Chapter 11 Chapter 9 Continuation and Renewal of Blue Ocean Strategy

Creating a blue ocean field is not achieved overnight, but a dynamic process.Once the blue ocean strategy is successful, it will only be a matter of time before imitators follow.From another perspective, how difficult is it to imitate the blue ocean strategy? As the company and its early imitators expand the scope of the blue ocean, more companies will follow.This raises the question, when is it time to create another blue ocean?In the final chapter, we discuss continuation and renewal of blue ocean strategies. Imitation of blue ocean strategy is a difficult business.Some barriers are operational, others are cognitive.Sometimes a blue ocean strategy can go without a challenger for as long as 10-15 years.Examples include Cirque de Soleil, Southwest Airlines, FedEx, Home Depot, Bloomberg, CNN, etc.From these cases, we concluded that the imitation of blue ocean strategy has the following obstacles:

*A valuable innovation may not make sense to be judged by traditional strategic logic.When CNN began broadcasting real-time news 24 hours a day, 7 days a week, NBC, CBS, ABC and other stations derided the practice as "chowder soup."Such a dismissive attitude certainly does not lead to rapid imitation of innovations. *Brand image hinders imitation of blue ocean strategy.For example, Body Shop's blue ocean strategy abandons the expensive packaging of cosmetics, does not promote youth and beauty, and does not use beautiful models.The business model that is very different from the traditional way makes most cosmetics manufacturers in the world do nothing about it.

*When the market capacity is limited, the natural monopoly prevents imitators from entering.Belgian film company Kinepolis introduced the first MEGAPLEX big screen in Brussels and, although very successful, there was no competition for 15 years.This is because the market in Brussels is limited and new entrants can only create a lose-lose outcome. * Patents or legal barriers prevent imitation. *Value innovation brings about a sharp increase in business volume, so that innovators enjoy cost advantages, while imitators have cost disadvantages.For example, Wal-Mart's purchasing volume allows it to take advantage of economies of scale, which limits other companies' imitation.

*The external characteristics of the network hinder the imitation of the blue ocean strategy.For example, eBay's online auction business has gathered strong popularity in a short period of time, which is very important for auction buyers or sellers to reach a deal, so it will not easily transfer to other imitators' auction websites. *Blue ocean strategy requires companies to make major changes to the original business model, and company politics often make it take years for a company to make up its mind.When Southwest Airlines launched the fast, flexible and cheap blue ocean strategy, if any company wanted to imitate it, it would involve adjusting routes, retraining employees, changing marketing and pricing strategies, and changing corporate culture, etc. Few companies can afford the price.

*The increase in the value of the enterprise has led to a sudden increase in brand awareness and loyalty.This kind of brand awareness is something that imitators cannot obtain even if they invest a lot of advertising dollars.For example, Microsoft wanted to drive Intuit's Quicken multimedia player out of the market, but it took ten years and huge investment, but failed. Table 9-1 shows that the barriers to imitation of all kinds are high.This is why we rarely see rapid imitation of blue ocean strategy.Moreover, blue ocean strategy is a systematic project, which cannot be simply copied, but requires internal coordination and integration in order to gain value from innovation.It is not easy to imitate such a system.

Table 9-1: Imitation Barriers to Blue Ocean Strategy *Traditional concept holds that value innovation is meaningless. * Blue Ocean Strategy does not match the brand image of other companies. *Natural Monopoly: The market cannot support a second competitor. * Patents and legal hurdles. *The cost advantage brought by the innovator's scale advantage hinders the latecomer. *External characteristics of the network. *Mimics significant requirements for relational balance, operational change, and cultural shift within the company. *The brand awareness and customer loyalty of value innovators discourage imitation.

Ultimately, however, imitation of blue ocean strategy is inevitable.But imitators take a piece of your blue ocean, and of course you'll do your best to defend and keep your hard-won customers.Yet the imitators aren't holding back either.When focusing on market share, you may once again fall into the trap of competition.Over time, competition, not customers, will be at the center of your strategic thinking and strategic actions.If this continues, the basic shape of the value curve will return to competition. In order to avoid the pitfalls of competition, the value curve needs to be monitored.Some signals from the value curve will remind companies when to re-explore new blue ocean areas, and when the value curve will become the same as under the competitive situation.

Monitoring the value curve can also sometimes tell you that the current blue ocean strategy still has a lot of profit margins. You must resist the temptation of transformation and gain economies of scale and greater cash flow returns by improving your operating level or expanding geographically.Companies should swim in the blue ocean and distance themselves from early imitators.The goal at this point should be to occupy the blue ocean territory for as long as possible. When rivals surround you, supply and demand are out of balance, brutal competition turns the sea red.When the competitor's competition curve is approaching you, it's time to find another blue ocean field.Comparing the competitor's value curve point by point with that of your own company, you can intuitively see the degree of imitation by the competitor and the degree to which the sea water turns red.

The Body Shop is one example.This company has monopolized the blue ocean field for more than ten years, but when the value curve of competitors approached it, it did not recreate new value, but fell into a red ocean, and its performance continued to decline. "Yellow Label" red wine has always been in the blue ocean field, getting rid of competition and enjoying high-profit growth.But at the same time, it also tried to launch a Casella wine, which is a long-term profitable product. When competition intensifies, this product is expected to become a new value growth point for the company.

For any company that wants to stand out from the fierce competition, the six principles of blue ocean strategy are the key points that the company needs to consider when making strategic decisions and strategizing.This does not mean, however, that there is no competition in the market, or that competition ceases, but quite the opposite.Competition is still an important element of the real market, so companies can only achieve outstanding performance by surpassing competition and creating a blue ocean. Blue oceans and red oceans always exist at the same time, which requires companies to master different strategies that can succeed in both areas.Still, a wealth of books and theories have been written and theorized about how to compete in the Red Ocean.This book hopes to bring some balance, and systematically and operationally sort out the formulation and implementation of blue ocean strategy, which will be beneficial for enterprises to surpass competition.