What the Hell is... Blue Ocean Strategy

In contrast to a blue ocean (an undiscovered market), the red ocean is the current marketplace, where corporations are competing for market share. Intense competition leads some companies to go under, and the "cutthroat nature" of business turns the ocean bloody or red. It's the concept of diminishing returns, as companies have to devote more resources to besting the competition in order to build market share slightly.

Without the cost of competition, corporations are free to focus on developing their product. Moreover, innovative companies will have the opportunity to define the rules of the marketplace in their favor.

Starwood Hotel's targeting of non-customers is a recent example of Blue Ocean Strategy as they are trying to step outside the traditional market boundaries of the hospitality industry.

Origin:

Michigan State University Professor Charles W.L. Hill introduced the idea in 1988 that differentiation and cost management was the key to gaining a competitive advantage. The concept was encapsulated in the 2005 bestseller, Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant, written by W. Chan Kim and Renée Mauborgne.