A gaming simulation approach to understanding blue ocean strategy development as a transition from traditional competitive strategy

ABSTRACT

Blue Ocean Strategy (BOS) has attracted a resurgence of interest following various market discontinuities, including digital disruption, the growth of the sharing economy and the development of ecosystems. BOS is a combination of value innovation and new markets, driving sustained higher performance through specific marketing activities, but it is difficult to conceive and implement. We outline five cases that use various transition paths to BOS through white spaces – with product extensions in the existing market. An important part of this transition are ‘blue ocean droplets’ which drive profitable growth through the transition and then onto a successful deployment of a blue ocean strategy. Blue ocean droplets drive profitable growth – simultaneously increasing volume sales, maintaining/increasing prices and maintaining/decreasing costs. We then use an inductive qualitative approach in a multi-team gaming simulation to examine drivers of firm performance. Higher than average performance is driven by repositioning in white spaces and execution of the three blue ocean droplets. Finally, we discuss implications for firms: execute a number of real options to follow one of several transition paths to a full BOS. This approach involves less downside risk than a full BOS approach, but can still be sustainably profitable, while also breaking the traditional value/cost trade-off.

KEYWORDS:

• Blue ocean strategy
• strategy
• strategic marketing
• blue ocean droplets
• product innovation
• business model innovation
• value innovation

Acknowledgments

The authors thank the editor and an anonymous referee for very helpful comments and suggestions. Furthermore, we thank our 240 MBA students for their performance driven by a culture of “competing to win”.

Disclosure statement

No potential conflict of interest was reported by the authors.