Last Updated on January 30, 2026 by Dave Schoenbeck
Most business owners I work with are fighting the same battles: competing on price, battling for market share, and watching their profit margins shrink year after year. But what if there were a better way? Blue ocean strategy, a term coined by professors W. Chan Kim and Renée Mauborgne, offers a different approach to business growth that could work for you.
What Is Blue Ocean Strategy?
Blue ocean strategy, as Kim and Mauborgne detail in their book of the same name, compares business to shark-infested waters. The strategy is straightforward: instead of fighting your competitors in existing markets (red oceans), you should create uncontested market space (blue oceans) where you can swim alone.
Red oceans are existing industries with defined boundaries. The more competitors there are in a given market space, the bloodier the waters become—hence, “red ocean.” When this happens, margins shrink, differentiation becomes harder, and everyone ends up competing primarily on price. Quality inevitably decreases, disappointing customers. No one wins.
Blue oceans, on the other hand, are new, untapped market spaces. Instead of fighting for scraps, you can create your own demand. When you execute a blue ocean strategy successfully, you make the competition irrelevant because you’re playing an entirely different game.
The characteristics of the blue ocean strategy don’t require revolutionary technology or massive capital investment. Making this work for you requires creative thinking about what your customers truly value and the courage to break away from how things have always been done in your industry.
This Blue/Red Ocean analogy helps business owners understand the causal chain: existing markets lead to price wars that erode profits, while creating new markets enables sustainable growth.
Blue Ocean Strategy Examples
Let’s explore some real-world companies that demonstrate the power of the blue ocean strategy. Here are a few relatively recent blue ocean strategy examples.
Netflix
Netflix is perhaps one of the most famous blue-ocean success stories. When they launched their DVD-by-mail service in the 1990s, they weren’t trying to outdo video rental stores like Blockbuster. Instead, they created an entirely new way for people to rent movies: delivering them directly to their customers’ front doors.
In the late 1990s, I worked in the retail industry and had a bird’s-eye view of the rapidly changing competitive landscape. It was evident that technology and consumer needs were quickly evolving, and legacy retailers were ripe for change. It was clear that most retailers needed to adapt to a new model
They identified what customers hated about traditional video rentals (late fees, limited selection, inconvenient locations) and eliminated those pain points while adding value (convenience, selection, flat monthly pricing). When they later shifted to streaming, they found another blue ocean by creating a new market for instant, on-demand entertainment.
Uber
Before Uber, if you needed a ride, you either drove yourself, took public transportation, or called a taxi. Uber didn’t just build a better taxi company. It created an entirely new transportation category, making getting a ride as simple as tapping a button on your phone.
Now we no longer have to hail a cab or wonder how much our ride will cost at the end of the trip. Uber created new demand among people who might have driven themselves or stayed home because traditional options were too inconvenient.
iTunes (Apple)
When iTunes launched, the music industry was struggling with piracy and declining CD sales. Instead of fighting digital pirates or defending the old business model, Apple created a new way to buy music. They made it legal, easy, and affordable to buy individual songs rather than entire physical albums.
The blue ocean market here wasn’t just about digital distribution—it was about fundamentally changing how people bought and consumed music. They eliminated what customers didn’t want (buying entire albums for one good song, dealing with too many CDs) and added what they did want (instant access, song-by-song pricing, portability).
Looking back at the iTunes launch, we can trace the decision. Apple could have continued to fight piracy through legal means, but instead, they chose to create a new market. They considered defending the old business model, but realized it was a losing battle. The decision to embrace digital distribution and make it easy and affordable was pivotal.
Meta (Previously Facebook)
Although online social networks such as MySpace already existed at its launch, Facebook identified a new market by targeting college students and emphasizing real identity over anonymity. It introduced features that made staying connected with friends and family easier than ever.
As they expanded, they continued to create blue ocean moves, such as the News Feed, which fundamentally changed how people consumed social information. Each innovation opened up new market space rather than competing feature-for-feature with existing platforms.
How the Blue Ocean Strategy Works
In their book Blue Ocean Strategy, Kim and Mauborgne present a four-part framework, called the Four Actions Framework, for implementing blue ocean strategy in your business.
- Eliminate any factors that your industry takes for granted.
- Reduce any factors that fall below industry standards.
- Raise the remaining factors above industry standards.
- Create new factors that have never been offered before.
When applying the Four Actions Framework, I’ve found that the most common mistake business owners make is failing to truly understand their non-customers. A good rule of thumb is to spend at least 50% of your research time on understanding why people *don’t* use your product or service.
The idea is to reconstruct market boundaries by looking beyond traditional industry tactics to identify and target new blue ocean opportunities. By focusing on non-customers, you can attract those who don’t buy from your industry at all, bringing in an entirely new customer pool that your competitors have no chance of winning.
Advice On Implementing Blue Ocean Strategy
Implementing a blue ocean strategy isn’t easy, but here’s what I’ve seen among business owners who have done it successfully.
Start by deeply understanding what your customers truly value, not just what your industry has always delivered. Talk to customers who don’t use your product or service to find out why. Also, talk to former customers who have moved on. These conversations often reveal opportunities competitors miss.
Next, create a map of your industry’s competitive factors using Kim and Mauborgne’s “Blue Ocean Strategy Canvas.” Plot what every company in your industry competes on, then ask: which factors could we eliminate, reduce, raise, or create? This framework is incredibly powerful for identifying blue ocean opportunities.
To do this successfully, you need to challenge assumptions about how things must be done in your industry. Just because everyone does something a certain way doesn’t mean it’s the best or only way. The most powerful blue ocean moves often come from questioning the unquestionable.
Look for pain points that everyone in your industry considers unavoidable. These are often your best opportunities. If customers hate something about your industry but have learned to live with it, eliminating that pain point can create enormous value.
However, don’t bite off more than you can chew. Start with one blue ocean move and execute it brilliantly rather than trying to reinvent everything at once. Once you’ve proven the concept, you can expand.
While the Blue Ocean Strategy is powerful, it’s not a silver bullet. I’ve seen it fail when businesses try to apply it to markets with extremely high barriers to entry, such as heavily regulated industries. For example, in the pharmaceutical industry, the cost of regulatory approval can make it nearly impossible to create a truly ‘blue’ ocean without massive capital.
If you’re ready to explore how a blue ocean strategy could transform your business, I can help. As a business coach, I’ll walk you through red ocean vs. blue ocean strategies, help you identify your best blue ocean opportunities, and develop a plan to pursue them. Click here to schedule a free coaching session, and let’s discuss how you can outshark the competition.
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Coach Dave
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