Implement Blue Ocean Strategy: A Founder’s Guide

The Founder’s Guide to Implementing Blue Ocean Strategy

You know the feeling. The constant, grinding pressure of competition. You’re fighting for every sliver of market share, battling on price, and spending a fortune on marketing just to be heard above the noise. Your market is a blood-red ocean of rivals, all chasing the same exhausted customers. It’s draining. But what if there was another way? What if, instead of fighting in that crowded space, you could simply… leave? This is the core promise of Blue Ocean Strategy, a game-changing approach for founders who are tired of playing by the old rules and ready to create their own.

This isn’t just some abstract business school theory. It’s a practical framework for creating new markets and unlocking massive growth by making the competition completely irrelevant. Forget trying to be the best. It’s time to be the only. In this guide, we’ll walk through exactly how you, as a founder, can implement this powerful strategy to chart a course for your own uncontested, deep blue ocean.

Key Takeaways:

• Blue Ocean Strategy is about creating new, uncontested market space (blue oceans) rather than competing in existing, saturated markets (red oceans).
• The central idea is Value Innovation—simultaneously pursuing differentiation and low cost to create a leap in value for both buyers and the company.
• Key tools include the Strategy Canvas for visualizing the current market and the Four Actions Framework (ERRC) for reconstructing market boundaries.
• This approach is not about out-competing rivals; it’s about making them irrelevant by creating a new value curve.

What Exactly Is Blue Ocean Strategy (And Why Should You Care)?

Coined by W. Chan Kim and Renée Mauborgne in their groundbreaking book, the concept is beautifully simple. Most companies operate in “Red Oceans.” These are all the industries in existence today—the known market space. The rules of competition are defined, and companies try to outperform their rivals to grab a greater share of existing demand. As the market space gets crowded, profits and growth shrink. The competition gets bloody. Hence, the red ocean.

“Blue Oceans,” on the other hand, are the unknown market spaces. They are the industries not in existence today, untainted by competition. In blue oceans, demand is created rather than fought over. There’s ample opportunity for growth that is both profitable and rapid. Think about the first iPhone. It wasn’t just a better phone; it created a new category of device and a new market for apps. That was a blue ocean.

Red Oceans vs. Blue Oceans: The Core Difference

It boils down to a fundamental shift in thinking:

• Red Ocean Strategy: Focuses on competing in existing market space. The goal is to beat the competition. You’re forced to make a value-cost trade-off (either create greater value at a higher cost or reasonable value at a lower cost).
• Blue Ocean Strategy: Focuses on creating new market space. The goal is to make the competition irrelevant. You break the value-cost trade-off by pursuing both differentiation and low cost simultaneously. This is the magic of Value Innovation.

As a founder, you’re likely short on resources. You can’t out-spend or out-muscle an established giant in a red ocean. It’s a losing game. Your greatest assets are agility, creativity, and the ability to see the world differently. Blue Ocean Strategy provides the framework to leverage those assets and find a space where the big guys aren’t even looking.

The Core Tools of Your Blue Ocean Voyage

This isn’t about just brainstorming and hoping for a eureka moment. Blue Ocean Strategy is a systematic process with powerful analytical tools to guide you. Let’s look at the two most important ones.

The Strategy Canvas: Visualizing Your Competitive Landscape

You can’t chart a new course until you know where you are. The Strategy Canvas is a diagnostic tool and an action framework that helps you visualize the current state of play in your market. It’s a simple line graph:

1. The horizontal axis captures the key factors the industry competes on and invests in. For the airline industry, this might be price, meals, lounge access, and hub connectivity.
2. The vertical axis captures the offering level that buyers receive across all these key competing factors. A high score means a company offers more of that factor, and invests more in it.

When you plot your company and your competitors on this canvas, you get what’s called a “value curve.” In most red oceans, the value curves of all the competitors look strikingly similar. They’re all just trying to be a little better, a little cheaper, on the same set of factors. Your goal is to create a value curve that looks completely different—one that zig-zags where others stay flat.

The Four Actions Framework (ERRC): The Heart of the Shift

Once you see the industry’s standard value curve, the Four Actions Framework helps you break it. It challenges the long-held dogmas of your industry by asking four key questions. This is where you reconstruct buyer value elements to craft a new value curve. It’s often called the ERRC Grid (pronounced ‘Urk’).

• Eliminate: Which factors that the industry has long competed on should be eliminated? These are often features or services that customers no longer value, but that add significant cost.
• Reduce: Which factors should be reduced well below the industry’s standard? These are factors that have been over-designed in the race to match and beat the competition, adding cost for minimal gain.
• Raise: Which factors should be raised well above the industry’s standard? These are the compromises your industry forces customers to make. Raising them uncovers and satisfies unmet demand.
• Create: Which factors should be created that the industry has never offered? This is about discovering entirely new sources of value for buyers and creating new demand.

The first two questions (Eliminate and Reduce) are about driving down your cost structure compared to rivals. The next two (Raise and Create) are about lifting buyer value and creating new demand. When you do all four, you achieve Value Innovation. You’re not just cost-cutting, and you’re not just adding features. You’re doing something entirely new.

A Step-by-Step Guide to Implementing Blue Ocean Strategy

Alright, let’s get practical. How do you actually put this into action for your startup? It’s a journey, not an overnight switch. Here’s a simplified roadmap.

Step 1: Get Your Bearings (Analyze Your Current State)

First, you need a clear, honest picture of where you are right now. This is where you build your “As Is” Strategy Canvas. Get your team together. Don’t do this in a silo. Brainstorm the key factors your industry competes on. Don’t be shy—list everything from product features to customer support channels to brand image. Then, honestly score your company and your key competitors on each factor. You’ll likely see what we discussed: very similar-looking value curves. This visual is powerful. It makes the red ocean tangible.

