Why is a BLUE OCEAN Strategy Difficult to Implement?
According to an article in the October 2004 Harvard Business Review, in a study of 108 companies, 86% of business launches were line extensions, that is improvements on existing industry offerings, and a mere 14% were aimed at creating new markets, or industries. While line extensions did account for 62% of the total revenues, they delivered only 39% of the total profits. Conversely, the 14% invested in creating new markets generated 61% of total profits.
The above data demonstrates the payoff potential if a new blue ocean is found, but as they say, “if it were easy someone would have already done it.” Since blue ocean strategies require identifying untapped markets, and sometimes reinventing the market itself, a blue ocean strategy is a high-risk play that does not always pay off. When it succeeds, however, the rewards are considerable.