Blue Ocean Strategy

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TLFeBOOK

Blue Ocean Strategy

Blue Ocean Strategy
How to Create Uncontested Market Space and Make the Competition Irrelevant

H A R VA R D B U S I N E S S S C H O O L P R E S S BOSTON, MASSACHUSETTS

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W. Chan Kim Renée Mauborgne

Copyright 2005 Harvard Business School Publishing Corporation All rights reserved Printed in the United States of America 09 08 07 0605 5 4 3 2 1

No part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form, or by any means (electronic, mechanical, photocopying, recording, or otherwise), without the prior permission of the publisher. Requests for permission should be directed to permissions@hbsp.harvard.edu, or mailed to Permissions, Harvard Business SchoolPublishing, 60 Harvard Way, Boston, Massachusetts 02163. Library of Congress Cataloging-in-Publication Data Kim, W. Chan. Blue ocean strategy: how to create uncontested market space and make the competition irrelevant / W. Chan Kim, Renée Mauborgne. p. cm. Includes bibliographical references and index. ISBN 1-59139-619-0 (hardcover: alk. paper) 1. New products. 2. Market segmentation. I. Mauborgne,Renée. II. Title. HF5415.153.K53 2005 658.8 02—dc22 2004020857 The paper used in this publication meets the requirements of the American National Standard for Permanence of Paper for Publications and Documents in Libraries and Archives Z39.48–1992

To friendship and to our families, who make our worlds more meaningful

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Contents
Preface Acknowledgments

ix xiii

Part One:Blue Ocean Strategy
1 2 Creating Blue Oceans Analytical Tools and Frameworks 3 23

Part Two: Formulating Blue Ocean Strategy
3 4 5 6 Reconstruct Market Boundaries Focus on the Big Picture, Not the Numbers Reach Beyond Existing Demand Get the Strategic Sequence Right 47 81 101 117

viii

Contents

Part Three: Executing Blue Ocean Strategy
7 8 9 Overcome Key Organizational Hurdles BuildExecution into Strategy Conclusion: The Sustainability and Renewal of Blue Ocean Strategy 147 171 185 191 209 213
217 223 231 239

Appendix A Appendix B Appendix C
Notes Bibliography Index About the Authors

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Preface
about friendship, about loyalty, about believing in one another. It was because of that friendship, and that belief, that we set out on the journey to explorethe ideas in this book and eventually came to write it. We met twenty years ago in a classroom—one the professor, the other the student. And we have worked together ever since, often seeing ourselves along the journey as two wet rats in a drain. This book is not the victory of an idea but of a friendship that we have found more meaningful than any idea in the world of business. It has made our livesrich and our worlds more beautiful. We were not alone. No journey is easy; no friendship is filled only with laughter. But we were excited every day of that journey because we were on a mission to learn and improve. We believe passionately in the ideas in this book. These ideas are not for those whose ambition in life is to get by or merely to survive. That was never an interest of ours. If youcan be satisfied with that, do not read on. But if you want to make a difference, to create a company that builds a future where customers, employees, shareholders, and society win, read on. We are not saying it is easy, but it is worthwhile.
HIS IS A BOOK

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Preface

Our research confirms that there are no permanently excellent companies, just as there are no permanently excellentindustries. As we have found on our own tumbling road, we all, like corporations, do smart things and less-than-smart things. To improve the quality of our success we need to study what we did that made a positive difference and understand how to replicate it systematically. That is what we call making smart strategic moves, and we have found that the strategic move that matters centrally is to...
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