[In depth interview] Blue ocean plan not a fad, co-creator says
W. Chan Kim
Kim is a professor of strategy and international management at France’s Insead, one of the world’s leading graduate business schools. Considered a guru in modern business administration circles, Kim is one of the world’s most sought-after consultants, with not only major multinational corporations but also governments seeking his advice. The book he co-authored with fellow Insead professor and research partner Renee Mauborgne, “Blue Ocean Strategy,” published in 2005 by the Harvard Business School Press, has become an international best seller, translated into 32 languages and published in 182 countries.
Though Kim’s advice is expensive ― a one-hour lecture, for example, could set you back 100 million won ($108,932) ― he is fully booked for one year, and important appearances by Kim are arranged two to three years in advance. A team in London and New York works full-time to arrange his schedule. To keep up with the demand, Kim trained 20 blue ocean consultants from around the world. Companies and governments hoping to consult with Kim must first go through “strategy consulting” with the consultants and then schedule a meeting with Kim.
Why is Kim so influential?
Simply put, his theories and solutions are appealing. The term blue ocean refers to untapped and uncontested markets. The goal is to do something different and create your own blue ocean. Governments and business companies have embraced his strategy like the gospel.
“By creating new value, they [countries] can create a blue ocean where there is no competition,” Kim told The Economist, a JoongAng Ilbo economic weekly magazine, in a brief interview.
What is most interesting is that many governments, including the ir militaries ― which are usually regarded as free of competition ― are embracing the strategy.
“Recently,” Kim said, “many governments have either adopted or are willing to adopt the strategy. The public sector needs to create value as well.
“Fierce competition exists within the army,” Kim said. “Externally, it is in an arms race with other countries’ armies, but internally the military ― the navy and air force ― have to compete to increase their strength. Things have changed, however. The meaning of competition in the army has become vague. First of all, it is difficult to win [a war], and the definition of winning and losing is vague. The distinctions between soldier and civilian or being at war and at peace have become blurred. A new concept dictates that today’s civilian can become tomorrow’s soldier. One solution for all stands no ground.”
Circumstances change and so do concepts. Still, can the same theory hold for the public sector?
“Yes,” Kim replied. “The blue ocean strategy is expanding from the private sector to the public sector and government because they have common objectives. Governments want to maximize national interests while businesses want to maximize profits.”
Kim stressed that both states and businesses need to adopt a strategic mindset and what they need is a creation strategy. Such a strategy is in line with the blue ocean strategy, he said.
Business theories come and go. From what is considered the first business theory of the early 20th century, Frederick W. Taylor’s “scientific management,” to Michael Hammer’s “re-engineering” in the 1990s, numerous theories have swept the world at one time or another and later were forgotten.
Will the blue ocean strategy have the same fate?
“The future is unforeseeable,” Kim said, but he also predicted that the strategy is not a fad and that it will persist.
“The future is unpredictable. Let’s take Michael E. Porter’s competition strategy, for instance. That strategy is remarkable. Porter explains how to win in competition by analyzing industries and competitors and telling how to have a competitive edge. In contrast, the blue ocean strategy aims to create a new market. Historically, the company that created value was not the one that won in competition, but one that generated a new industry. Microsoft’s Bill Gates is a good example.”
The blue ocean strategy always aims to create a new industry and at the same time tells how to put the strategy in practice, Kim said.
Many people still question the blue ocean strategy.
One can establish a blue ocean by creating new value, but the followers will turn the blue ocean red [with blood from competition] again. In that respect, some experts say the blue ocean can be a short-term phenomenon.
“The blue ocean soon becomes a red ocean,” Kim said. The blue ocean strategy and the red ocean strategy are not completely separate, but they are complementary to each other. Historically, creation and competition have continued. Kim emphasized that sometimes creation is more important, while in other times competition is.
“Since 2000, creation has become more significant. Supply has exceeded demand. At this point, the blue ocean strategy is far more important,” Kim said.
In reality, however, good strategy does not always ensure success. Is the famed blue ocean strategy as successful as its reputation? Does it reflect in the performance of domestic companies?
“The results from implementing a blue ocean strategy are not always positive; even though some say they have adopted a blue ocean strategy, there are many occasions in which it is not executed correctly. Sometimes, people mistake a niche market for a blue ocean,” Kim said.
Kim suggested that Koreans learn and adopt the blue ocean strategy.
“Korea needs the blue ocean strategy more than other countries. Koreans are too used to competition. Koreans learned how to compete since they were in elementary school and they think they must win in competition.
“But competition strategy needs to be transformed to creation strategy. Through creation, they have to neutralize competition,” Kim said.
By Lee Jae-kwang Economist
[jbiz91@joongang.co.kr]
with the Korea JoongAng Daily
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