The concept of “Blue Ocean Strategy” was developed by W. Chan Kim and Renée Mauborgne at INSEAD. Essentially, they suggested how organisations might create new markets using "Blue Ocean thinking" rather than compete in heavily populated, competitive, cost focused markets, which the researchers referred to as “Red Ocean thinking”.

Red Oceans represent established markets. Within red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known. Products become commoditised or niche, and cut-throat competition turns the ocean red.

Blue oceans, in contrast, describe the markets and technologies as yet undiscovered or defined - untainted by competition (think MP3 technology when everyone was using CDs and other hardcopy music media). Within blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set.

The basic premise of Blue Ocean Strategy is 'Value Innovation'. A blue ocean is created when an organisation innovates to create value for both the client and the organisation. The innovation (in product, service, or delivery) must raise and create value for the market, while simultaneously reducing or eliminating features or services that are less valued by the current or future market.

The goal of the blue ocean strategy is to stay clear of the red ocean market and head into blue waters. The concept is simple to understand – however, executing it is another matter. We believe the value of such discussions lies in the motivation to think differently and to challenge your organisation to constantly monitor its strategy against its objectives. Coming out of a recession is perhaps the time to reconsider and revaluate current thinking and strategies.

Further reading: Kim, Chan (2005). Blue Ocean Strategy. Boston: Harvard Business School Press. p. 210. ISBN 1591396190.