Afrasiyab Gul
The world has become fast, environment is getting furious and innovation in technology is changing human lives beyond imagination. New ways of doing things and thinking out of the box solutions to counter new problems and turning them into human benefits is of core importance in this scenario. Previously, all the approaches towards business and economics was to compete in market for shares to earn profit and innovate in same market to give tough time to rival competitors, this strategy of doing things is called “Red Ocean”. The very increasing global population, pollution, and climate change has given new challenges to human kind and their demands to be countered with given limited resources. The “Blue Ocean Strategy” is new way of doing things efficiently and effectively. It is time to say goodbye to Red Ocean and adopt Blue Ocean Strategy.
Old School Vs New School
Red ocean can be referred as an old way of doing things to get solutions to the problems which is costly and less effective contrast to Blue Ocean Strategy. Blue ocean leads out of box solution to tap untapped potential creating new markets with opportunity and growth.
| Red Ocean | Blue Ocean |
| All existing industries | Unknown future markets |
| Cut-throat competition | Unexplored and untainted by competition |
| Exploit existing demand | Uncontested market space |
| Less profit and Growth | Profitable and rapid growth opportunities |
Red ocean are all industries that are presently in existence and known market space to parties in business where as blue oceans are industries that do not exist but has enough space to be developed. Creation of Space-X is very recent example of blue ocean; no one would have thought of a privately developed space rocket with such a low cost with a landing back technology saving billions of rupees. There is no space of cut-throat competition that turn ocean bloody red, rather it gave way to vast and deep opportunities for growth and making profit. Existing markets are crowded and companies compete fiercely for greater share having limited demands on opposite side. There is need to develop uncontested market space and think blue ocean rather than fighting over a shrinking profit pool in red ocean.
Going Blue
In a past decade, life on earth has changed in very significant way with a dramatic shift almost in everything we do. Can you imagine your life with WhatsApp, YouTube, Twitter, Wikipedia, Facebook and smartphones? There are growing challenges and organizations have to rethink their driving strategies whether they are based in Asia, Europe, Africa or any other part of the world. The value innovation and low cost of doing things is the corner stone of Blue Ocean Strategy. Unlike before, the surge in internet use, social networking and user driven content has shifted the paradigm from organization to individual.
Realizing the future growth prospects, today China and India are topping the list with growth perspective, even the county like Brazil has joined this elite and influential club to hold sixth largest economy leaving behind so called mighty tycoons of the world. These big emerging economies are countries with large population and low per-capita income unlike developed countries with high per-capita income.
The blue ocean strategy is said to have three primary components. First, expending mental horizon and the shift in mindset to develop understanding where the opportunity lies. Secondly, tools to transform blue ocean thinking into commercially compelling offering and thirdly, successful implementation to inspire people’s confidence to own and drive the process for effective execution.
Criticism on Blue Ocean Strategy
Blue Ocean might be a good way of doing things but calling it all in all and limiting the role of economics is not rational way of thinking. Depending solely on innovation and human mindset to develop new markets by neglecting type of markets and unseeing upcoming competition in the same created market is a hot air balloon approach associated with risks. The first mover methodology is a myth, entering market to early is open to risk because people might be not ready to understand the offered product. For example, Amiga computer was decade ahead of Macs and PCs, but it did not survive because the world was not ready for it. Blue ocean requires a lot of patience, trust and executive expertise to ensure that you are not fishing a dead sea. Yes, the blue ocean strategy might be successful in many cases but number of companies failed and their skeletons are resting in dark graves. However, limiting role of economics in strategy making and huge dependence on value innovation and shifting human mindset to develop new markets is a complete denial of social sciences.
The author Afrasiyab Gul is M. Phil scholar of Economics at the Pakistan Institute of Development Economics (PIDE), Islamabad
