Blue Ocean Strategy: Innovation, Development, and Application Analysis

This report provides a comprehensive analysis of Blue Ocean Strategy as a key approach to managing innovation and achieving competitive advantage in business development. It begins by defining innovation and introducing the Blue Ocean Strategy, which emphasizes creating uncontested market space through differentiation and cost-effectiveness. The report details the six principles of Blue Ocean Strategy and the processes involved in its successful implementation, using OLO, a B2B software as a service company, as a case study to illustrate these concepts. It further explores the four action framework (eliminate, reduce, raise, create) and examines the benefits and limitations of the Blue Ocean Strategy. Finally, the report delves into the historical application of the strategy, highlighting OLO's journey from its inception to its current success, and briefly touches on its potential in future development contexts. This analysis underscores the importance of strategic planning, value innovation, and understanding market boundaries in creating new market spaces and achieving sustainable growth.

Managing Innovation

Table of Contents
INTRODUCTION...........................................................................................................................3
Main Body.......................................................................................................................................3
Blue Ocean Innovation theory................................................................................................3
Processes for Blue Ocean Strategy ........................................................................................5
Application of Blue Ocean Theory in historical development...............................................9
Application of Blue Ocean Theory in Future development context.....................................13
Conclusion.....................................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Innovation in the today's competitive world is a significant strategy used by the business
firms to opt for a differentiation and creative products and services which in turn helps is
developing and creating competitive edge in the market. Innovation is defined as the process of
practical implementation of invention ideas that in turn results into introduction of new goods
and services or binging necessary changes into the existing offerings to add more value for
customers and generate profits for the company (Corsaro and Maggioni, 2021). Business firms
may look forward to develop a price leadership strategy or differentiation strategy where in both
the cases innovation is required to enhance the competitiveness. Blue ocean strategy in
innovation is creating and capturing entire new and uncontested market space to introduce new
products and services which have not been existed before and are offered at low cost, thus
making the competition irrelevant. Under Blue ocean strategy demand is created by the
companies rather than fight over it and has huge potential for the further growth and profit.
Main Body
Blue Ocean Innovation theory
Blue Ocean Strategy opted by the companies to enhance their competitiveness is defined
as the new market place for the products and services where there are minimal companies
operating into industry for the with a little competition prevailing. This strategy revolves around
the looking for a business in the relevant market where there are few business firms are operating
with no pressure over price. OLO is a B2B software as a service company based in New York
which has evolved with the help of Blue Ocean Strategy where company have identified the
business idea of placing order and delivering requests programmes for some of the well known
and well established restaurant. The company enables customers to place restaurant orders for
multiple sources such as brand's own website, an application, social media platforms or from any
other third party market places (Peerally, De Fuentes and Figueiredo, 2019).
With the help of Blue Ocean Strategy, OLO has focused on the strategic organisational
approach which is based on the principle of focusing on uncontested market with a new products
and services along with exceptional features and quality rather than engaging in competitive
struggle and invest efforts in reducing costs, improve profitability and facing cut throat
competition. There are basically six major principle of Blue Ocean Strategy which guided OLO

in successfully formulation and implementation of strategy along with a systematic risk
minimising and opportunity maximising way.
Illustration 1: Blue Ocean Strategy, 2021
Source: (Blue Ocean Strategy, 2021)
Major Principle of Blue Ocean Strategy Reconstruct market boundaries: As per this principle manager of OLO could
systematically craft a uncontested market space across several industry domains that in
turn mitigating search risk. By looking at six conventional boundaries of competition,
this principles teach managers how to make competition irrelevant and commercially
open up for the blue oceans. The six path lay emphasis over by looking across alternative
industries, strategic groups, buyer groups, functional-emotional alternative,
complementary product and services and even time (Vendrell-Herrero, Bustinza and
Opazo-Basaez, 2021). Focus on big picture, not on numbers: In order to go beyond incremental improvements
with the aim of creating value innovations, this principles illustrates OLO how to make a
strategic planning process. This principles with the help of visualising approach helps
company in focusing over reality rather than submerged into numbers and jargon as

