The six paths framework was created by Chan Kim and Renee Mauborgne, authors of the bestselling 2005 book Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant. The six paths framework encourages organizations to identify blue ocean strategies that increase their competitive advantage.
- Understanding the six paths framework
- The six paths of a blue ocean strategy
- Key takeaways:
Understanding the six paths framework
Within every industry, most companies compete on the same basic factors such as features or price. Over time, these companies become more and more similar with each pitted against the others for a slice of the same pie. Markets exemplified by fierce competition and little differentiation are associated with red ocean strategies.
Blue ocean strategies, on the other hand, call upon the company to search out blue, unchartered waters where there are no competitors and thus more profit. These strategies encourage the organization to look beyond its market, industry, and customer base since the insular approach does not tend to favor competitive advantage.
The six paths of a blue ocean strategy
1 – Look across alternative industries
Many companies have a narrow view of their environment, believing their products and services exist in a single, static industry. But there also exist alternative industries, or those that sell products and services with the same purpose but with a different function or form.
Consider the probiotic yogurt drink Yakult. The product competes in one industry with other health drinks and juices, but it also competes with the pharmaceutical industry. But since neither would consider Yakult to be their competition, the brand exists in a blue ocean that spans multiple industries.
2 – Look across strategic groups
Strategic groups can be defined as organizations that adopt a similar strategy built on either price or performance. These dimensions can be ranked in hierarchical order, which means a price increase tends to result in a subsequent increase in performance.
Most organizations sell products that are too focused on the middle of the spectrum. By focusing on budget products or premium products, the company may be able to differentiate itself.
3 – Look across buyer groups
In addition to the actual purchasers of a product or service, this chain consists of:
- The users of the product.
- Influencers and regulators, who impact decision-making, and
- Intermediate buyers, or traders.
Instead of marketing to doctors and nurses, for example, Novo Nordisk developed an insulin pen that was marketed to the actual users instead. The pen was easy to use, travel-friendly, and attractively designed to make it more appealing than the traditional bottle and syringe.
4 – Look across complementary product and service offering
In other words, what happens before, during, and after a product or service is used by the customer? By understanding the context of usage, the company can identify additional pain points and develop products for each.
When Philips were developing their range of kettles, they found that the lime in tap water caused scale to deposit inside the vessel. To solve a major pain point that was not related to the kettle itself, they devised a limescale filter that removed impurities as the kettle was filled.
5 – Look across the functional-emotional orientation of an industry
For buyers, emotional appeal refers to the emotional utility of using a product or service. Similarly, functional appeal refers to the functional utility of a product or service based on utility and price.
Businesses who understand that their industry is dominated by one or the other can compete on functional appeal by adding emotion or on emotional appeal by subtracting function.
6 – Look across time
Lastly, the blue ocean strategy encourages businesses to use initiative when monitoring trends. Some companies pace their actions to keep up with the development of a trend instead of determining how it will redefine customer value or impact their business model.
Rather than react passively to trends, Kim and Mauborgne advocate that businesses take an active role in shaping them. To do this, the trend must be decisive (relevant), irreversible, and have a clear trajectory. Businesses that shape trends and take advantage of them tend to be leaders in their industry.
- The six paths framework encourages organizations to identify blue ocean strategies that increase their competitive advantage. It was created by Chan Kim and Renee Mauborgne of blue ocean strategy fame.
- Blue ocean strategies call upon the company to search out blue, unchartered waters where there are no competitors and thus more profit. This requires bold, non-insular, out-of-the-box thinking.
- The six paths framework consists of six specific actions that may yield a competitive advantage. The business can choose to look across alternative industries, buyer groups, strategic groups, or time. Alternatively, it can look at complementary products and services or their functional and emotional components.
Read Next: Blue Ocean Strategy.
- Porter’s Five Forces
- Competitive Advantage
- Business Strategy Frameworks
- Blue Ocean Strategy
- BCG Matrix
- Ansoff Matrix
- Profit Margins
- Competitive Moat