Blue Ocean Strategy (BOS)

Blue Ocean Strategy (BOS) is the simultaneous pursuit of differentiation and low-cost to create new market space. Blue Ocean Strategy seeks to make the competition irrelevant by creating a leap in value for both the company and its buyers.  

Blue Ocean Strategy aligns the following three propositions:  

1. Value proposition: The utility buyers receive from the product or service minus the price they pay for it.  

Is there a compelling reason for the mass of target buyers (customers and noncustomers) to purchase the new offering? Is the offering priced to attract the mass of target buyers so that they have a compelling ability to pay for it?  

2. Profit proposition: The price of the offering minus the cost of producing and distributing it.  

Achieving lower cost is achieved by eliminating and reducing factors that the industry has either taken for granted (e.g., legacy factors the industry still competes on but add little value); or over delivered on.

3. People proposition: The readiness of employees to execute the new strategy with all of their energy, to the best of their abilities, and voluntarily.  

Adoption hurdles can block the execution of a Blue Ocean Strategy. These forces may come from the company’s employees, business partners, or the general public. One must identify adoption hurdles, and address them up-front before attempting to execute a Blue Ocean Strategy.  

Beyond the alignment of these three propositions, six principles drive the successful formulation and implementation of Blue Ocean Strategy. See Principles of Blue Ocean Strategy.