Blue Ocean Innovation Theory: Application in Business Development

This report examines the application of Blue Ocean Innovation Theory in business development, focusing on its principles, processes, and evaluation. It discusses how companies can create new market spaces and differentiate themselves from competitors. The report includes a historical analysis of Olo, a B2B SaaS company specializing in digital ordering and delivery programs for restaurants, illustrating how Olo has leveraged Blue Ocean strategies for growth. It also explores the potential future applications of this theory for Olo, emphasizing the importance of innovation for sustained success. The report concludes by highlighting the benefits and limitations of the Blue Ocean strategy, suggesting its potential for driving growth and competitive advantage through strategic market restructuring and innovation.

Assessment

Table of Contents
INTRODUCTION...........................................................................................................................3
Main Body.......................................................................................................................................3
Blue Ocean Innovation theory.........................................................................................................3
Definition.....................................................................................................................................3
Principals......................................................................................................................................3
Process of theory..........................................................................................................................4
Evaluation of theory.....................................................................................................................5
Application of Blue Ocean innovation theory in historical development.......................................5
Application of innovation Blue Ocean innovation theory in context of future development.........5
CONCLUSION................................................................................................................................6
REFRENCES...................................................................................................................................7

INTRODUCTION
Innovation signifies generation and implementation of new ideas with an aim to bring a
creative & unique product in market place. It can be related with development of new product &
services and modification in existing products. Innovation is a process through which a domain,
product & service is renewed and updated by applying new process, formulating successful new
ideas in order to provide value to customers (Whidya and et. al., 2020). The present report is
based on Olo, B2B sass company which prepares a digital delivering programs for restaurants. It
is headquartered in New York and was founded in the year of 2005. The present report is based
on innovation in company which will help in bringing value in its products. Blue Ocean strategy
is implemented in the following report in order to introduce and implement innovation
effectively. Blue ocean strategy is widely used framework which is adopted for getting
competitive advantage by differentiating products and services from competitors The report
comprises principals, process and evaluation of respective theory, with application of historical
and future development.
Main Body
Blue Ocean Innovation theory
Definition
Blue Ocean is related with pursuing differentiation & low cost for creating new market space and
increase demand. Maim aim of this strategy is to acquire huge market space and strengthening
market position in such a manner that competition become irrelevant. Competitive advantage is
the major objective behind this strategy where managers put all the necessary efforts for
differentiating their services from rivals (Salih, 2019). In context of Olo, they are looking
forward for bringing innovation for which they will apply blue ocean strategy in a structured way
so that they get positive results in future period of time.
Principals
Blue Ocean is a theory of strategic management which holds great significance in
business setting. Principals of this theory are mentioned as under:

Reconstructing market boundaries: According to this principal, there is requirement to
identify new boundaries, opportunities for business growth apart from the set conventional
criteria. New opportunities are really helpful in bringing growth and provide a chance to
organization to explore in new areas. In context of Olo company, they are required to follow this
principal for further development of business.
Reaching beyond existing demand: There are some predefined level of demand is
present in market but for growth, it is imperative to generate new demand by targeting more
number of customers. For this, organization is required to always tap into new segment by
undertaking extensive market research which lowers down the risk of failure (Nakamori, 2020).
In context of respective company, they can get tremendous success by implementing this
principle as it will help in enlarging current customer base significantly.
Process of theory
 Reconstruct market boundaries: It is the first step under which existing business
boundaries are analyzed and then suitable strategies are prepared in order to explore
business apart from conventional boundaries for gaining higher amount of sales &
revenue.
 Focus on big picture: Do not get indulge in small issues while focus on such things
which have tremendous impact over business. Always, prepare such strategies which
prove beneficial for company in future period of time (Denning, 2017).
 Reach beyond existing demand: Rather only focusing on existing customers, try to
generate more demand by targeting more number of customers. Focus on potential
customers and tap into new segments so that business can grow & succeed.
 Apply right strategic sequence: For successful implementation of strategy, apply
strategies in predefined sequence. It will help to drive positive outcomes through
innovation & development framework.
 Overcome with organization hurdles: It is the crucial stage where, it is required to put
efforts for resolving issues before they turned into big problems. Timely resolving issues
is helpful in order to deal with future obstacles effectively.

