Managing Innovation: Blue Ocean Strategy and its Application in Spotify

MANAGING INNOVATION

TABLE OF CONTENTS
Introduction......................................................................................................................................1
MAIN BODY..................................................................................................................................1
Definitions, Principals and Processes of the theory.....................................................................1
Principles and process of Blue Ocean Strategy...........................................................................2
Evaluation of theory....................................................................................................................3
Application of the Blue Ocean Strategy Innovation Theory in the historical development
context..........................................................................................................................................5
Application of the Blue Ocean Strategy Innovation Theory in the future development context 7
Conclusion.......................................................................................................................................8
REFERENCES................................................................................................................................9

Introduction
Innovation is a process though which a new product or service can be developed with
improved efficiency and effectiveness or competitive advantage (Chesbrough, Lettl and Ritter,
2018). In order to grow and expand it is important for organizations to focus upon innovating
something new. It further helps an organization in sustaining within the market in which they
operation. Not only this, it also provides various kinds of opportunities to the company that can
help them in enhancing their customer base, profitability, revenue and expand their business to
other market segment as well. There are various kinds of innovation theories that can be used by
firm s for development of new product. Choosing an appropriate innovation theory helps an
organization to increase chances of their success and become more resilient to changes and
becomes more capable of growing in the market. This report will lay emphasis upon Blue Ocean
innovation theory, applications of this theory in in historical and future development of Spotify.
MAIN BODY
Definitions, Principals and Processes of the theory
Innovation helps an organization from standing out from competition and gain
competitive advantage (Namboodiri, Banerjee and Dasgupta, 2019). There are various different
kinds of innovation theories that can be used for development of new innovative product or
service that can be used by firms for gaining competitive advantage and successfully expand
their business. Blue Ocean strategy is a kind of innovation theory is an action of achieving low
cost and differentiation for opening a new market demand. It helps a company in exporting
potential and wider market space that has not been explored or captured. It helps an organization
in making competition irrelevant by capturing new needs and demands of market that can help
them in breaking value cost trade off. Use of Blue ocean strategy can help a firm in meeting
untold or unmet needs, requirement and demands of customers. It is one of the most commonly
used and well- known strategy that can be used by companies for development of new products
or services that can help them to meet unknown or unmet needs and requirements of their target
customers (Nakamori, 2020)(Agnihotri, 2016). Organizations that focus upon using Blue ocean
strategy focuses upon creating a demand rather than struggling over fulfilling current needs and
demands of customers. Various organizations like Spotify has used this theory f innovation and
created a new market segment and focused upon exporting new opportunities that can help them
to attract new customers and gain competitive advantage. Spotify successfully created and
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capture new demand of customers and offered then unlimited streaming of videos instead of
traditionally downloading music. They completely changed the way people listen music.
Blue ocean strategy can be said as a strategic move that can help organizations in
enhancing overall business values and enhancing abilities of organization for meeting new
unexplored needs of market (Denning, 2017). Like Spotify focused upon meeting unmet needs of
unlimited music streaming application where there is no requirement of downloading music.
This helped Spotify to gain competitive advantage.
Principles and process of Blue Ocean Strategy
Principles:
There are four main principles on the basis of which blue Ocean strategy has been
formulated and other two principles help in addressing execution risk of the strategy. First four
major principles are as follows:
 Reconstruct market Boundaries: It focuses upon identifying path by which organizations can
create untested market space across diverse industry domain (Madsen and Slåtten, 2019).
This principle helps the company in understanding ways in which competition can be made
irrelevant by looking across making competition boundaries so that they can open upon
commercially. Simply in other words, this principle reduces focus upon reducing
characteristics of product so that important characteristics of product can be identified and
enhanced for enhancing its market value.
 Focus upon bigger picture: Organization should focus upon analysing large amount of data in
order to understand wants and neds of customers. This can be done by identifying what
current market is providing to the customers and what is not been provided by the current
market segment. This will help the firm in identifying innovative idea that can further help
them in creating a blue ocean, achieving success and making competition irrelevant. It will
further help in developing a strategy which is currently lost (Karaoulanis, 2018). This
principle also says that organization should not focus upon numbers, instead they should
focus upon development of an appropriate strategy.
 Reaching beyond existing market demand: this principle focuses upon identifying ways in
which future potential customers can be attracted who are currently not purchasing from the
current market due to one or more than one reason. They should work upon identifying ways
in which future potential target customers actually wants and so that size of blue ocean being
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