Blue Ocean Strategy, Expanded Edition: How to Create Uncontested Market Space and Make the Competition Irrelevant


The Impact of Creating Blue Oceans



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Blue Ocean Strategy, Expanded Edition How to Create Uncontested Market Space and Make the Competition Irrelevant by W. Chan Kim, Renée A. Mauborgne (book-drive.com)

The Impact of Creating Blue Oceans
We set out to quantify the impact of creating blue oceans on a company’s growth
in both revenues and profits in a study of the business launches of 108
companies (see 
figure 1-1
). We found that 86 percent of the launches were line
extensions, that is, incremental improvements within the red ocean of existing
market space. Yet they accounted for only 62 percent of total revenues and a
mere 39 percent of total profits. The remaining 14 percent of the launches were
aimed at creating blue oceans. They generated 38 percent of total revenues and
61 percent of total profits. Given that business launches included the total
investments made for creating red and blue oceans (regardless of their
subsequent revenue and profit consequences, including failures), the
performance benefits of creating blue waters are evident. Although we don’t
have data on the hit rate of success of red and blue ocean initiatives, the global
performance differences between them are marked.
FIGURE 1-1

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