Sep25
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, 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:
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 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.
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.
Organizations must continuously evaluate how their strategy propositions align and support each other to create a sustainable Blue Ocean. Key questions include:
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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By Andrew Constable MBA, LSSBB
Keywords: Business Strategy, Innovation, Leadership