Blue Ocean Strategy Vs. Stuck In The Middle

The blue ocean strategy is a theory that states companies can gain a competitive advantage by creating whole new markets through value innovation (so-called blue oceans) where competition doesn’t exist yet. Stuck in the middle is a scenario from Porter’s Generic Strategies, where for lack of focus or differentiation, a company finds itself in a place where it lacks strategic advantage.

Aspect	Blue Ocean Strategy	Stuck in the Middle Strategy
Definition	Blue Ocean Strategy is a business strategy that aims to create uncontested market spaces, making competition irrelevant by innovating and offering unique value to customers.	Stuck in the Middle Strategy, also known as the Hybrid Strategy, refers to a business that neither focuses on differentiation nor cost leadership, resulting in mediocre performance.
Focus	– Focuses on differentiation and creating new markets. – Aims to break out of existing industry boundaries. – Seeks to provide unique value to customers.	– Lacks a clear focus on differentiation or cost leadership. – Tries to appeal to a broad customer base without excelling in either low cost or differentiation.
Market Space	– Creates a new market space with limited or no direct competition. – Emphasizes value innovation. – Seeks to redefine industry norms and customer expectations.	– Operates in existing market spaces but struggles to distinguish itself significantly. – Faces competition from both low-cost and differentiated competitors.
Competition	– Aims to make competition irrelevant by offering unique value. – Focuses on non-customers as potential new customers. – Often enjoys a first-mover advantage.	– Faces intense competition from both low-cost and differentiated competitors. – Struggles to capture a substantial market share. – Competitive position is weak.
Innovation	– Prioritizes innovation to create new products, services, or business models. – Emphasizes value innovation, often resulting in disruptive solutions.	– Typically lacks significant innovation and relies on existing products or services. – Rarely introduces groundbreaking ideas or concepts.
Examples	– Cirque du Soleil: Created a new market space between circus and theater by eliminating animal acts and focusing on artistic performances. – Nintendo Wii: Offered a unique gaming experience appealing to non-gamers.	– Sears: Struggled to differentiate itself in the retail industry and lost market share to both low-cost retailers like Walmart and differentiated ones like Macy’s. – AOL: Failed to adapt to changing internet dynamics and faced competition from various directions.
Risk Tolerance	– Blue Ocean Strategy involves a moderate to high level of risk due to the uncertainty associated with creating entirely new markets. – Success can lead to substantial rewards.	– Stuck in the Middle Strategy often involves a lower risk as it operates within existing markets but may lead to mediocre financial performance and gradual decline.
Long-term Viability	– Blue Ocean Strategy aims for long-term sustainability by continually innovating and adapting to changing market dynamics. – Seeks to maintain a competitive advantage.	– Stuck in the Middle Strategy tends to be less viable in the long term, as it struggles to keep up with competitors and adapt to market shifts. – May face eventual decline.
Strategic Focus	– Places a strong emphasis on strategy formulation and innovative thinking. – Requires a clear vision and commitment to value innovation.	– Often lacks a clear strategic focus and relies on an existing business model without significant adaptation or innovation.
Customer Perception	– Aims to create a positive customer perception through innovative products or services, leading to strong brand loyalty and customer retention.	– Often faces challenges in establishing a distinctive customer perception, which may result in weaker customer loyalty and susceptibility to price competition.
Resource Allocation	– Allocates resources toward research, development, and innovation. – Prioritizes creating and capturing new demand in untapped market spaces.	– May allocate resources toward cost-cutting measures to compete with low-cost competitors, limiting investment in differentiation or innovation.

Table of Contents

Blue Ocean Strategy

Porter’s Generic Strategies

Key Similarities between Blue Ocean Strategy and Stuck in the Middle:

Competitive Advantage: Both concepts are related to a company’s competitive advantage in the market. Blue Ocean Strategy seeks to create a unique and uncontested market space, while being stuck in the middle implies a lack of strategic advantage due to a lack of focus or differentiation.
Market Positioning: Both concepts are about the positioning of a company within its market. Blue Ocean Strategy aims to create a new market position that is distinct from existing competitors, while being stuck in the middle means being unable to establish a clear and compelling market position.

