Why Blue Oceans?
Blue Oceans encapsulates our thinking as it relates to strategy and environmental sustainability. Both core to our values.
With regard to environment, Blue Oceans evokes images of pure waters and sustainability. We see a fundamental link between environmental sustainability and the financial community. Those institutions, as providers of capital, have enormous power to force change if it is their will, and in fact, they have a responsibility to do so.
Blue Oceans as it relates to business strategy is a term coined by Kim & Mauborgne (2005) that describes business models in uncontested markets with new demand, and strong, profitable growth. For us, Blue Oceans Strategy is a mental framework and a methodology for contributing to society in a sustainable way. It assists us to capture value with time compression from ideation to realisation.
Blue Oceans’ strategy is about “building a future where customers, employees, shareholders and society win.” In this way it is aligned with our passion for business to contribute to the betterment of people and to the environment as shown in our ESG focus. As opposed to Blue Oceans, Red Ocean industry boundaries are well-defined and accepted with the rules of the game already known. In Red Oceans, companies try to outperform their rivals to grab a greater share of existing demand. As that market space gets crowded, returns diminish and products become commoditised. Blue Oceans are untapped market spaces where new demand is created and there is opportunity for highly profitable growth. Some Blue Oceans are created in entirely new industries but most are created by expanding industry boundaries into new areas and markets through value innovation within Red Oceans. Here competition is irrelevant because the rules of the game have not yet been set. The focus is on the strategic move that companies make and not the company or industry itself.
Reference: Kim, W. C., Mauborgne, R. (2005). Blue Ocean Strategy: From Theory to Practice. California Management Review, 47(3), 105–121.
Business Value Capture
Ø – No Captured Value – Business not possible
oo – Infinite Value Creation Possibilities
A – Little Captured Value
B– Moderate Captured Value – most businesses.
C – High Value Capture
1 – Facebook
2 – Google
3 – Amazon
Figure A. Conceptual distribution curve of global untapped value creation.