Most of the Guru’s never built, made or created anything. The only one who tried – Michael ‘5 Forces’ Porter – saw his company go bankrupt. Peddling ‘strategy’ and charging clients a few million to read their watches and tell them the time, is doomed to oblivion. So it goes with the Gurus.
In Porter’s philosophical world, business is ‘structuralist’ meaning that the industry’s structure [however that is defined, and it is not defined with any precision by Porter] is supreme. Contrary to this the Blue Ocean theological position advocates a ‘reconstructivist’ approach, meaning that an industry can be rebuilt, or destroyed from within [Dell’Agata, 2015]. This ‘reconstructivist’ approach proposes the following main principles, evinced in the 2005 book, ‘Blue Ocean Strategy’, by Kim and Mauborgne, which is supposedly a seminal work for the management-philosophical industry of the 21rst century:
- -never use competition as a benchmark
- -create new markets, new products, new ideas
- -reduce costs whilst producing new value
- -value pioneering not technological innovation
- -incumbents are just as likely to produce blue ocean as new entrants
[Kim & Mauborgne, 2004, 2005]
In essence Blue Ocean strategies should lead a firm to new markets with new ideas, in which there is little competition. In other words, a world of unicorns and rainbows.
But does any of this make sense? Did Kim and Mauborgne ever create a Blue Ocean? Did they ever run or develop a business or market? Or did they simply research ‘successful’ firms and map these successes back to pre-conceived ideas and conclusions?
Sample Bias?:
Blue Ocean stories are picked to support a pre-determined idea. The reason is simple. There are no failures of ‘Blue Ocean’ in Kim and Mauborgne’s work [Burke et al., 2009]. In the real world, this is not a reasonable supposition. Reasonable theories must be tested and proven falsifiable [Karl Popper]. I can name quite a few ‘big idea failures’, just from IT. A biased sample negates the theory; or to be charitable, severely limits its relevancy.
If you parse the jargon, there is no evidence that Blue Ocean is real. Most of the ‘successful’ firms cited like Dell, did not even create a Blue Ocean. They incrementally improved an aspect of the business, which either opened up a new idea, a new channel, or a new product creation.
[Critiques of Blue Ocean philosophy can be found from Burke et al 2009; Herman 2008 and Kraiijenbrink 2012 amongst many others.]
Strengths of Blue Ocean:
A general advantage and one which is unrelated to Blue Ocean theology; is that Blue Ocean concepts probably force a business manager to focus on new areas and new market domains in which a competitive system is non-existent. This would tie into strategy, which then can identify products and services to enter and develop this market. An important insight might be the sensible idea that new ideas can and should reduce costs especially with the use of technology and innovative delivery systems [consider Paypal or Amazon.com]. These are valid [Dell’Agata, 2015].
Weaknesses of Blue Ocean Strategy:
It is hard to penetrate the models around Blue Ocean. Questions are obvious:
- How do I discover new oceans?
- Why would I ignore the competition?
- What if they are out innovating, looking for new oceans? Can’t I learn from them?
- How much R&D time and budget do I need to discover my ‘Blue Ocean’?
Blue Ocean theology has no answers to these questions [see also Herman, 2008].
In the real world, new oceans blue or red, are usually discovered by those with experience and technical experience within a domain. The Cirque de Soleil success story is based on 2 individuals. An overlooked fact. It was not a communal, communist-5 year planning effort. This is usually true of all major inventions. Blue Ocean theologies are thus for me, rhetoric masking how innovative ideas create, or transform markets. It is usually the individual – which is largely anathema to academia – which creates the new markets. If anyone can point out to me, a committee creating a new market, I would be delighted in hearing about it. Such examples don’t exist.