Red Ocean VS Blue Ocean Strategy
The famous book “Blue Ocean Strategy” highlights how a company or a startup may reap tremendous benefits through disruptive innovation and value leap generation, namely Blue Ocean Strategy. Conversely, a company engages in red ocean competition if it is competing with rival firms in an established landscape. I find this phenomenon fascinating as an aspiring entrepreneur. This article breaks down the comparisons in a readily digestible manner. For instance: red ocean strategy competes in existing market space, aims to beat the competition, and exploits existing demand. On the other hand, blue ocean strategy creates uncontested market space, makes the competition irrelevant, and creates and captures new demand. This is crucial to the scale of the success a company can have, as we can see that almost all top firms nowadays (FAANMG, for instance) started out with disruptive innovation (Apple with the iPhone, Facebook with social media, Netflix with streaming, Google with search engine, Amazon with ecommerce…etc). This relates to the concept of zero-sum game discussed in the course, where all the players compete in a space that if one wins, another inevitably loses, similar to a red ocean. In this landscape, companies focus on dividing up the red ocean, where growth is increasingly limited and constant growth is impossible. In other words, it is impossible that an additional player wins while keeping the other winners’ benefits intact. If one more person wins, that has to come at the expense of another’s loss. In short, it is vital that founders and business executives recognize untapped opportunities and break out of the red ocean. Such will allow much greater rewards in the long run.
Source: https://www.blueoceanstrategy.com/tools/red-ocean-vs-blue-ocean-strategy/