 Execution: At end, implement blue ocean strategy in organization for gaining positive
outcomes. After executing, it is required to analyze the after effects for making necessary
improvements in future period of time.
Evaluation of theory
Blue Ocean strategy is strategic framework which is helpful in creating new demand and
extending current market boundaries. Generally, this approach is used for value creation among
customers by introducing innovation in an efficient manner. It enlarges current market space and
creates new demand so that company can face the competition significantly. It depicts the way
how to restructure market and current boundaries of business instead of fighting for survival
within industry (Tanasamrit and et. al., 2016). With blue ocean organization is able to uplift from
the competition and enjoy tremendous growth and success with higher number of customers. It is
related with enhancement of demand and stand in competition in successful manner. It provides
scope of creating new demand by tapping into new market space and gets the opportunity of
growth & development. Sometimes, Blue ocean is also known as such strategy which maximize
opportunities and minimized risk. Here, a lot of opportunities are provided to business entities in
order to ensure enlarge current customer base for earning substantial amount of profit in future
period of time. In reference of Olo, this strategy is going to prove highly beneficial for them as it
will help in getting an edge over competitors by introducing new and innovative services. By
implementing this framework, they can restructure current market space by targeting new
segment of customers. This strategy will allow them in order to tap into a new market which has
higher scope of growth. Through this, they can earn tremendous amount of profit and it will also
lead the company towards higher fame & popularity. Additionally, evaluating blue ocean
successfully will help Olo to face competition in an efficient manner in order to maximize
current level of growth.
Benefits:
 This strategy helps company in order to identify untapped market which is full with
opportunities and allows organization to avoid statures & matured market. By applying
this theory, respective company can easily target a potential market for earning
substantial amount of profit margin (Wicaksono, 2020).

 Innovation is the back bone of blue ocean wherein new and advance products are
developed to provide value to existing customers in an efficient manner. In addition to
this, it also enhances the chance of growth & development by strengthening the
competitive positioning of company which is crucial to sustain in market place for longer
run.
Limitations:
 However blue ocean strategy provides ample of benefits in terms of improving current
level of sales and profit margin but it is not easy to execute this strategy in rightful
manner. In this, company enters into a new market place which is not an easy task. For
this, they need to choose such a market place which has growth potential and
opportunities(Hinings, Gegenhuber and Greenwood, 2018).
 In blue ocean, company enters into a new market space so it required huge patience, faith
as well as preparation so that they can sustain in new market place. They need to be
realistic and need to have positive attitude in order to face future obstacles in an efficient
manner.
With above discussion, it is found that blue ocean is an effective framework which will
provide tremendous opportunities of future enlargement and betterment tor respective company.
With this, organization can bring highly innovative products & services in market place for
staying in competition till longer period of time. On other side, there is requirement of strategic
mind set and keep high patience and faith for converting the ideas into reality.
Application of Blue Ocean innovation theory in historical development
Company Background
Olo is a company which develops programs of digital ordering and delivering for
restaurants and hotels. Maim aim of this company is to use the digital transformation in an
efficient manner so that customers can meet with their requirements in timely and effective
manner. It is B2B Saas company based on New York which develops softwares to help
restaurants as well as customers. Here, Olo acts as a mediator between customers and
restaurants. It provides great feasibility to audience wherein they can place order from different

origination points like social media platforms, brand’s website, smart speakers and more. It was
founded by Noah Glass in the year of 2005. Initially, it offers an app by which users can place
pre order of food through text message. It brings constant transformation for bringing innovation
in market place which allows company to maintain a strong presence in competitive market place
(Ferraris, Bresciani and Papa, 2018). It is analyzed that Olo is based on two models which is
subscription and transaction. In Subscription model, restaurants need to pay a certain amount
of subscription for using the ordering platform of company. Apart from this, it also earns
significant amount from transaction fees during dispatch of products. Subscription is considered
as the crucial source of revenue for Olo. In 2018, olo earned 93% of its overall income through
subscription and 7 % from transaction. Although, in recent time transaction income Olo is also
increasing significantly which is a good sign for company. It is a platform which is based on
innovation and provides feasibility to customers to order online. Here, business Canvas of Olo is
given as under:
The above stated business canvas shows that Olo works within different models in order
to provide better services and experiences to customers. They perform a lot of activities such as
preparing software, maintain it efficiently. Apart from this, they also have been partnering with
different restaurants and hotels. Various channels are used by company for providing effective
services to users.

