Value innovation is about creating uncontested market space. This requires you to differentiate your product or service to the extent that what you’re offering is a value proposition that is incomparable to anything else in the market. Ideally you want to create a new market for product or service that’s never existed. Naturally, over time markets will become saturated, but the mindset of striving for differentiation is one that can lead to continuous long-term success.
This is a concept that we’ve discussed in a previous book review of Peter Thiel’s Zero to One. Value innovation is not just about developing high-tech products. Rather, it’s about aligning your vision, price-point and business with the value proposition that you’re presenting and using that to differentiate yourself, thus creating uncontested market space.
Value innovation requires companies to orient the whole system toward achieving a leap in value for both buyers and themselves.
red vs. blue ocean
The primary difference between companies in the red and blue ocean lies in their core viewpoint of their business and industry. Red ocean businesses operate on a structuralist view. This means that they believe the conditions of competition are predetermined. The notion that there are a set of rules that one must abide by and simply compete based on traditional factors with the hopes of incremental improvement and differentiation.
In contrast, blue ocean businesses operate from a re-constructionist viewpoint. As industry players they set the conditions of competition. A blue ocean business decides what factors they want to compete on and how they want to position their product, even if that positioning contrasts the traditional market norms.
The key here is not to pursue pricing against the competition within an industry but rather to pursue pricing against substitutes and alternatives across industries and non-industries.
This book offers excellent analysis and clearly breaks down their case studies. Kim and Mauborgne effectively illustrate how businesses either suffer in the red ocean or succeed in the blue ocean, offering insight into the distinguishing factors amongst various companies.
Kim and Mauborgne offer excellent online resources on their website that complement the content of their book. There are various analysis tools that are mentioned in the book that you can also access online and utilize to help develop your business plan. Click here to see their online tools!
The examples and case studies are dated. In the global economy there have been seismic changes since the release of this book in 2005. The discussion and analysis are still excellent, but I found it hard to relate to the examples as they weren’t particularly relevant anymore.
This book is for you if…
- You are working on a business plan
You are a business owner or team leader – you can utilize this book as a “check up” on your business to see if your current issues could be attributed to swimming in the red ocean.
- You are interested in studying the blueprints of successful companies