Managing Innovation: TikTok's Blue Ocean Strategy Analysis Report

This report provides a detailed analysis of TikTok's innovative approach to the social media market, framed within the context of the Blue Ocean Strategy. It begins with an introduction to innovation and the Blue Ocean Theory, defining its principles, processes, and evaluation methods, including the Strategy Canvas and Four Actions Framework. The report then delves into the application of this theory to TikTok, providing background information on the company, its historical development, and its future development plans. It explores how TikTok created a new market space by offering short-form video content, differentiating itself from existing social media platforms. The analysis examines how TikTok has achieved a competitive advantage, emphasizing its innovation in content creation, user experience, and market positioning. The report concludes with a discussion of the strategy's implications for future growth and sustainability in the dynamic social media landscape.

Managing Innovation
Assessment

Table of Contents
Introduction......................................................................................................................................1
BLUE OCEAN THEORY...............................................................................................................1
Definitions, Principles and Processes of Blue Ocean Theory................................................1
Evaluation of the Theory........................................................................................................3
APPLICATION OF THE THEORY...............................................................................................6
Company Background............................................................................................................6
Historical Development..........................................................................................................8
Future Development...............................................................................................................9
Conclusion.....................................................................................................................................10
References......................................................................................................................................11

Introduction
Innovation refers to aspect that is associated with creating new products, technologies,
services along with processes for adding up value within the existent offerings so that dynamic
requirements of customers can be accomplished in an appropriate manner. Basically, it implies
detailed aggregation of different techniques, methods and processes for enhancing their
usefulness (Barbosa, 2020). Innovation is an imperative aspect that must be executed for
ensuring that relevant standards of productive as well as added features are included in existent
liabilities. The rationale of opting for innovation within working premises is to amplify
sustainability along with having a competitive positioning in the marketplace.
In this context, report is based on TikTok that is Chinese social networking service in
which videos is shared and is owned via ByteDance. In this case, different short videos based on
distinct genres such as education, comedy and dance are made. The innovation has been offered
where people can post their videos and others can get entertain. The report will furnish
applications related with Blue Ocean strategy, that is innovation theory in which emphasis is
made on creation of uncontested marketing space that is liable for creating irrelevant competition
in the organisation. The report will provide overview of theories and their applications in
different perspectives.
BLUE OCEAN THEORY
Definitions, Principles and Processes of Blue Ocean Theory
Definition
The Blue Ocean Strategy is defined as consistent process for differentiation and also acts
as a low cost substitute that will enable firms within creation of new demands in the marketplace
where they deliver their offerings. Moreover, the notion behind working of this theory is to
capture market places which are still unchallenged that makes competition irrelevant for the
organisation. The other crucial notion that is being maintained via this theory is industrial
structure along with boundaries in the market that can be reconstructed by the firm that opts for
this strategy (Biemans, 2018).
Principles behind Blue Ocean Theory
There are two terms that are widely used within this theory. Red Ocean is one that
implies the sectors who have certain existence in the market at present scenario; this is also
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defined as market space. In this case, boundaries are clearly specified and are accepted via
businesses that are involved within delivering their services as well as opts for certain
competitive rules that must be adhered by organisation while rendering their services in the
industry. In context of market space, competitive edge will be attained via acquisition of shares
of the market by accomplishment of existent demands (Dodgson, 2018). But profits are declined
when industry gets over crowded with multiple firms.
With reference to term, Blue Ocean, it denotes all the sectors that do not exist yet and are
still unknown along with this are free from any kind of competition in between firms. The
demand or needs in market are not fought instead they are being formulated by the strong players
related with peculiar industry in the marketplace. The flexibility that is rendered by particular
sector is very high as this operates within restricted or no boundaries (Wikhamn and Styhre,
2020). The certain principles or features associated with Blue Ocean Theory are mentioned
below: Unknown Market Space: This is prominent feature associated with blue ocean strategy
that implies market is not known yet. The reason that lies behind this is that there are
certain unexplored areas in the market that have not been taken up by any organization to
work on as of yet. No Competition: This is another principle of the strategy blue ocean that organization
have to enter within those market strategies which have not been explored. This clearly
implies that probably there is no competition as this will be new zone that will be brought
up by the organization. In addition to this, the rationale that is related with this aspect is
creation of new demands by opting for blue ocean strategies. This means that blue ocean
is liable for making competition irrelevant. Differentiation: This principle is related with having consistent differentiation in
offerings that will enable organization to develop a new market space that is still not
explored within the market by others (Goolsbee and Krueger, 2015). In addition to this,
this is important that a platform is created in culture of organization for inspiring
extensive market research for identification of gap that exist in market for creation of
fresh demands. Development of Demand: This is crucial for organisation that they make use of Blue
ocean strategy in order to create new demands among their potential customers. The
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emphasis behind usage of this strategy is to innovate services along with products that
will aid within expansion of boundaries in distinct sectors and adequately make sure that
customers are targeted towards new offerings of firm that have been developed.
