Apple and Samsung Case Study

5 August 2010

How did Apple forecast that we'd pine for the iPhone 4 despite the bad press? After all, fans were just coming off their highs from embracing the iPad. And how did du pull off its unique positioning as a lower cost alternative without sacrificing profits? Or how did Samsung succeed with its entirely new smartphone platform, "bada", in a seemingly saturated market dominated by iPhone, Android and Blackberry?

Smart enterprises engage their customers in regular dialogue to ascertain what would excite them beyond what's currently available. The ones that crack consumer demand are those that identify wants and needs that customers don't even know they have. By challenging the assumptions of their industry incumbents, these companies virtually eliminate competition, because they actually redefine the benchmarks for their kind of product. Such market dominance is achieved by these companies adopting the "Blue Ocean" strategy, a new management metaphor causing a sea change in technology innovation worldwide.

The blue ocean strategy was popularised by W. Chan Kim and Renée Mauborgne, distinguished professors at INSEAD in France. They formulated this concept after studying 150 strategic initiatives, spanning over 100 years and 30+ industries. Simply stated, their hypothesis is that most businesses are located in a red ocean. The red ocean is log jammed with competitors, all offering similar products and services. As these companies fight for market share in a zero-sum game, they stain the waters red with blood, shed through skirmishing at close quarters. Profits shrink and market share declines in red oceans, simply because they're overcrowded and often dangerous.

Blue oceans are quite the opposite. They are spawned by innovative start-ups or existing organisations that apply fresh thinking to stay away from red oceans. Their strategy usually involves designing new products or services and linking them to what buyers really want, even if they don't realise they want it as yet. The blue ocean strategy is a way for both large enterprises and small to mid-sized business to leave their competition behind and enter markets that are uncontested.

Apple's "think different" slogan is a tribute to these waters. In blue oceans there is often no competition, or, if there is any, it's irrelevant because it can't negatively affect your market. The iPhone unwittingly cannibalised its unborn competitors as it created a blue ocean for touch screen phones that didn't exist until then. Then, it broke ground with the iPad, another blue ocean debutante.