Step 2: Go Exploring (Look for New Opportunities)

Now, you need to look outside your industry for inspiration. A core part of the strategy is looking at non-customers and finding commonalities in what they value. The book outlines a “Six Paths Framework” for this, which includes looking across:

• Alternative industries (What do people do instead of using your product?)
• Strategic groups within industries (Why do people trade up or down between, say, a high-end accounting firm and simple software?)
• The chain of buyers (Who is the purchaser, the user, the influencer? Can you shift focus?)
• Complementary product and service offerings (What happens before, during, and after your product is used?)
• The functional-emotional appeal to buyers (Does your industry compete on function? Can you add emotion, or vice-versa?)
• Time and trends (How will external trends impact your industry over time?)

You don’t need to analyze all six in-depth. Pick one or two that seem most promising and dig in. The goal is to get fresh perspectives that challenge your ingrained assumptions about who your customer is and what they want.

Step 3: Reconstruct Market Boundaries (Apply the ERRC Grid)

With insights from your exploration, it’s time to use the Four Actions Framework. Go back to your Strategy Canvas factors and rigorously apply the ERRC questions.

Challenge everything. Ask your team: What if we just stopped doing this? What if we stripped this back to its bare bones? What’s the one thing customers secretly wish they had that no one offers? What if we created an entirely new service around our product?

This is the most creative—and often the most difficult—part of the process. You’re deconstructing and then reconstructing. The output of this step should be a list of factors to Eliminate, Reduce, Raise, and Create.

Step 4: Build a Compelling New Value Curve

Now, translate your ERRC actions into a new “To Be” Strategy Canvas. Plot your new value curve. Does it stand apart from the competition? If it still looks similar, go back to the drawing board. A successful Blue Ocean strategy has a value curve with three key qualities:

1. Focus: It doesn’t try to be everything to everyone. Your investments are focused on the key factors you’ve chosen to Raise and Create.
2. Divergence: Its shape is fundamentally different from the rest of the industry.
3. A Compelling Tagline: Can you describe your new offering with a clear, powerful tagline? If not, it might be too complex or lack a clear value proposition.

Real-World Blue Oceans: Examples to Inspire You

Theory is great, but let’s see how this works in the real world.

Cirque du Soleil: Beyond the Circus

The traditional circus industry was in decline—a classic red ocean. They competed on getting bigger stars, more daring animal acts, and selling concessions in a three-ring venue. Cirque du Soleil used Blue Ocean Strategy to reinvent the industry.

• Eliminated: Animal acts, star performers, and three-ring venues. These were the most expensive components.
• Reduced: The amount of “humor and thrill.” It was less about slapstick and more about wonder.
• Raised: The uniqueness of the venue. They created a sophisticated, theater-like environment.
• Created: A completely new form of entertainment. They blended circus with theatre, adding a theme, a storyline, artistic music, and dance.

The result? They created a new market of adults and corporate clients who were willing to pay premium, theater-level prices for a circus experience. They made traditional circuses like Ringling Bros. totally irrelevant to their target customer.

[yellow tail]: Uncorking a New Wine Market

The U.S. wine market was intensely competitive, dominated by premium wines on one end and budget wines on the other. It was also intimidating for new drinkers, with complex jargon about tannins, oak, and vintages. Casella Wines, an Australian winemaker, saw an opportunity.

• Eliminated: All the complex wine terminology and aging potential.
• Reduced: The complexity of the wine itself (tannin, acid), the range of wines offered, and the emphasis on the vineyard’s prestige.
• Raised: The ease of drinking. They made a simple, fruity, fun wine. They also raised the price point above budget wines, signaling higher quality.
• Created: A new category of a fun, easy, everyday social drink. They created ease of store selection with simple, bold branding featuring a wallaby.

They didn’t target existing wine connoisseurs. They targeted beer and cocktail drinkers—the massive segment of non-customers the wine industry had ignored. They made wine accessible and fun, and [yellow tail] became the fastest-growing wine brand in history.

Conclusion: Your Ocean Awaits

Implementing Blue Ocean Strategy is more than a strategic exercise; it’s a mindset shift. It’s about having the courage to stop looking at what your competitors are doing and start looking at what your customers—and non-customers—truly value. It’s about challenging the fundamental assumptions of your industry and finding opportunity where others only see constraints.

As a founder, you’re uniquely positioned to do this. You’re not bogged down by decades of legacy thinking. You’re nimble. You can ask the dumb questions that lead to brilliant insights. The red ocean is loud, crowded, and exhausting. Your blue ocean—the one with clear water, deep potential, and no rivals in sight—is out there. You just have to build the ship to get there.

FAQ

Is Blue Ocean Strategy only for startups or can established companies use it?

It’s for everyone. While startups have the advantage of agility and a clean slate, established companies can also create blue oceans. Apple did it with the iPod and iPhone. It often requires creating a separate business unit or team that is protected from the red ocean thinking of the core business.

How is this different from just being innovative?

Innovation can often be technology-driven or focused on simply creating something new without a clear path to profitability or a solid value proposition for the buyer. Blue Ocean Strategy is specifically about Value Innovation—innovation that is directly linked to what buyers value and is pursued alongside a lower cost structure. It’s about creating a commercially viable new market, not just a cool new gadget.

How often should a company revisit its strategy canvas?

Your blue ocean won’t stay blue forever. Eventually, imitators will arrive and the water will begin to turn red. It’s a good practice to revisit your strategy canvas annually or whenever you see a significant shift in the market. The goal is to continuously monitor your value curve and look for the next blue ocean opportunity before your current one becomes a red ocean.