![]() ![]() On the other hand, alternatives include products or services that have different functions and forms but the same purpose. Reconstructing Market Boundaries Products or services that have different forms but offer the same functionality or core utility are often substitutes for each other. Innovation without value tends to be technology-driven, market pioneering, or futuristic, often shooting beyond what buyers are ready to accept and pay for. Value without innovation tends to focus on value creation on an incremental scale, something that improves value but is not sufficient to make a company stand out in the marketplace. ![]() Value innovation places equal emphasis on value and innovation. Instead, they follow a different strategic logic called value innovation. The creators of blue oceans, do not use the competition as their benchmark. Just four decades back, mutual funds, cell phones, gas-fired electricity plants, biotechnology, discount retail, express package delivery, minivans, snowboards, coffee bars, and home videos, to name a few did not exist in a meaningful way. About one hundred years back, how many of today's industries were known? Many industries as basic as automobiles, music recording, aviation, petrochemicals, health care, and management consulting were unheard of or had just begun to emerge at that time. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. Although some blue oceans are created well beyond existing industry boundaries, most are created from within red oceans by expanding existing industry boundaries. Blue oceans, in contrast, are defined by untapped market space, demand creation, and the opportunity for highly profitable growth. Products become commodities, and cutthroat competition turns the red ocean bloody. As the market space gets crowded, prospects for profits and growth are reduced. ![]() Companies try to outperform their rivals to grab a greater share of existing demand. In the red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known. Blue oceans denote all the industries not in existence today. Red oceans represent all the industries in existence today. A market universe consists of two sorts of oceans: red oceans and blue oceans. Creating Blue Oceans The only way to beat the competition is to stop trying to beat the competition. ![]()
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