Processes involved within Blue Ocean Theory
In the case of blue ocean strategy, different processes are involved that are liable for
furnishing relevant guidance along with appropriate structure for organisations to engage them
within bringing innovation which will further bring in new offerings in the new market.
Therefore, there are some processes which are explored, they are specified beneath:
 Creating a new market that is not explored.
 Enhancement of inappropriateness along with irrelevancy of competition that is present
in the marketplace (Helper and Henderson, 2014).
 Developing new demands as well as breaking trade off associated with value cost.
 Aligning all the organisational processes as well as resources for accomplishment of
adequate innovation.
Evaluation of the Theory
It is crucial that the strategies are evaluated in an appropriate manner with reference to
development of better acknowledgment through which insight can be acquired in context of their
applications as well as usage. Therefore, in this context, different tools that can be utilised by
organisation while execution of Blue Ocean Strategies are specified below: Strategy Canvas: This tool implies actions along with diagnostic framework that is liable
for capturing strategic environment of sector as well as illustrate future prospects of
organization in graphical manner. The horizontal axis comprises of different entities that
acts like basis for investment as well as competition in the marketplace. In case of
vertical axis, it comprises of relative performance of firm against other entities that
creates impact in a graphical way (Mao, 2017). This will enable firm within segregation
of their activities from others in context of similarity and on basis of ways in which
consumers sees their strategies.
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Illustration 1: Strategy Canvas
(Source: Strategy Canvas, 2020)
 Four Actions Framework: In case of Blue Ocean strategy, this framework is used for
reconstruction of value entities for buyers in context of formulating different new curves
along with strategic profiles. Furthermore, for breaking down low cost as well as
differentiation trade off, the complete framework emphasize on wide range of questions,
they are explored beneath:
o Raise: What factors needs to be raised above standards of the sector?
o Create: What are the factors that have to be developed within the industry and are
not yet furnished?
o Reduce: Which entities must be declined below certain levels of the industry?
o Elimination: What factors that have been attained or competed by sector must be
wiped out?
In addition to this, it becomes necessary that all the affirmatives along with pessimistic
perspectives associated with blue ocean strategy are taken into consideration (Morgan and et. al,
2020). Therefore, certain prominent advantages as well as disadvantages are explored beneath:
Advantages:
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 Innovation: This is biggest advantage that is related with Blue Ocean Strategy that will
further enable within facilitating innovation in the organization in context of development
of offerings that unique for people.
 Transformation: It is another prominent asset that is associated with the strategy that
leads to expansion of horizons along with mental capacities of individuals who are
involved within distinct processes. This strategy is liable for transforming mindset of
people towards bringing something in new markets by engaging their potential
consumers for enhanced demands.
 Value improvisation: The practical approaches along with proven information that is
being utilized within Blue Ocean Strategy, makes this aspect effective in context of
improvisation of value for organization and their offerings (Noble, 2017). This is done by
breaking trade off that prevails among price as well as differentiation that leads to make
customers perspectives affirmative for organization and thereby improvising the scope
associated with revenue and success.
Disadvantages:
 Complex: Basically, Blue Ocean strategy is critical in nature, the reason behind this is
that the characteristic comprises of consistency this makes it critical for firm to constantly
get indulged within bringing up new ideas for creation of unexplored market spaces every
time.
 Investment within research and development: The processes that are involved within the
Blue Ocean Strategy, this is mandatory that organization have to make significant
investment within market research that will further aid assist within mapping forecasted
alterations. This will enable within creation of products through which new demands can
be developed in an affirmative manner. But, each organization do not possess capacity
for making investments consistently as well as heavily within the entire process which
acts as major limitation of this framework (Prange and Schlegelmilch, 2018).
