? Are there really new "oceans" that are not yet discovered?? New industries not yet discovered? Or simply dormant??
regards,
david chong
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Nowadays, it's hard to run into someone at b-school who hasn't already heard of Blue Ocean Strategy (BOS) or already have a strong opinion about it. Popular opinions on BOS have ranged from the near religious to the dismissive. There are people, such as Scomi Group CEO Shah Hakim bin Zain, who have redeveloped their entire corporate strategy using the analytical tools and framweworks of BOS. Others, such as Professor Philip M. Rosenzweig of IMD, have dismissed BOS as snake oil.
Most b-school students in this country have a tendency to evaluate ideas like BOS from an ideological perspective. And by that I mean that they decide on the merit/demerit of an idea like BOS largely on the basis of whether it fits with their current managerial frames. Hence we hear comments like "BOS is good because price competition is killing my industry. We should all try to operate in uncontested markets!" or "BOS is nonsense because in my experience, competition is always about price!"
What are missing from these popular discussion are:
a) an objective description of the central tenets of BOS and
b) a critical appraisal of the idea of BOS, including its merits/demerits against "conventional" strategy and its authors' claims to originality.
I have tried to contribute to a) by writing a blog post that attempts to provide a microeconomic analysis of the key elements of BOS. In particular, I've summarised the fundamental concepts of BOS, its underlying economic worldview and economic model as impartially as possible. Hopefully, this will provide a solid foundation for intelligent discussions on BOS. You can read my blog post "The Economics Of Blue Ocean Strategy" here:
The Economics Of Blue Ocean Strategy
Your comments and criticisms on this article are most welcomed. In future, I hope to follow up with another article that aims to critically appraise BOS.
HI George,
Good article I might add. I especially like your analysis of the economic model on Value Innovation.
However, there seems to be some similairties between Prahalad and Hamels Book "Competing with the future" and the ideas on "Blue Ocean". Prahalad is talking about Creating the future and Leaderhip in the industry. Your thoughts??
Also I am not so sure how many Malaysian based companies are using these innovative ideas on business in their Business plans?!??!? Any reserach you are aware of?? I tend to find most amlasyian comapnies may be behind in these innovative business models and are mainly relying on the traditional time tested planning models! Any thoughts??
Hey George, lets get Patrick Hoh in on this and maybe sometime next month sit down and "battle" these ideas out?? I love these type of conversation face to face?!?!?
PatricK Ready (see you on Sunday -1st July)?? Where are you? also let's bring in Mak, our new MBA student!?!?
regards,
david chong
great stuff from George, frankly speaking, i yet to read BOS but i did have the book, really need to spare some time for it.
Hi David,
You are absolutely right in drawing parallels between "Competing For The Future" and BOS.
Competing For The Future was motivated by the insufficiency of restructuring and reengineering. BOS is motivated by the dead-end of price competition.
Competing For The Future is concerned with reinventing industries and regenerating core strategies. BOS is concerned with creating and dominating uncontested market spaces.
Competing For The Future uses the tools of industry foresight, functionality thinking, core competence perspective, changing customer interfaces, strategic architecture/intent, stretch and resource leverage to achieve the goals of future competition. BOS frameworks and tools come with exotic names such as: “strategy canvas,” “value curve,” “four actions framework,” “six paths,” “buyer experience cycle,” “buyer utility map,” and “blue ocean idea index.”
Both take an economic approach to strategy. Hamel and Prahaled utilised the concept of economies of scope of activities to build their theory of core competencies. Kim and Mauborgne use the economics of value innovation to build a case for the existence of "blue oceans."
The slight difference is that Hamel and Prahaled took an explicitly future oriented approach. This is essential since in their view core competencies may take a decade to develop and a strategic intent may take just as long to realise. Because of their long gestation, core competencies form the enduring barrier to imitation by competitors. Kim and Mauborgne on the other hand, does not assume a future-oriented perspective. And their preference is to rely on a rapid accumulation of scale economies, learning effects and network externalities to form barriers to imitation.
Some reviewers of both books have criticised the pseudo-scientific "research" behind BOS as being methodologically flawed. They also question the efficacy of the tools advocated by Kim and Mauborgne.
I agree with some of these criticisms. In my view, BOS reinvents an idea so masterfully presented in Competing For The Future, and offer tools and techniques that are less robust than those of Hamel and Prahaled. Also, by hiding a normative method in positive garb, BOS gives its readers the false sense of security of having found a repeatable way to discover uncontested markets.
Hamel and Prahaled, on the other hand, offers no such illusions. Getting to the future first is hard work and full of pitfalls. We can increase our odds of success through foresight, strategic intent and leverage. But nothing is guaranteed and there are certainly no repeatable formulae. And when you finally reach the future, you'll still need to rapidly translate the opportunity share to market share.
Competition has never been and never will be about sailing into placid blue oceans. Instead, it will always be a fierce race to the future.
HI George,
Am glad to read your thoughts and your rather "interesting" analysis on both BOS and Prahalad's strategic thinking.
Hey ALL, try this other book "What the best CEOs Know" by Jeffrey Krames McGraw Hill. Let me put up another Post later. Strategic Leadership.
Briefly, I like Prahalad as it is more "genuine" and not trying o provide some solutions to some questions/issues which is standard to all companies and all situations!??
However, it would be good to see some concrete research or real cases to support or dismissed these propositions!?!?
regards,
david chong
Hi George/David,
Great thoughts, discussion and debate over 'Blue Ocean Strategy', I would love to join the party but I've got my head tied on a business meeting preparation and also out of the country. I'll be back soon enough to share my thoughts and opinions.
Cheers,
Patrick
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