blue ocean innovation

Harnessing the Power of Innovation: Leveraging Blue Ocean Strategy and Disruptive Innovation Frameworks

Kurt GraverBusiness Development, Marketing & Sales, Startups & Entrepreneurship

In today’s fiercely competitive business landscape, UK entrepreneurs face the constant challenge of differentiating themselves and staying ahead of the curve. As markets become increasingly saturated and traditional industry boundaries blur, the need for innovative strategies and frameworks has never been more pressing. Two powerful approaches that have gained significant traction in recent years are Blue Ocean Strategy and Disruptive Innovation. 

According to a study by the UK Innovation Survey, 38% of UK businesses were engaged in some form of innovation activity between 2014 and 2016 (GOV.UK, 2018). By leveraging these innovation frameworks, entrepreneurs can unlock new opportunities, create uncontested market spaces, and drive sustainable growth. 

In this blog, we’ll explore the principles of Blue Ocean Strategy and Disruptive Innovation, real-world examples of successful applications, and provide actionable insights for UK entrepreneurs looking to innovate in competitive markets.

Understanding Blue Ocean Strategy

Blue Ocean Strategy, developed by INSEAD professors W. Chan Kim and Renée Mauborgne, is a systematic approach to creating uncontested market spaces and making the competition irrelevant (Blue Ocean Strategy, 2021). The core idea behind the Strategy is to shift focus from competing in existing, crowded markets (red oceans) to creating new, untapped market spaces (blue oceans) through value innovation.

The Principles of Blue Ocean Strategy

Blue Ocean Strategy is built on four key principles (Blue Ocean Strategy, 2021):

1. Create uncontested market space by reconstructing industry boundaries and looking beyond existing demand.

2. Focus on the big picture, not just numbers, by aligning the entire system of a company’s activities in pursuit of differentiation and low cost.

3. Reach beyond existing demand by unlocking new customer segments and creating new demand.

4. Get the strategic sequence right by building execution into strategy and overcoming key organisational hurdles.

The Blue Ocean Strategy Tools

To help entrepreneurs systematically apply the principles of Blue Ocean Strategy, Kim and Mauborgne have developed a set of analytical tools and frameworks (Blue Ocean Strategy, 2021):

1. The Strategy Canvas is a diagnostic tool for visualising the market’s current state and identifying opportunities for value innovation.

2. The Four Actions Framework: A tool for breaking the trade-off between differentiation and low cost and creating a new value curve.

3. The Eliminate-Reduce-Raise-Create Grid is a complementary tool to the Four Actions Framework, encouraging companies to simultaneously pursue differentiation and low cost.

4. The Three Tiers of Noncustomers: A framework for identifying and unlocking new demand beyond industry boundaries.

Blue Ocean Strategy in Action: The Case of Cirque du Soleil

One of the most iconic examples of Blue Ocean Strategy is Cirque du Soleil, the Canadian entertainment company that revolutionised the circus industry. By eliminating animals, reducing the importance of individual performers, raising artistry and theatricality, and creating a unique, immersive experience, Cirque du Soleil created a new market space that appealed to a whole new segment of customers (Blue Ocean Strategy, 2021). The company’s success demonstrates the power of value innovation in creating uncontested market spaces and driving profitable growth.

Exploring Disruptive Innovation

Disruptive Innovation, a term coined by Harvard Business School professor Clayton Christensen, refers to a process by which a new entrant introduces a product or service that initially serves a niche market but eventually displaces established competitors (Christensen Institute, 2021). Disruptive innovations often start as simpler, cheaper, or more convenient alternatives that appeal to underserved or overlooked customer segments.

The Theory of Disruptive Innovation

The theory of Disruptive Innovation is based on the observation that incumbent companies often focus on sustaining innovations that serve their most profitable customers, leaving them vulnerable to new entrants that target overlooked segments with disruptive innovations (Christensen Institute, 2021). As disruptive innovations improve over time, they eventually meet the needs of mainstream customers and displace established competitors.

The Three Types of Disruptive Innovation

Christensen identified three types of Disruptive Innovation (Christensen Institute, 2021):

1. Targeting customers who are overserved by existing offerings with a simpler, cheaper alternative.

2. Creating a new market by serving customers who previously could not access or afford existing offerings.

3. Improving existing products or services to serve customers without fundamentally changing the market.

Disruptive Innovation in Action: The Case of Netflix

Netflix, the American media services provider, is a prime example of disruptive innovation. Starting as a DVD-by-mail service, Netflix initially targeted a niche market of movie renters who valued convenience over immediate gratification (Harvard Business Review, 2015). As internet speeds improved and streaming technology advanced, Netflix disrupted the traditional video rental industry and eventually expanded into content production, challenging established media giants. Netflix’s success illustrates the power of Disruptive Innovation in reshaping entire industries and creating new market opportunities.

