What is Blue Ocean Strategy about?
Understand how @Tesla used it to its advantage.
In business, the blue ocean strategy refers to the creation of new market space that is uncontested, making the competition irrelevant. This is done by creating and offering products or services that are unique and differentiated from anything else on the market.
The goal is to create new demand in a market that doesn't exist yet, rather than trying to compete in an existing market where there is already intense competition. The theory behind blue ocean strategy was first proposed in a 2004 book by W.
Chan Kim and Renée Mauborgne, professors at INSEAD business school. Since then, the concept has been applied to a wide range of businesses and industries around the world.
One of the most famous examples of blue ocean strategy is Cirque du Soleil, the world-renowned circus company. When Cirque du Soleil was founded in 1984, the circus industry was in decline.
Traditional circuses were struggling to compete against newer forms of entertainment, such as theme parks and video games. Cirque du Soleil reinvented the circus by creating a new type of circus that was more like a theatrical performance than a traditional circus act.
Cirque du Soleil's shows are known for their high-quality acrobatics, costumes, and music. The company has been so successful that it now has over 2,000 employees and generates over $800 million in revenue each year.
While blue ocean strategy can be applied to any business or industry, it is particularly well-suited for businesses that operate in mature industries with intense competition.
Blue ocean strategy can help businesses to break out of the "red ocean" of bloody competition and create their own "blue ocean" of uncontested market space.
@Tesla is an example of a company that has successfully used the blue ocean strategy. It has created a new market for electric cars, which has allowed the company to capture a large share of the market.
The traditional "red ocean" marketplace of vehicles is segmented into many different groups according to different customer demands. In order to satisfy the target group, the vehicle companies need to adjust the attributions of vehicles from size, appearance, etc.
The "green" car and sports car seem to always focused on two different customer groups in the past. The major feature of green cars was low energy cost, which conflicted with the characteristic of premium sport vehicle.
Tesla was the first company to combine these two attributes in one single vehicle model- the Tesla Roadster, which was the first vehicle of the company. It is a fast vehicle with plenty of torque with zero emissions.
Tesla created "green performance vehicle" marketplace, which was completely new market which hadn't existed before. Tesla created this "blue ocean" to itself, where it has large space to develop.
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