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The creation of new markets without destroying existing ones. Both the…
The creation of new markets without destroying existing ones. Both the Blue Ocean Strategy and Nondisruptive Creation focus on innovation that fosters growth and prosperity without causing harm to existing industries, jobs, or businesses.
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The main idea of the article is about the concept of Blue Ocean Strategy, which involves creating new market space (Blue Oceans) that is free of competition, rather than competing within the existing market boundaries (Red Oceans). This strategy allows companies to generate new demand, make competition irrelevant, and achieve growth and profitability.
Subordinate Concepts
Red Oceans represent existing industries with well-defined competition, where businesses fight for a share of existing demand.
Blue Oceans represent new, uncontested market spaces where demand is created rather than fought over.
Successful companies such as Cirque du Soleil have used Blue Ocean Strategy by redefining the boundaries of their industries and creating new value for customers.
The strategy also focuses on reducing costs while differentiating the product or service, achieving both low cost and high value simultaneously.
Propositions
The Creation of Blue Oceans:
To create a Blue Ocean, companies need to break out of the existing industry boundaries and redefine the market. This can involve altering traditional industry structures or even creating completely new industries, as seen with companies like Cirque du Soleil.
The Failure of Traditional Strategy:
Traditional business strategies are heavily based on competition, where the goal is to outperform rivals. This focus on competition limits the potential for companies to create new opportunities.
Red Oceans vs. Blue Oceans:
Red Oceans represent all the industries that currently exist. Blue Oceans, on the other hand, represent unexplored or new industries, where there is no competition.
Simultaneous Pursuit of Differentiation and Low Cost:
Blue Ocean Strategy rejects the traditional belief that businesses must choose between differentiation (creating higher value at a higher cost) and low cost. Instead, it enables companies to achieve both simultaneously.
The Role of Managers in Blue Ocean Creation:
The creation of a Blue Ocean is a result of strategic managerial actions, not merely technological advances.
Kim, W. C., & Mauborgne, R. (2023). Innovation doesn’t have to be disruptive. Harvard Business Review, 101(3), 72-81.
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The main idea is the concept of nondisruptive creation in innovation, where new markets and growth are created without destroying existing industries, companies, or jobs. This approach fosters economic growth and social harmony by introducing new market spaces that do not disrupt or displace any current market participants.
Subordinate Concepts
Disruptive Innovation:
Disruption is a common belief in innovation, where new companies or technologies destroy existing markets or industries to create growth.
Nondisruptive Creation:
In contrast to disruption, nondisruptive creation involves creating entirely new markets without displacing existing companies or jobs.
Social Impact of Innovation: Disruptive innovation often leads to social and economic pain, such as job losses and the displacement of industries, which generates negative adjustment costs.
Opportunities for Nondisruptive Creation: The text explores how companies can identify nondisruptive opportunities by solving unmet needs or addressing emerging problems in new ways, such as the creation of e-sports or microfinance, which didn’t disrupt existing industries but created entirely new ones.
Propositions
Red Oceans vs. Blue Oceans:
Red Oceans represent industries that are highly competitive, with clearly defined boundaries and a focus on outperforming rivals.
Blue Oceans, in contrast, are untapped market spaces where demand is created rather than fought over.
The Failure of Traditional Strategies:
Traditional strategies focus on competing within existing markets, where companies aim to outperform rivals and gain a greater share of the market.
Creating Blue Oceans:
Companies can create Blue Oceans by either creating entirely new industries (e.g., eBay) or by redefining the boundaries of existing industries to create new demand (e.g., Cirque du Soleil).
Simultaneous Pursuit of Differentiation and Low Cost:
Traditional strategies often involve a trade-off between differentiation (creating high value) and low cost.
Blue Ocean Strategy, however, allows companies to pursue both differentiation and low cost simultaneously.
Strategic Moves and Managerial Action:
The creation of Blue Oceans is a result of strategic moves made by companies
Successful companies understand the patterns behind these strategic moves and apply them to create uncontested market space.
Sustaining Blue Oceans:
Once a Blue Ocean is created, it is important for companies to protect and sustain it.
Companies that successfully create and sustain Blue Oceans can enjoy long-term growth and profitability without being threatened by competitors.
Kim, W. C., & Mauborgne, R. (2023). Innovation doesn’t have to be disruptive. Harvard Business Review, 101(3), 72-81.
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In summary, both strategies reject the traditional notion of competing for existing market share and instead focus on creating value in ways that do not harm established businesses or industries. They encourage sustainable growth and innovation without the adverse social impacts that disruptive innovations often entail.