News & Views

Opinion / Deep dive

by Kristina Dimitrova

Mermaids might be my spirit creatures but, alas, this piece is not about them. It’s about everything that surrounds them, by which I mean: Blue Oceans.

In case you’ve been living under a rock (or under the sea) since 2005, in business, the term coined by INSEAD strategy professors W. Chan Kim and Renée Mauborgne, refers to moving from crowded and competitive markets (red oceans) into new, unexplored territories (blue oceans).

Blue Ocean Strategy – Kim and Mauborgne’s 2005 book – has become one of the most essential strategy reads ever written, selling more than 3.6 million copies in 44 languages. For the upcoming issue of Contagious magazine, I interviewed the authors about their follow-up, Blue Ocean Shift, which provides a step-by-step guide on identifying new growth opportunities and making competition irrelevant.

Even though businesses see the value of blue oceans, ‘companies are finding it difficult to move from red to blue oceans because market creation has traditionally been associated with entrepreneurs and trial-and-error process. That places it outside the comfort zone of most managers’, Kim told me. ‘Operating in red oceans is what managers are conditioned to, so it seems less risky to operate in the known existing market space than to explore the unknown. On the other hand, a blue ocean denotes the wider and deeper potential of market space but does not exist currently. It therefore appears to be high risk and marked by uncertainty.’ This gives a false sense of security. Operating in familiar existing territories might appear safer, but it could become impossible when the competition is unbearable.

So where do you start if you want to make that shift? Success in creating blue oceans, the authors told me, comes down to overcoming three key challenges – developing a blue ocean mindset, building creative competence and having the confidence to make the shift. ‘Too many organisations are wedded to industry best practices. And market-competing logic dominates most executives’ mental models. Red ocean strategists tend to focus on finding better solutions for existing industry customers, while blue ocean strategists look towards noncustomers to create new demand. The blue ocean perspective opens your mind to what could be, instead of limiting it to what is,’ said Kim.

It’s easier to choose the right scope for a blue ocean shift if you’re a startup or company with a single offering by focusing on the product or service they’re setting out to create. Take Hims, for example. The startup, launched late last year, set out to open up the male wellness market. The company started with a line of products that help men fight hair-loss, with plans to move into skincare and sexual wellness.

‘What is so special about Hims?’, you might ask. It’s not that these products didn’t exist before. That’s true, but have you seen the average anti-hair loss ad? It’s dull, boring and targeted towards men over 60. Hims’ imagery, on the other hand, features millennial men, the packaging is clean and simple, and their tone of voice talks to guys in a cool, humorous way. Plus, instead of costing hundreds of dollars, Hims products are much more affordable for this younger demographic.

‘Acne, hair loss and sexual wellness issues are exceptionally common in your 20’s and by your 40’s they’re statistically more likely to happen than not. Yet from a science stand point, there is nowhere online educating guys about what solutions are available and how to get them,’ Andrew Dudum, founder of Hims, told Contagious. ‘One of the eureka moments was when I was talking to a bunch of close friends about hair loss and everybody was very uncomfortable about having the conversation. No one was really jumping in. And after we joked and shared a few light-hearted comments, I learned that everyone had either done research or was already on a prescription medication. Yet no one knew the others had gone through the process and found a solution.’

The startup has tapped into a previously unexplored audience for these types of products – young and health-conscious men – through its branding, product price and content around its offerings. ‘Dozens of women’s wellness brands have done a great job of helping women get comfortable with the idea of preventative care and proactive self-care, but culturally it’s not something that has happened in the men’s market yet,’ told us Dudum. Four months after launch, an investment round valued the startup at $200 million. Coincidence? I think not.

‘But Kristina, I’m in a massive company with dozens of products. How do I do this blue ocean shift thing,’ I hear you ask. Well, it might be harder, but the good news is that any business, regardless of its size, can implement a blue ocean shift. According to Kim and Mauborgne, organisations with multiple offerings should focus their blue ocean shift for a product or service that meets the greatest subset of four criteria: First, the business or product/service offering is currently swimming in a red ocean. Second, it’s headed by a manager who is eager to break out of the red ocean and believes that fundamentally rethinking the strategy is key to doing that. Third, ideally, no other major initiatives should be underway in the unit. And fourth, the business or product/service offering should have its back against the wall and be losing money.

One of my favourite examples of this comes from AccorHotels. The global hotel chain recently launched AccorLocal – an app aiming to connect guests with local suppliers and let nearby residents use the hotels’ facilities and services without having to stay there. ‘People want to know their local baker, flower artist, wine maker. We decided to offer a digital integration to those local merchants in order to sell their products and services on AccorLocal,’ Scott Gordon, CEO of AccorLocal, told me.

On the decision to embrace local citizens, who have no need for a bed for the night, Gordon said: ‘We realised that in our 50 years of existence we’ve focused purely on the traveller, which makes sense because we’re selling rooms, right? But we’ve completely forgotten about a target that’s four or five times superior, that surrounds all our hotels: the local residents. So, we started to think what we can offer those locals. We looked at our assets and realised we have two incredible ones at our disposal: more than 4,200 hotels over the world and more than 250,000 employees that are ready to welcome anybody, anywhere in the world, 24 hours a day, seven days of the week. That’s a tremendous asset because in France and around Europe almost nothing is open 24/7.’

So, you see? It’s not about big fish or little fish. Blue oceans are for everyone.

Contagious readers get $33.00 off Blue Ocean Studio™ – the digital, collaborative workspace enabling teams to apply the Blue Ocean Shift concepts, tools and frameworks. Simply enter CONTAGIOUS33 when subscribing to Blue Ocean Studio™ at