Value innovation: A leap into the blue ocean

  • Kim W
  • Mauborgne R
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Abstract

We set out to quantify the impact of creating blue oceans on a company’s growth in both revenues and profits in a study of the business launches of 108 companies (see Figure 1). We found that 86 percent of the launches were line-extensions, that is, incremental improvement within the red ocean of existing market space. Yet they accounted for only 62 percent of total revenues and a mere 39 percent of total profits. The remaining 14 percent of the launches were aimed at creating new blue oceans. They generated 38 percent of total revenues and 61 percent of total profits. Given that business launches included the total investments made for creating red and blue oceans (regardless of their subsequent revenue and profit consequences, including failures) the performance benefits of creating blue waters are evident.

Author-supplied keywords

  • Competitive advantage
  • Competitive strategy
  • Innovation
  • Market position
  • Value analysis

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Authors

  • W. Chan Kim

  • Renée Mauborgne

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