existing strategic planning is criticised often as number crunching exercise. An effective
strategic planning will help company in creating and grabbing blue ocean strategy. Reach beyond demand: With the help of this strategy managers challenge conventional
practice for finer segmentation in order to meet the existing customer preference that
results in increasing small target markets. Unlike traditional concept, this principle focus
on aggregating demand not by separating customers but by establishing commonalities
among non customers in order to maximise the size of blue ocean market and unlocking
new demands thus helps in minimising the risk. Get strategic sequence right: As per this principle OLO builds most viable business
model with the aim of producing and maintaining profitable growth along with
generating a leap in value for mass potential buyers (Diercks, Larsen and Steward, 2019)
. This principle helps managers in articulating the sequence of strategy in term of utility,
price, cost and adoption so that both customer and company wins in the well developed
business model. Overcoming organisational hurdles: This principles states that while discovering blue
ocean markets companies must identify and plan for the future risks and contingencies
with the aim of overcoming such problems and let the business function smoothly
without any hurdles. Good leadership style enables OLO is in rallying the efforts of
business and resources so that there is no road block in successful implementation of
blue ocean strategy.
 Build Execution into strategy: The final principle of blue ocean strategy will enable
OLO in making fair process for the successful introduction of blue ocean strategy by
integrating execution into strategy making. Fair process is essential to keep the
employees motivated to act upon and make efforts towards successful execution of blue
ocean strategy (Mom and et. al., 2019).
Processes for Blue Ocean Strategy
According to Steve Denning 2017, Creating and capturing a new market space does not
takes place overnight as it is a lengthy process which requires extensive research and planning
along with huge amount of time, money and efforts invested. In order to mitigate the randomness
and trail and error while creating a market space an effective process of Blue Ocean Theory

helps OLO in successfully developing a new software as a service market space for the customer
to be able to make reservations and place orders in restaurants through numerous sources. Right scope for the blue ocean initiative and develop confidence: At this initial stage,
OLO identifies the business, products or services which it can tackle as per the
availability of natural resources and capability of business firm. With the help of pioneer-
migrator-settler-map, OLO could target the area where there is huge potential
opportunities and high rate of return. After identifying the opportunities in Internet based
services for the restaurants of New York, OLO start building confidence, motivates and
inspire employees to contribute towards the common goals. Current strategic leadership: At this stage OLO answers the few questions like does the
company has a one simple picture of the company's vision which is shared by all the
managers and subordinates so that everyone is on the right path and same page (Brillinger
and et. al., 2020). Having a clear and current strategic scenario is crucial for the business
as it helps in keeping the firm differentiating from the competitors and revealing
information with regards to what extent company's current strategy and that of other
competitors looks similar to target market and reasons for shifting towards red ocean
market. Hidden constraints that could be converted into potential opportunities: Once the
company has identified the bigger picture, the next challenge is to build an equally clear
and bigger picture view by understanding how the industries assumptions and boundaries
could limit the appeal and size of the industry. By analysing the customer utility path
OLO can identify the hidden constraints which can prove into the valuable opportunities
for the company and helps in providing new solutions to the customer's existing problem.
By analysing and identifying the non customers along with reasons for why the
customers stays away from the industry helps OLO in developing a personalised services
for entirely new market (Franzosa and et. al., 2021). Creating blue ocean options: Now at this stage, OLO creates and develop practical
develop blue ocean options which follows the strategy of differentiation and low costs for
creating and capture uncontested market. This stage applies the systematic process for
reconstructing market boundaries and creating a new market spaces. OLO identified the
future trends and acted on a proactive basis to discover the internet based software

services for the convenience of customers to make restaurants order through multiple
sources.
 Launch blue ocean move: At last and final stage OLO initiate to take a blue ocean move
and start testing the initiative in the market on target audience to check the viability and
reliability of selected business model. OLO starts applying their initiative to the target
market audience and gathers the customer feedbacks and suggestion on how successful
new developed products and services are. Furthermore with a democratic leadership
style, OLO inspire the workforce and encourage them towards commitment and long
term vision of company (Vendrell-Herrero, Bustinza and Opazo-Basaez, 2021).
Four action framework of Eliminate/ reduce/ raise/create grid
The four action framework is a significant technique used by the business firms that
breaks the trade off between the low cost and differentiation and to be able to generate a new
value curve. This framework is based on the four factors which helps business firms to create
valuable and innovative products and services by answering few questions. Whatever is taken for
granted in the industry should be eliminated, factors to be reduced below industry standards,
factors that has to raised above the desired and industry standards; and finally creating a valuable
products and services that has never been offered by the industry.
With the help of this model OLO offered the liaison services between customers ,
restaurants and hotels by making it easier for both the parties to get connected. It has eliminated
the ordering fees for the customers for placing an order on restaurants and other food
establishments (Fletcher and et. al., 2021). OLO has raised the quality of delivery services by
offering safe, secure and hygiene food delivery to customer keeping in mind the safety and
hygiene protocols of COVID-19. Before the inception of OLO company, there were no such kind
of services offered to the customers where they can easily get connected to the numerous
restaurants and place order by their choice as per the food taste and preference. Furthermore,
OLO has reduced the waiting time for ordering and delivering food which was relatively high as
compared to prior launching of such innovative services by OLO.

