Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant

The first step toward formulating a strategy for breaking out of red oceans and into blue waters is to reconstruct existing market boundaries. The authors identify six approaches that are commercially viable, applicable across sectors, and require not foresight but sound data analysis to work. They call this the “six paths framework,” which asks businesses to look for alternatives across industries, strategic groups, buyer groups, complementary product and service offerings, functional-emotional orientations, and time.

The first path is to break free from red ocean competitions by stretching toward alternative industries. Alternative industries and products are not to be confused with substitutes. Whereas substitutes designate two products with different forms but the same functionality, alternative products have different functionality but fulfill the same purpose. For example, writing can be done digitally or on paper, meaning these two mediums are substitutes for each other. However, cinemas and restaurants are alternatives, because they serve the same purpose of offering a fun night out for their customers using different means of entertainment.

Customers intuitively make purchasing decisions by considering their options across alternative industries, yet businesses rarely think about industries adjacent to their own.