Blue ocean vs. Red ocean

If you are thinking about launching an entrepreneur project or you already have one, there are two key concepts that might be helpful. In this article we dive into the blue and red oceans, two ways of undertaking business that coexist in the business world with a totally different approach: one based on tradition (red ocean) and the other on innovation (blue ocean)

What is a blue ocean and how does it differ from a red one?

Imagine an open, empty and calm sea, where there are no boats competing for fish. This is a blue ocean. This idea, popularized by the book Blue Ocean Strategy by Chan Kim and Renee Mauborgne, a work that has become a benchmark in the entrepreneurship world, calls for thinking outside the box. That is, instead of fighting against the competition in an already saturated market (which would be a red ocean), this methodology encourages overcoming established boundaries and creating new market spaces where competition is minimal or non-existent.

The key of these blue oceans is to identify markets that are, until now, empty or unattended niches that are easily conquerable. The advantages are quite numerous:

• No initial competition, since you are a pioneer in a market or niche, you will not have rivals to face to stand out.

• Flexibility. You can mold your strategy to your liking, as there are no preexisting rules that limit you.
• Ease of correction if you make mistakes.

Sin embargo, también cuenta con algunos inconvenientes que se deben considerar: However, it also has drawbacks that should be considered:

• Starting from scratch and blindly. There is no traced path, which implies greater uncertainty and the possibility of achieving great success or great failure.
• Lack of prior information to facilitate your activity. Unlike the red ocean, where you will find large amounts of data that will allow you to study trends, the blue ocean has no information, so at first, you will move a bit relying on your intuition.

On the other hand, the red ocean is the traditional domain of competition, where companies compete with each other in the market and continuous improvement is fundamental. In this form of business, the market is already defined, as are the competitors. So it is fundamentally based on outperforming competitors and taking advantage of existing demand. The advantages of red oceans include:

• Plenty of prior information from which you can start, identifying trends to work on.
• Established demand and a need to satisfy.
• Ability to analyze your competition: Although you have competition, you can analyze it and identify its strengths and weaknesses, obtaining information of great interest to know how to stand out from them.
• You don't start from scratch.

But, like everything, it also has its drawbacks, such as the great competition you must face, which makes it difficult for you to stand out.

How to create a blue ocean strategy

If the idea of venturing into a non-existent market has attracted you, you are surely wondering how you can create a blue ocean strategy. Here are some key steps to do so:

1. Identify the existing market. The first thing is to analyze the market in which you are already operating with your business and thus identify customer needs that are being neglected, not only by you but also by your competition.
2. Analyze the competition. Another way to find blue ocean opportunities is to analyze your competition to identify their weaknesses and gaps that you can exploit.
3. Create a unique value proposition: If you have already found a neglected market opportunity where there are no satisfied customers or direct competition, it is necessary to create a value proposition for it. At this point, innovation is the protagonist, as you have to create something that does not exist.
4. Validate your proposal: If you already have your value proposition and strategy planned, it is essential to validate it before launching it, otherwise, it may fail.

In short, opting to operate in a red or blue ocean will depend on your vision and capacity for innovation. Both approaches can be a great choice depending on your capabilities.