Blue Ocean is Economics Failure

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Blue Ocean is Economics Failure
Mauricio Crippa, Member
In my opinion, the idea of a Blue Ocean hurts the basic principles of economics which results in all economic profits tending to zero. Whenever an industry presents abnormal earnings, it will attract competitors. Even the creation of barriers to these new entrants is costly and soon, if the firm isn't able to create sustainable competitive advantages, the ocean will turn into red.

Blue Ocean is Economics Failure
Ceferino Dulay, Jr., Member
You're right in a way if you stay put after you entered a new playing field. But the idea is that you keep on innovating and if that's the culture you have developed in your organization, your "would-be competitors" will end up simply running catching up and never get to you.

Old Wine in a New Bottle?
Mauricio Crippa, Member
Therefore, what is that new from old Schumpeterian innovative development? Or even from Porter's differentiation? I do believe the search for a market where competition is sustainably irrelevant (as precognized at the blue box above) is the search for the Eldorado (unless you're a state monopoly, of course!).
That doesn't mean I disagree from your point, it's just about the concept of BOS that, for me, is just another Harvard's "consulting seller" book.

Stagnant BOS
BNYa, Member
Is the monopolistic stance of BOS detrimental to development and progress and to ultimate benefits to end consumers?
For example, the IT sector is almost monopolistic and hence stagnant now and hence there is no progressive development over a given period of time, compared to pace of development in any other technology in the past.

Stagnant BOS
Mauricio Crippa, Member
For sure. The "invisible hand" doens't act on mopolistic/oligopolistic markets. Therefore, if economic profits do not trend to zero, there's no motivation for services and performance improvements, or cost/price reduction efforts. But I wouldn't cite it as a proper example.

Blue Ocean Strategy is Necessary in Business
Dean Gamache, Member
Isn't the whole purpose of the Blue Ocean strategy to gain a competitive edge by coming up with something new and creative that the competitor does not have. Is not that the whole idea of being in business? If there is no vision the company will surely fail. I believe you're off base with your opinion.

Blue Ocean Strategy Does Not Really Contradict Economic Theory
Nedyalko Terziev, Member
Hi Mauricio, standard economic theory teaches that economic profits go down to zero in the long term and implicitly assume no innovation happens. There is no contradiction with the BOS theory.
In fact, in Appendix A from the BOS book, this is precisely the point that Kim & Mauborgne make- every BO eventually turns into a RO as competition enters.
This is also the reason why Kim & Mauborgne advice to constantly look for value innovation, as any market success stemming from a BO move is only temporary.
Schumpeter's creative destruction cycle also makes similar statements.


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