Thinkers360

Creating Sustainable Blue Oceans

Sep



The concept of Blue Ocean Strategy has captivated business leaders worldwide, offering a compelling approach to creating uncontested market spaces free from competition. However, sustainability remains a critical question. Renowned strategist Michael Porter has been sceptical of the long-term viability of Blue Oceans, arguing that competition is inevitable. Without proper strategic alignment, these new markets often turn into competitive “red oceans.”


This article delves into what separates high-performing, sustainable market-creating strategies from those that fail to last. We explore Porter’s critique and introduce the crucial role of aligning the three strategy propositions—value, profit, and people—as the key to sustaining a Blue Ocean.


Michael Porter’s Critique of Blue Ocean Strategy


Michael Porter, known for his Five Forces framework, emphasizes that competition cannot be avoided. In his view, the Blue Ocean Strategy—an approach that seeks to create new market spaces with little to no competition—is often unrealistic in the long run. Porter’s critique centres on three main points:



  1. Competition is Inevitable: Blue Ocean Strategy suggests companies can avoid competition by creating new markets. However, Porter argues that any booming market will inevitably attract competitors, making it essential to build substantial barriers to protect the newly created market space.

  2. Cost vs. Differentiation: Porter emphasizes choosing between cost leadership or differentiation. Blue Ocean Strategy challenges this by advocating for both simultaneously. Porter warns that this dual focus can dilute strategic clarity, making it difficult for companies to maintain a robust and defensible market position.

  3. Sustainability Matters: New markets, or Blue Oceans, are only sustainable with ongoing innovation and strategic barriers. Porter highlights that Blue Oceans can quickly turn red as competitors enter, replicating the value proposition and eroding the initial advantage.


Are Blue Oceans Truly Sustainable?


To create a sustainable Blue Ocean, companies need more than just a compelling value proposition; they must align their entire strategy with three critical propositions: the value proposition, the profit proposition, and the people proposition. This holistic approach ensures that the strategy is well-formulated and effectively executed.


The Three Strategy Propositions: Value, Profit, and People



  1. Value Proposition: The value proposition focuses on creating an offering that attracts buyers with a compelling reason to engage. It emphasizes differentiation while keeping costs low, making the product or service accessible to a broad audience.

  2. Profit Proposition: The profit proposition involves developing a business model enabling the organisation to profit from its offering. A robust profit proposition ensures that the strategy is economically sustainable.

  3. People Proposition: The people proposition motivates those within and outside the organization to execute the strategy effectively. This involves inspiring employees, partners, and stakeholders to align with the company’s strategic vision.


The Risk of Misalignment


The failure to align these three propositions often leads to short-lived success or outright failure. A notable example is Napster, the pioneering digital music platform. Despite creating a compelling value proposition with a first-mover advantage and over 80 million users, Napster failed to align its people and profit propositions. The company’s refusal to collaborate with record labels on a sustainable revenue model led to its downfall. Napster's Blue Ocean turned red without industry support or a viable profit proposition, and its success was short-lived.


Achieving Blue Ocean Strategic Alignment: The Case of Comic Relief


A successful example of Blue Ocean Strategy alignment is Comic Relief, a UK charity that transformed the competitive landscape of fundraising. When Comic Relief launched in 1985, the charity sector in the UK was overcrowded, and donor fatigue was widespread. However, Comic Relief differentiated itself by aligning its value, profit, and people propositions, creating a sustainable and thriving Blue Ocean.



  1. Value Proposition: Comic Relief redefined charity fundraising by focusing on fun and accessible events like Red Nose Day, where participation was as simple as buying a £1 red nose. Unlike traditional charities that relied on guilt-based marketing, Comic Relief’s value proposition was about having fun while making a difference, engaging everyone from schoolchildren to celebrities.

  2. Profit Proposition: Comic Relief minimized its operational costs by leveraging existing retail outlets, volunteer support, and donated airtime from television networks. Its unique approach allowed the organization to fulfil its “golden pound promise” of donating 100% of the funds raised, creating an unbeatable profit proposition that supported its value-driven mission.

  3. People Proposition: Comic Relief inspired volunteer fundraisers, corporate sponsors, and celebrities to contribute, creating a reinforcing cycle that sustained the strategy. The charity made participation easy and rewarding, fostering community and purpose among its supporters.


Key Questions for Sustainable Blue Oceans


Organizations must continuously evaluate how their strategy propositions align and support each other to create a sustainable Blue Ocean. Key questions include:


 



  • How can each of our three strategy propositions support and reinforce the other two to create a strong, positive, reinforcing cycle?

  • How can we leverage a compelling value proposition to strengthen our profit proposition or build on an influential people proposition to create a strong one?


Conclusion: The Secret to Sustaining Blue Oceans


The alignment of the value, profit, and people propositions around differentiation and low cost is the key to sustaining a Blue Ocean strategy. This strategic alignment makes imitation by competitors more difficult, extending the lifespan and impact of the Blue Ocean. Comic Relief’s enduring success demonstrated that a well-aligned strategy can keep an organization thriving in uncontested market space for decades. In contrast, misalignment, as seen in Napster’s downfall, can quickly lead to failure.


Organizations aiming to build sustainable Blue Oceans must prioritize strategic alignment, ensuring that all three propositions work together to reinforce and sustain their market position. By doing so, they can navigate the competition challenges and continue to innovate, keeping their Blue Oceans alive and thriving.


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Visualise Solutions is a boutique strategy consultancy firm based in Leicestershire, UK. Transform your business with our strategic advisory services, focusing on innovation, strategy formulation, and execution. Utilise our expertise in strategy, business model innovation, OKRs, and balanced scorecards.


You can learn more about us by contacting us now.

By Andrew Constable MBA, LSSBB

Keywords: Business Strategy, Innovation, Leadership

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