Applying Blue Ocean Strategy and Disruptive Innovation in the UK Market

Blue Ocean Strategy and Disruptive Innovation offer valuable frameworks and insights for UK entrepreneurs looking to innovate in competitive markets. Here are some key considerations and strategies for applying these approaches in the UK context:

Identifying Unmet Customer Needs

Entrepreneurs must identify unmet or underserved customer needs to create blue oceans or disruptive innovations. This requires a deep understanding of customer pain points, preferences, and behaviours and thinking beyond industry boundaries. Tools like the Empathy Map and the Jobs-to-be-Done framework can help entrepreneurs gain customer insights and uncover new opportunities (Strategyzer, 2021).

UK entrepreneurs should stay attuned to emerging market trends and disruptions that could create new opportunities for innovation. For example, the rise of mobile and digital technologies, the growing demand for sustainable and ethical products, and the impact of Brexit on trade and regulation could all present potential blue oceans or disruptive opportunities (PwC, 2021). By identifying and leveraging these trends, entrepreneurs can position themselves at the forefront of industry transformation.

Collaborating with UK Innovation Ecosystems

The UK boasts a vibrant innovation ecosystem, with numerous incubators, accelerators, and support organisations dedicated to fostering entrepreneurship and innovation. Organisations like Innovate UK, Nesta, and the Catapult Network provide funding, mentorship, and resources to help entrepreneurs bring new ideas to market (GOV.UK, 2021). By collaborating with these ecosystems, UK entrepreneurs can access valuable networks, expertise, and support to accelerate their innovation journeys.

Embracing Agile and Lean Methodologies

To successfully execute the Blue Ocean Strategy or Disruptive Innovation, UK entrepreneurs must embrace agile and lean methodologies that enable rapid experimentation, learning, and adaptation. Lean Startup and Agile Development emphasise iterative prototyping, customer feedback, and data-driven decision-making (Mind the Product, 2021). By adopting these approaches, entrepreneurs can reduce risk, validate assumptions, and quickly pivot in response to market feedback.

Conclusion

In conclusion, Blue Ocean Strategy and Disruptive Innovation offer powerful frameworks for UK entrepreneurs looking to innovate and succeed in competitive markets. By focusing on creating uncontested market spaces, serving overlooked customer segments, and challenging industry conventions, entrepreneurs can unlock new opportunities for growth and differentiation.

The principles and tools of the Blue Ocean Strategy, such as the Four Actions Framework and the Eliminate-Reduce-Raise-Create Grid, provide a systematic approach to value innovation and break the trade-off between differentiation and low cost. Meanwhile, the theory of Disruptive Innovation highlights the importance of identifying and serving underserved customer needs and the potential for new entrants to displace established competitors.

To successfully apply these innovation frameworks in the UK market, entrepreneurs must develop a deep understanding of customer needs, leverage emerging trends and disruptions, collaborate with innovation ecosystems, and embrace agile and lean methodologies. By doing so, they can position themselves at the forefront of industry transformation and drive sustainable growth.

At SGI Consultants, we are committed to helping UK entrepreneurs and organisations embed innovation excellence into their DNA. Our Business Systems framework and expert consulting services provide the tools, insights, and support needed to systematically apply the principles of Blue Ocean Strategy and Disruptive Innovation and to create a culture of continuous innovation and customer-centricity.

As the pace of change accelerates and competition intensifies, the ability to innovate and create new market spaces will become increasingly critical for UK businesses. By leveraging the power of Blue Ocean Strategy and Disruptive Innovation, entrepreneurs can survive and thrive in the face of market disruptions and create lasting value for their customers, organisations, and society.

Sources:

– Blue Ocean Strategy. (2021). What is the Blue Ocean Strategy? https://www.blueoceanstrategy.com/what-is-blue-ocean-strategy/

– Christensen Institute. (2021). Disruptive Innovation. https://www.christenseninstitute.org/disruptive-innovation/

– GOV.UK. (2018). UK Innovation Survey 2017: headline findings. https://www.gov.uk/government/statistics/uk-innovation-survey-2017-headline-findings

– GOV.UK. (2021). Innovation support for business. https://www.gov.uk/guidance/innovation-support-for-business

– Harvard Business Review. (2015). What Is Disruptive Innovation? https://hbr.org/2015/12/what-is-disruptive-innovation

– Mind the Product. (2021). The Lean Startup Methodology: How It Works and When to Use It. https://www.mindtheproduct.com/lean-startup-methodology-how-it-works-when-to-use-it/

– PwC. (2021). UK Economic Outlook. https://www.pwc.co.uk/services/economics/insights/uk-economic-outlook.html

– Strategyzer. (2021). Value Proposition Canvas. https://www.strategyzer.com/canvas/value-proposition-canvas