Historical development
It is stated that Olo is developd over the period of time. It was started in the year on 2005
with a mobile app through which customer can make order using text. But now, it is working at
huge level wherein has association with a lot of partners. It offers softwares which are used
within restaurants industry. It has been provide services to nearly 64000 restaurants from taking
order to monitor inventory, manage delivery and analyze data of customers. The company has
grown with passing years and currently works with 100 technology partners for providing an
open eco system where companies are allowed to use different digital tools of Olo. Main aim of
respective company is to enable restaurants in order to taking and delivering order seamlessly
with implication of digital techniques. It is stated that organization changed its name from online
ordering to Olo in 2010 for depicting the changes of being a customer facing company from a
B2B software company. In the year of 2017, shake shack launched a shake app which was
created by Olo. In the same year, organization recorded nearly 40 million users which show its
growth and potential of getting success in future period of time. Company also entered into a
partnership with search engine giant Google in 2019 for proving interface between Google
application and Google search with an aim to connect customers with nearby restaurants and
allowing them to place order by eliminating third party services.
During pandemic, Olo got tremendous success due to change in circumstances (Kay and
Willman, 2018). It is handing 2 million orders on daily basis and has experiences huge growth
during lockdown. Customers or partners of Olo who are restaurants decided to offer take aways
and home delivery for coping up with impact of pandemic. Blue ocean strategy helped company
in order to gain growth and success in market place. Due to this, they were able to identify new
group of customers and face competition effectively. Implementation of blue ocean provided
various benefits to company in terms of enlargement of business, profit, number of customers
and subscription income. It is analyzed that customers of Olo are highly loyal and majority of
them has renewed the subscription in 2020. Hence, the company experienced a significant
journey of growth from a small company in 2005 to get listed in New York stock exchange and
associating with Google for further growth.

Application of innovation Blue Ocean innovation theory in context of future development
Olo aims to provide assistance to restaurants so that they can avail the services of third
parties like food delivery, firms and more. It aims to make the restaurants independent so that
they can provide own offering with the use of Olo platform rather relying on other service
providers such as UBER eats, Door Dash and more. With this platform, restaurants can directly
cater to their customers which is helpful in terms of relationship building. The platform enables
restaurants from taking order to provide timely delivery so that customers get a better
experience. Partners( restaurants) are likely to associated with Olo as they wish to make own
digital relationship with customers rather taking services of other parties. This is a reason that
popularity of Olo is increasing constantly. During pandemic time where hospitality industry
struggle for survival then Olo helped restaurants to operate in digital ways according to the set
guidelines of take away and home delivery (Pintonello, 2020). Apart from this, it provides
opportunity to restaurants to maintain their own system and take charge over the data &
information of customers instead of sharing it with any third party. In upcoming years, people
will take step to order directly from restaurants website rater depending on third party service
providers. Olo is really working well with hospitality industry and now has been started to
expand business in areas which will help in earning substantial amount of profit.
There are possibilities of future development of Olo as it is a software based company so,
there is requirement to stay aware with market trends and update their services accordingly. In
present time, extensive competition is present in market place for which, company needs to
undertake higher innovation and development (Cheng and Sheu, 2016). They can select new
ways of delivery such as drones and robots for ensuring timely delivery to customers. Olro was
providing digital platform to partners so far through which they can take and deliver the orders to
customers. Adding the feature of drone deliver and robotics will help restaurants in order to cater
the needs of customers in well defined manner. Through this, they can easily survive in tough
time like COVID and more. It has been seen that hospitality industry was worst hit by pandemic.
People are afraid of visiting to restaurants, hotels so far. In this time, drone deliver will prove a
boon and help to restaurants in meeting with requirements of customers in an effective manner.
Here, Blue Ocean strategy plays a crucial role in reconstructing market areas wherein company
will tap into a new market segment. It is analyzed that most of the people who deliver food
online are millennia’s. They are highly tech friendly and get attracted by technical aspects. By

offering this service, company can easily enter into a new market place where they cannot only
provide services to restaurants but also to other industries. With this, Olo can tap into new
market segment such as pharmaceutical, retail and more where people also wish to get
convenient and timely services. For providing drone delivery services, Olo is required to get
associate with other technical partners that will help them to convert the idea into reality. This is
a great idea with having possibilities of high growth. By applying the suggested idea in real
context, Olo can easily enhance its current customer base which will lead the organization
towards growth and development in future period of time.

CONCLUSION
The above discussion stated that innovation is used in order to bring new products and
services in market place for providing enhanced value & experiences to customers. Innovation is
a process which is related with embarking new practices and bring updation in current product
for betterment of whole society at large. There is discussion regarding blue ocean strategy which
is a widely used theory of innovation & development. It is helpful in terms of preparing such
strategies by which company can stand in competition in an efficient manner. It is based on
market restructuring where organization is likely to tap into new market place for earning
significant amount of profit. Discussion has been carried out about Olo which is a platform
providing ordering and delivering services to restaurants. It is analyzed that company started
with scratches and with the application of blue ocean, it is able to drive positive benefits which
will lead it towards enlargement & enhancement in future period of time. It is monitored that
organization is required to focus in future development by adding some new services such as
drone delivery and robotics in order to sustain in competitive market place for longer run.

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Online:
We explain everything you need to know about Olo, which provides software to restaurants
across the US, after it completed its US IPO, [Online], Avalible through :
https://www.forex.com/en/market-analysis/latest-research/everything-you-need-to-know-about-
olo/