 Risk: There are certain risks that are associated with Blue Ocean Strategy that are very
high in comparison to other innovative theories. This is due to the fact that new market
that will be developed will have predictable demands in the mindset along with
preferences of customers might alter drastically as they are uncertain and cannot be taken
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into account. Thus, this strategy can be very risky in context of attaining higher revenue
as well as profits.
In this context, it becomes crucial to take into account different examples to acknowledge
its applications. Therefore, some of the aspects are specified beneath:
 One of the critical applications is given by Apple and this when they brought in iTunes.
At that peculiar instance of time, individuals opt for downloading pirated music for
listening to favorites along with desirables. The idea was based on creating new market
space as well as demands to stream free music rather than opting for illegal practices to
download music (Rangone, 2020). Therefore, by opting for this strategy, the market was
captured by making use of this software.
 The other effectual instance of this theory is concept that is utilized via Uber. This was
brought like a revolution for transforming industry entirely by eradication of concept
associated with physically booking cabs and having denial mostly. The firm opted for
furnishing their potential customers with an online platform who are authenticated so that
they can have reliable and safe trip. Thus, Blue Ocean Strategy leads to creation of
demand.
APPLICATION OF THE THEORY
Company Background
TikTok is also known as Douyin in China which owned via ByteDance. It is a social
media platform that is utilised for making videos and have duration from 3 seconds to 3 minutes
depending upon users. This was released on September 2016 for Chinese market but later in
2017 this was launched for Android and iOS outside the mainland of China and is available
across world. Both Douyin as well as TikTok had identical user interface but do not have access
to content present in one other. These two platforms are similar but the features that are being
delivered by this are not identical. ByteDance is multinational internet technological firm that is
headquartered across Beijing as well as is legally domiciled in Cayman Islands and is founded in
2012 by Zhang Yiming.
Its history is beyond as far as 2012, when Toutiao was produced which content platform
is across the world and this was initiated like news recommendation engine that gradually
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delivered content in different formats. Furthermore, TikTok was developed and ByteDance had
around 800 million users each day and this was regarded as valuable unicorns present in the
world.
Business Canvas Model:
Key Partners
Ad partners
Key Activities
Development of
apps and their
maintenance
Maintaining data
of users
Design
Value
Proposition
Easy and quick
video creation
Huge music
library
Lip-sync videos
Visual impacts
Customer
Relationships
Celebrity
accounts
Challenges
Duet videos can
be created with
other users
Videos can be
shared on distinct
networks
Customer
Segments
Brands
Gen Z
Celebrities
iPhone or
Android users
Key Resources
User base
Technology
Advertisers
Network
Channels
App stores
Cost Structure
Data and servers maintenance
Customer services
Platform and development
Revenue Streams
Brand partnership
Gift sales
Native ads (that are in testing)
TikTok is liable for making their revenue as well as profitability through rendering their
customers with gift sales, partnership and ads. This is carried out by them by formulating
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relations or having partnership with different platforms so that they can reach maximum users
across the world. Their target customers are any individuals irrespective of any demographics or
age. With reference to value proposition of the organisation, there are distinct entities that
provide users to have worth (Tidd and Bessant, 2014). An instance can be taken like users have
an option to integrate with other users and also see what others are posting irrespective of
whether they know them or not. This means that high quality and technologically sound platform
is being rendered to individuals on which they can upload videos, share them with others and
also see what is being posted via others.
Historical Development
It is crucial that historical development is being considered and their products are
explicated in an appropriate manner that pertains to have peculiar illustration of innovations
related with their offerings must be included by applications of innovation theory. This will
further assist within knowledge creation related with what has been done by the organisation and
how they can further attain success by accomplishment of requirements of their potential
consumers. The Blue Ocean strategy with reference to TikTok is executed beneath: Uncontested Space: The application was launched in 2016 and this enabled users to
share videos on social media platform . The idea that was considered in this case was
aligned with Blue Ocean Strategy. The rationale behind TikTok was to create vibrant
atmosphere where people can embrace diversity along with celebrate trends and thereby
created the uncontested space. Irrelevancy of competition: The scope was so wide that they expanded easily across the
world by providing people with unique space where they can share anything whether for
3 seconds or 3 minutes. Firm required huge servers so that videos can be stored which
made competition irrelevant.
Therefore, all the concerns are effectual with reference to organisation that enabled them to
be market leader across the country. The Blue Ocean Strategy is executed via the organisation
within their business formatting channels that are dealt within, technological and infrastructure
provisions as well as other operations of organisation.