Key Differences between Blue Ocean Strategy and Stuck in the Middle:

Focus on Innovation: Blue Ocean Strategy emphasizes value innovation and the creation of new markets with unique value propositions. In contrast, being stuck in the middle is a situation where a company fails to differentiate itself and lacks a clear strategy for competitive advantage.
Market Environment: Blue Ocean Strategy operates in an environment where competition is non-existent or irrelevant, as the company creates its unique market space. On the other hand, being stuck in the middle occurs in a highly competitive market where the company struggles to stand out.
Value-Cost Trade-off: Blue Ocean Strategy aims to break the value-cost trade-off by offering significantly more value at a lower cost to customers. In contrast, being stuck in the middle implies a company’s inability to achieve a distinct value proposition that justifies premium pricing or cost leadership.

Blue Ocean Strategy Examples:

Apple’s iPhone: When Apple introduced the iPhone, it wasn’t just another phone. It combined an iPod, a phone, and an Internet communication device. Apple created a new market space, moving away from the traditional phone market.
Netflix: Instead of competing with traditional movie rental stores, Netflix created a new market with online streaming. They offered a vast selection of movies and shows for a monthly subscription, making the need for physical rentals obsolete.
Cirque du Soleil: By blending opera and ballet with circus, Cirque du Soleil created a unique market space and took the traditional circus experience to a whole new level, attracting a different segment of the audience.
Nespresso: Rather than competing in the crowded coffee market, Nespresso introduced single-serving espresso machines for homes, creating a new market space.
Tesla: Instead of just another car manufacturer, Tesla focused on high-performance electric vehicles, carving out a unique space in the automobile industry.

Stuck in the Middle Examples:

Blackberry: Post iPhone era, Blackberry tried to maintain its business-oriented image while also attempting to cater to the general consumer market with touchscreens and app stores. This lack of clear focus led to a decline as they got overshadowed by both business and consumer mobile devices.
J.C. Penney: In an attempt to revitalize the brand, J.C. Penney tried to shift from sales and discounts to “everyday low prices.” This strategy alienated their core discount-loving customer base, and they didn’t gain a new customer segment, leaving them in a challenging middle position.
Yahoo: Over the years, Yahoo tried to be everything – a web portal, a search engine, an e-commerce site, a web directory, and a news site. This lack of clear identity made them lose out to competitors who specialized in these areas.
RadioShack: Instead of focusing on its strengths in electronics components, RadioShack tried to compete with big-box electronics retailers and cell phone service providers. This left them in a middle ground where they couldn’t compete effectively with either segment.
Sears: Once a retail giant, Sears struggled in the 2000s as they were caught between better-endowed general merchandise competitors like Walmart and more specialized retailers in sectors like tools and appliances.

Key Takeaways:

Blue Ocean Strategy encourages companies to seek uncontested market space through value innovation, providing unique value at a lower cost to create new demand and render competition irrelevant.
Stuck in the middle is a situation where a company lacks a clear strategic advantage due to a lack of differentiation or focus, making it vulnerable to intense competition and limited growth opportunities.
While Blue Ocean Strategy offers the potential for substantial growth and success by creating new market space, being stuck in the middle is often associated with mediocrity and challenges in sustaining profitability.
Companies should carefully assess their market positioning and competitive advantage to avoid getting stuck in the middle and consider adopting Blue Ocean Strategy principles to break away from traditional competitive boundaries and find new avenues for growth and success.

Key Highlights:

Blue Ocean Strategy: This strategy involves companies creating new, uncontested market spaces (or “blue oceans”) rather than competing in existing industries. It emphasizes value innovation to make competition irrelevant.
Stuck in the Middle: This refers to a situation where a company fails to achieve a competitive advantage because it does not differentiate itself or focus on cost leadership. It’s a scenario where a company struggles to stand out amidst fierce competition.
Competitive Advantage: Both concepts relate to how a company positions itself in the market. The blue ocean strategy aims to establish dominance in new market spaces, while being “stuck in the middle” indicates a lack of clear strategic advantage.
Value Innovation: Blue ocean strategy prioritizes creating value in new ways, breaking away from industry norms, while a company that’s stuck in the middle often lacks a clear value proposition.
Market Environment: While the blue ocean strategy seeks areas with little to no competition, being stuck in the middle happens in saturated markets where differentiation is hard to achieve.
Implications: Adopting a blue ocean strategy can lead to significant growth and success. In contrast, companies that are stuck in the middle often face challenges in profitability and growth.