How strategy shapes structure by W Chan Kim and Renee Mauborgne, Harvard Business review, September 2009

I sought the help of MTP’s leading strategy tutor Chris Goodwin for this review because, as often happens with articles on this topic, it is difficult to be sure whether this is breakthrough thinking or a recycling of previous writings. In fact the article is at neither of these two extremes; it puts forward a new theory of strategic success but the arguments and examples are not convincing enough to make you believe in its practical application.

The basic argument in the book is that there are two ways to achieve success; you can either operate in the ‘Red Ocean’ where all the competitors are fighting it out and where blood is flowing into the water. The authors claim that this is the traditional ‘structuralist’ approach advocated by many writers on strategy, most famously Michael Porter. This can work but, as Porter convincingly argued, success needs competitive advantage by means of the right strategic positioning in terms of differentiation or cost leadership..

These authors argue that an alternative approach is to enter the ‘Blue Ocean’ where you are able to adopt a ‘Reconstructionist’ approach by changing the economic landscape and avoiding competitive pressures. This happens in circumstances where the product is so game changing that you are able to achieve competitive advantage via differentiation AND cost leadership.

This theory seems interesting at first but some of the examples are not sufficiently convincing to suggest that it is capable of general application. These examples include Cirque de Soleil, Dubai, Comic Relief and the Chrysler Mini Van in the USA. The first three seem to be rather too specialised to be the basis of wider application and our view is that the latter soon lost its uniqueness as it was copied by other car companies. This example raises the issue that the authors do not really address – how do you keep competitors from invading your nice blue ocean?

So when you get down to the fundamental crux of the article, it is saying that a unique product will be successful unless and until competitors copy it, which is not really anything new in strategic thinking; in fact Porter's more recent work made a similar point. In his article ‘What is strategy?’ he quoted for instance, IKEA, South West Airlines and Enterprise Car Rental as examples of companies that had developed offerings with strategic positioning that could not easily be copied, though he did not use the ‘Blue Ocean’ label.

The other main point made in the article – that the companies who develop unique products are often merely applying existing technologies in different ways – was made much more effectively in another recent strategic publication, ‘Fast Second’ by Markides and Geroski. This book talked about companies who were ‘consolidators’ of existing technology and contained much more convincing arguments, as confirmed by my review here earlier this year.

To read this article go to http://hbr.harvardbusiness.org/2009/09/how-strategy-shapes-structure/ar/1