7.5 Blue Ocean Strategy

Create uncontested market space with value innovation—simultaneous differentiation and low cost. Launch on platform.

What is it?

Dragonfly's Blue Ocean Strategy Lens helps organizations escape competitive battles by creating uncontested market spaces that make competition irrelevant. Rather than fighting for shrinking profit pools in red oceans, it reveals how to unlock new demand through value innovation—the simultaneous pursuit of differentiation and low cost.

Why is it useful?

• Create uncontested market spaces that generate new demand rather than fighting over existing customers

• Achieve value innovation by pursuing differentiation and low cost simultaneously, breaking traditional trade-offs

• Map competitive landscapes through Strategy Canvas visualization to identify convergence points and differentiation opportunities

• Apply the Four Actions Framework (Eliminate-Reduce-Raise-Create) to design breakthrough value propositions

• Explore systematic market reconstruction through Six Paths methodology that looks beyond industry boundaries

• Target three tiers of noncustomers to unlock latent demand that competitors ignore

How does it work?

The Blue Ocean Strategy Lens applies systematic value innovation methodology to reconstruct market boundaries and create uncontested market spaces through strategic differentiation.

Strategy Canvas Construction and Analysis

• Focus: Map current competitive landscape and value curves to identify areas of intense competition and convergence

• Example: Analysing the airline industry value curve to reveal how Southwest Airlines eliminated first-class service, reduced meals and lounges, while raising flight frequency and friendly service to create low-cost differentiation

Four Actions Framework (ERRC Grid) Development

• Focus: Design value innovation through systematic elimination, reduction, raising, and creation of competitive factors

• Example: Netflix eliminated late fees and physical store visits, reduced selection breadth initially, raised convenience and personalization, while creating recommendation algorithms and binge-watching culture

Six Paths Market Reconstruction Exploration

• Focus: Look beyond traditional industry boundaries using alternative industries, strategic groups, buyer chains, complementary products, functional-emotional orientation, and time perspectives

• Example: Cirque du Soleil looked across entertainment alternatives (theatre + circus), eliminated animal acts and star performers, while creating artistic storytelling and upscale venue experiences

Noncustomer Analysis and Demand Unlocking

• Focus: Identify and convert three tiers of noncustomers—soon-to-be, refusing, and unexplored segments

• Example: Yellow Tail wine targeted non-wine drinkers (refusing noncustomers) by eliminating wine complexity, reducing aging and traditions, while raising accessibility and fun positioning

Value Innovation Validation and Strategic Sequence

• Focus: Test blue ocean opportunities through utility, price, cost, and adoption validation sequence

• Example: Apple's iPad validated exceptional utility for content consumption, achieved premium but accessible pricing, enabled low-cost manufacturing through scale, and designed intuitive adoption experience

Implementation Roadmap and Tipping Point Leadership

• Focus: Design execution strategy that overcomes organizational inertia and resource constraints through focused effort on tipping point factors

• Example: Creating pilot implementations that demonstrate blue ocean success, building momentum through early wins, and cascading strategy through organizational influencers rather than top-down mandates

Turning Blue Ocean Strategy into Action

• Implement systematic value innovation rather than competing on existing industry factors or pursuing differentiation or cost leadership separately

• Create new market spaces by reconstructing industry boundaries rather than accepting conventional market definitions

• Design execution strategies that focus organizational energy on tipping point factors that maximum impact with minimum resource investment