Managing Innovation: Blue Ocean Strategy

Managing Innovation
Blue Ocean Strategy
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Content
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Introduction
The paper is devoted to the analyse the development of innovation concept, aspect and types.
The report’s main objective is to define and explain the growth pattern of conception and
interpretation of innovation over time. Innovation is the method of making modifications to
something already created by introducing something new. Innovation is about helping
organisations develop, includes activities such as managing ideas, identifying the objectives
and motivating teams (O’Sullivian and Dooley, 2009).
Innovation is applicable to business to increase the effectiveness of a service or productivity.
Since middle of the 19th century innovation made the appearance into the area of scientific
research implicitly. Since the second half of the 20th century the concept of innovation began
to spread across the different areas of information.
More and more concept of innovation starts to develop like “blue ocean innovation” (Kim
and Mauborgne, 2005), “diffusion innovation” (Tiwari and Herstatt, 2011), and “disruptive
innovation” (Moore, 2005). The focus on this report will be for Blue Ocean Strategy for the
BrewDogg company.
The report is organised as follow. The first part will discuss the principal and process of blue
ocean theory along evaluating the theory. The second section analyses the development of the
innovation concept in historical perspective. Finally, the third part will highlight the
application of blue ocean strategy in the further development.
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Part 1
Innovation Theory -Blue Ocean Strategy
According to Whittington et al. (2006), Blue Ocean strategy concept is useful to identify new
gaps in the market. Blue Ocean means minimising the competitions and creating an open
market space. Blue Ocean strategy is aiming to avoid Red Oceans with many similar rivals
and low profitability and can be analysed with a strategic canvas. Considering a new strategy
canvas for removing Red Ocean strategy for the existing market and aiming to beat
competitors and utilizes existing demands. Therefore, Blue Ocean creates uncontested market
space and aims to make competition irrelevant by creating new demand.
By focusing on making the competition irrelevant there are few factors Blue Ocean strategy
needs to evidence. If a company acts favourably in reducing the cost will increase the value
of buyer and eventually will create a value innovation.
Blue ocean strategy is to focus on reconstructing the market, looking at the bigger picture and
reach beyond of what customers are currently demanding. Blue Ocean divided them strategy
by focusing on the strategy canvas characteristics. Working on the four framework actions;
reduce the standards factors in the industry, eliminate the factors that are assumed, create
opportunities the industry which has not offered before and raise standards which are above
the industry.
According to Chan and Mauborgne 2006, value innovation is created in the region where a
company’s actions favourably affect both its cost structure and its value proposition to
buyers. Cost savings are made by eliminating and reducing the factors an industry competes
on. Buyer value is lifted by raising and creating elements the industry has never offered. Over
time, costs are reduced further as scale economies kick in due to the high sales volumes that
superior value generates.
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Fig1. The cornerstone of Blue Ocean Strategy Source: Google Scholar, 2020
Effective blue ocean strategy should be about minimising the risks of the business not taking
the risk (Kim, Mauborhne, 2015).
The strategy Canvas- Framework Tool
The strategy canvas is both an analytical and an action framework for creating a powerful
blue ocean strategy. Finding the current state in the market, this will allow a better
understanding of competitors, the factors that company compete on its product and service.
Looking into what customers receive from the currant competitors.
Fig2. Blue Ocean Tools and Strategy
The Four Action Frameworks
The aim of the four action frameworks is to recreate consumers value factors in creating a
new value curve.
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