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Future Development
For organisation that have developed their offerings on Blue Ocean it becomes essential
that firm identifies new ways associated with its application so that future growth along with
sustainability in the marketplace can be ensured in appropriate manner. In addition to this, it will
enable organisation to amplify their business functionalities as well as expansion of horizons of
industries for creating better spaces. In case of applications of Blue Ocean, the firm need to alter
their business format. This implies that technological service providers need to have sustainable
infrastructure that is liable for supporting their work along with development opportunities. In
this context, TikTok can opt for business process re-engineering which is radical redesign of
processes conducted by business for attainment of drastic improvisations within crucial aspects
such as cost, quality, speed and services. This will enable ByteDance to cut down the enterprise
cost as well as process duplications on large scale. This can be attained by mapping current state,
analysing this, identification of gaps and making improvements.
Illustration 2: Innovation in the Process Chart
In the infrastructure of TikTok, the latest technologies can be adopted like Automation
and AI for facilitating technological sustainability that will enable to easily share resources in
context of technology by creation of spaces and new demands for organisation that are inclined
towards enhancement of CSR operations. This will enable organisation to knowledge creation as
they will be able to identify the aspects they have to accomplish by identification of areas that
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are not known (Tidd and Bessant, 2018). By doing so, it will become easy to work on them and
accordingly make use of Blue Ocean strategy. In addition to this, it will aid them within having
partnership with different ad agencies and communities so that they can have corporate support
from other firms. This will enable ByteDance to make relevant contribution within attainment of
new objectives and missions that have been identified by them. Furthermore, this will lead to
creation of flexible infrastructure that will have new format that is formulated within distinct
locations. This will be assembled on the basis of what will be created so that new needs along
with uncontested market space for having uninterrupted customisation that will be rendered to
distinct customers. This will hold up as a key to success of organisation in the future as well as
enable them to have effectual application of Blue Ocean Strategy while delivering their services
within the marketplace.
Conclusion
From above, it can be concluded that innovation is crucial for each firm in order to make
sure that they acquire enhanced and improvised market shares which further enables them to
attain competitiveness. This is attained because of new offerings that are out of the box by
making use of adequate strategies and taking risks. This becomes important that strategies such
as Blue Ocean must be defined as well as evaluated with reference to organisation so that it can
be analysed that how apt is same for the organisation. In addition to this, applications of theory
must be considered with reference to historical development of the organisation by providing
detailed application of each aspect while firm is opting for developing their innovative offerings
within the marketplace. At last, it also becomes crucial application of theory or strategies are also
evaluated with reference to future development of organisation. This will aid to acknowledge
that best can be attained by its execution in the future context of offerings that will be delivered
by the organisation.
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References
Books and Journals
Barbosa, A.P.F.P.L., 2020. Managing Collaborative R&D Projects with DifferentTypes of
Knowledge Sources. The Crest of the Innovation Management Research Wave, p.17.
Biemans, W., 2018. Managing innovation within networks (Vol. 7). Routledge.
Dodgson, M., 2018. Technological collaboration in industry: strategy, policy and
internationalization in innovation. Routledge.
Goolsbee, A. D. and Krueger, A. B., 2015. A retrospective look at rescuing and restructuring
general motors and chrysler. Journal of Economic Perspectives. 29(2). pp.3-24.
Helper, S. and Henderson, R., 2014. Management practices, relational contracts, and the decline
of General Motors. Journal of Economic Perspectives. 28(1). pp.49-72.
Mao, Y., 2017. Managing innovation: The role of collateral. Kelley School of Business Research
Paper, (17-25).
Morgan, B. And et. al, 2020. Managing Productivity in Welsh Firms. Hodge Foundation.
Noble, D., 2017. Forces of production: A social history of industrial automation. Routledge.
Prange, C. and Schlegelmilch, B.B., 2018. Managing innovation dilemmas: The cube
solution. Business Horizons. 61(2). pp.309-322.
Rangone, A., 2020. A Benchmark for Innovation. In Managing Corporate Innovation (pp. 85-
94). Springer, Cham.
Tidd, J. and Bessant, J., 2014. Strategic innovation management. John Wiley & Sons.
Tidd, J. and Bessant, J.R., 2018. Managing innovation: integrating technological, market and
organizational change. John Wiley & Sons.
Wikhamn, B.R. and Styhre, A., 2020. Open innovation groundwork. International Journal of
Innovation Management, 24(02), p.2050013.
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