Blue Ocean

Strategy meetings used to open with a competitor's name. Someone would put features in a table, count the checkmarks in each column, and note where the other product had a mark and this one didn't. Whatever was missing went onto the build list for next quarter, and that list became the roadmap.

What the method never explained is what happens when everyone works from the same table. Fill in the same columns as your rivals and the products converge, and once products converge the only thing left for a customer to compare is price. So the meetings kept ending in the same place. Somebody would ask what makes us different, the answer would be cheaper and faster, and the competitor was writing that same sentence in its own deck. A market where margins get shaved down that way picked up a name: the red ocean, red for the blood in the water.

Blue ocean is the label for the other side of that image. Rather than filling more cells in the shared table, redraw the table. The shift is in the question — not how to beat a competitor on the agreed terms, but how to reach a position where the comparison doesn't apply. A 2005 business book of the same name spread the term, and it now turns up as everyday shorthand in investor decks and new-business reviews.

The real content of the strategy is reworking the factors an industry takes for granted, in four directions. List everything the market currently competes on, then pick one of these four for each item.

1. Eliminate — drop a factor the industry always includes and customers barely touch. For a document collaboration tool, thirty font choices and page margin controls sit here.
2. Reduce — dial back a factor that has to exist but not at today's level. Permission settings split across twelve tiers collapse into three.
3. Raise — pour resources into a factor that only matters if it goes far past the industry norm. Search that took three seconds becomes search that takes 0.2 seconds, and at that point people actually start searching.
4. Create — add a factor the market doesn't offer at all, such as pulling decisions out of a meeting in real time. There is no column for it in the comparison table.

The first two and the last two are a matched pair. Eliminating and reducing pull cost out; raising and creating spend it. That is how the product can look different without charging more. Normally each added point of differentiation — a strength competitors find hard to copy — raises cost, and cutting cost flattens the product. This strategy goes after both at once.

Steps 1 and 2 are where teams fall down. Additions are easy to propose; subtractions draw objections in the room, because some real customer uses the thing being cut. Do three of the four and skip elimination and no cost comes out, which leaves an expensive product with a long feature list.

It comes up most when a company is sizing up a new business. Picking which market to enter, someone rules out a candidate with a line like "that one is already a red ocean, there's nothing left in it." Fundraising materials use it too, since an investor wants to know not only what the team is building but why this particular spot is still empty.

It also shows up in positioning documents. Positioning is deciding what place to occupy in a customer's mind, and this term names the choice of whether to take that place inside an existing category or build a new one. Choose to build, and the work runs into category creation — the attempt to define a new category and be the leader inside it. The two terms travel together.

The places it doesn't help are just as clear. It is no use in a meeting about what to build this quarter. It operates at the level of which market to compete in, so getting down to execution means translating it into something more concrete, such as competitive advantage or focus strategy. Competitive advantage is the point rivals can't easily copy; focus strategy is the decision to put every resource into one narrow area.

"That market is a red ocean already. If we go in, we need to find the blue ocean part of it."

An argument for avoiding the crowded position and looking for the empty one first.

"You wrote blue ocean here — what's the evidence there are customers sitting in that space?"

No competitors and real demand are two different claims, and this asks for proof of the second.

"I can't see what you took out of the competing factors. Everything on this list got raised."

Nothing lowers cost, so the result will be an expensive product.

At Pagedeck the term comes up in a business direction meeting, raised by Grace. Several large products already sit in the document collaboration market, and her read is that a 45-person company cannot win with the same feature list. Mia pulls up usage records on the spot and shows that most customer accounts use documents for one thing: meeting notes.

The choice that comes out of it is to handle meeting notes extremely well and little else. Document design features get reduced; live transcription and decision extraction get raised past anything on the market. Ravi asks whether it's acceptable to stop being called a document tool and start being called a meeting tool, and Grace says being called that is the better outcome. Changing the name people give you is part of the strategy, not a side effect.

The most common misreading is that a market without competitors is a good market. Empty sounds like opportunity, so the assumption is natural. But a space stays empty for two different reasons, and "several companies tried it and left because the money wasn't there" is every bit as common as "nobody has noticed yet." Walk in without telling the two apart and you carry the entire cost of convincing customers a category exists, alone, and usually run out of money before they are convinced.

The other frequent slip is using the term to mean shipping a new feature. A team adds something no competitor has and calls it a blue ocean, but a single feature gets copied within a quarter or two. What the strategy describes is rearranging the whole set of competing factors, not adding one. Change the set and anyone who wants to follow has to give up what they are currently good at, which is what makes following hard.