Benefits and Limitations of Blue Ocean Theory
 One of the prime benefit of Blue Ocean Strategy for OLO is that it helps the business
firms in identifying the uncontested market and prevents the company from intense
competition in the red ocean market where rivalry firms are striving to outperform one
another (Tran and et. al., 2019).
 Backbone of Blue Ocean strategy is value innovation which is an alliance with cost, price
and utility. With the value added products and services, blue ocean strategy helps the
company in creating a demand in entirely new market, therefore, expands the new
customer base and chances for growth and profitability.
 Blue ocean strategy is a time consuming process which is supported by extensive
research and analysis of data with relevant facts and figures. It is not developed overnight
and is better developed with the results of numerous trials and errors.
 Production of the goods and services is not a easy tasks for the new market because OLO
has to be clear and wise in making right selection for the customer base and raising
awareness about the new products, process or services (Grosser and et. al., 2019).
Application of Blue Ocean Theory in historical development
Company Background: OLO stands for “online ordering” which is a New York based SaaS
company which is aimed primarily at developing digital ordering and delivering programmes for
the restaurants. Amidst such a economic crisis, food establishments are dealing with low sales

volume and difficulties in receiving orders and fulfilling on time. The company founded way
back in 2005 as GoMobo by Noah Glass as a initial mobile phone application which enabled
users to make pre-order food through text message from coffee-shops for pick-ups (Papouskova,
Telecky and Cejka, 2020). The company makes use of internet based model for interacting with
the its customer and providing them software based services.
Vision: OLO has a clear vision and long term commitment towards act as liaison between trusted
restaurants and loyal customers across the globe through leveraging potential opportunities and
capabilities of firm. The company is committed towards maintaining positive and long term
relationship with customers on the basis of trust and confidence gained through quality services.
Mission: Amidst economy crisis such as pandemic, OLO aims at strengthening its interface
between restaurants and potential customers and helping them to connect better with each other.
OLO strive to expand the customer base for food services establishments meanwhile taking care
of safety of customer by providing fast, cost effective and quality services with necessary safety
and hygiene measures (Georgios, Kerstin and Theofylaktos, 2019)).
Business Canvas Model
Key Partners
 Cafes
 Canteens
 Fine-dine
restaurants
 Commercial
buildings
 Shopping
malls.
 Other food
establishmen
ts in
colleges,
offices etc.
Key Activities
 Designing
and
developme
nt of an
application
.
 Advertisin
g and
promotion
of business
customers.
 Secured,rel
iable, fast,
safe and
Value
Proposition
 Company
is
committe
d towards
providing
reliable
and cost
effective
services
to
customers
, ensuring
customer'
Customer
Relationships
 It allows
custome
rs to get
highly
secured
and most
reliable
services
to the
custome
r
keeping
their
Customer
Segments
 Working
professio
nals.
 Students
staying
away
from
home.
 Family
and its
young
generatio
n.

hygiene
services.
s safety
and
client's
standards
are
properly
maintaine
d.
safety
and
security
at their
utmost
priority.
 Compan
y is
aimed at
boosting
up the
business
of
client's
by
increasin
g their
sales
volume
and
profitabi
lity.
Key Resources
 Customers
 Suppliers
 Volunteers
 Manageme
nt
Channels
 Food
Establis
hments
 Social
media.
 Official
website.

Cost Structure
 Cost of buying and renting machines
that include delivery drivers, payment
costs and so on.
 Promotional and advertisements for the
marketing of brand and client's
offerings.
 Delivery vehicles and warehouse for
storing and keeping the parcel safe.
Revenue Streams
 Company is charging commission from
customers to the sum of 25% of the
total bill value and with extra charges
for rapid delivery.
 Company is offering limited period and
life time period subscription package to
business clients.