Blue Ocean Strategy Basics - Making Competition Irrelevant

A different way of thinking.

It’s right there on the front of the jacket of the book Blue Ocean Strategy, “How to Create Uncontested Market Space and Make the Competition Irrelevant.” It’s also one of the most misunderstood concepts of blue ocean strategy.

I’ve been working on blue ocean strategy since 2001, when it was a series of articles, years before the book was published. I work directly with the authors. It took ages before I understood what making competition was irrelevant meant. In fact, I thought it sounded like nonsense for the longest time.

The concept doesn’t mean that competition doesn’t exist but that it doesn’t much matter; it is irrelevant.

Let’s return to the Nintendo Wii which illustrates the concept well. Repeating, there were three console makers, Sony, Microsoft, and Nintendo. Before the Switch, Nintendo was a distant third. Sony was spending billions on a new chip, Microsoft willing to lose hundreds of dollars per console to buy market share, and Nintendo essentially broke (a pattern we see with many blue ocean businesses).

Nintendo used blue ocean strategy to create the Wii then outsold Microsoft and Sony combined for two years, an eternity in the console gaming market.

Nintendo never competed with Sony or Microsoft. Instead, they messaged that traditional gamers should buy a Sony or Microsoft console; the two vigorously competed against one another. However, Nintendo suggested gamers should also buy a Wii. Additionally, Nintendo suggested countless non-gamers, “noncustomers” using blue ocean language, should also buy a Wii which is exactly what happened.

Nintendo didn’t compete with Sony or Microsoft despite that they were selling a similar product. Rather, the Sony and Microsoft offerings were simply irrelevant. It wasn’t an either/or zero-sum offering but, rather, additive.

Countless marketers fall into the trap of allowing competitors, real or imagined, to set market boundaries and define their offering. They accept industry boundaries and feel compelled to play in those boundaries, set by others, despite the boundaries are almost always set to the benefit of a market incumbent.

Even when a blue ocean offering comes along — after the maker of the offering expaines what happened — traditional marketers still don’t get it. I was with a colleague at a trade show when we ran into a Microsoft product manager from “those days.” Paraphrasing, he said “we didn’t know what hit us — Nintendo just came out of the gate and was an unexpected enormous competitor.”

This is after Nintendo announced that they’d used blue ocean strategy to invent the Wii and all but laid out their strategic focus. The traditional product manager simply couldn’t envision what had happened well over a decade later. It’s almost inconceivable to those who set and play within industry bounds that an entrant can redefine those boundaries away.

Marketers think of industry bounds like rules of a game and, to them, changing those rules is like a play ignoring dribbling rules in basketball and clobbering an opponent by running with the ball. Of course, the vast majority of industry bounds — everything except government rules and regulations and the rules of physics — is an artificial construct incumbents abide by, oftentimes to their own detriment.

We see this in countless product offerings, large and small. Does the family doctor or lawyer who has been working with the same people their whole lives care much about “competition?” No, of course not. Does Cirque du Soleil compete against circuses or Marvel compete against other superhero movies? No. As I write this, Nintendo’s Switch is the bestselling console about two years in a row and Sony and Microsoft have again released their new consoles. And, again, the offerings do not compete with one another.

Making competition irrelevant is not driving competition into the ground by lowering prices; that is Porter competitive strategy. It is not purposefully monopolistic or predatory behavior; again, that’s a way to compete. While a blue ocean offering may disrupt a market or include disruptive technology, the central focus is disruption.

It takes a while for traditional marketers to get their heads around and grok the idea of making competition irrelevant. The idea just doesn’t sync with what they know about business. It’s not altogether uncommon for traditional marketers to hurl ad hominem attacks that blue ocean practitioners “don’t know business” because “business,” in their minds, is done a certain way and they follow those rules almost religiously.

However, as I’ve written about in this and other articles, blue ocean businesses almost always cost less and have a significantly higher chance of success. Interested in talking more about blue ocean strategy? Write to me: info@olen.com.