Blue or Red: A Review of Blue Ocean Strategy by W. Chan Kim and Renée Mauborgne

At CMG Advisory we strongly believe in self education and this includes reading books that assist us in making informed decisions and understand how the world works in every area of enterprise and business.

This week I read again the book Blue Ocean Strategy by W. Chan Kim and Renée Mauborgne. The book is a provocative and influential framework for thinking about competition, value creation, and market positioning. While originally published in 2005 (and expanded in subsequent editions), its core idea remains highly relevant for small business owners navigating 2026’s dynamic landscape, in particular to advancements in technologies and how everything seems to become more systematized or agile.

Here’s a concise review focused on practical takeaways for improving a small business’s value proposition and help you prepare for the 2026 year.

What the book argues (the core premise)

• Red oceans vs. blue oceans: Rivalry in saturated markets (red oceans) leads to commoditized products, thin margins, and wasted energy. Blue oceans represent untapped market space, where demand is created rather than fought over. Evaluate where you are at and if you can spot a Blue ocean.

• Value innovation: The sweet spot where you simultaneously pursue differentiation and low cost. The goal is not to beat the competition at their game but to redefine the game itself so that you attract clients that perhaps you are not serving but could be.

• Tools and frameworks: The Strategy Canvas, Four Actions Framework (Eliminate-Reduce-Raise-Create), and the ERRC grid help teams reconstruct market boundaries and reimagine value. These frameworks are for decision making in terms of the practical changes you can make to your value proposition or identify new ways to serve clients or attract non-clients.

  
  

Why it matters for small business owners in 2026

• Market fragmentation and rapid shifts: With digital channels, global supply chains, and evolving customer preferences, many small businesses operate in spaces that can be reframed or repurposed rather than competed over in crowded niches. For example, you may be in retail and you may spot an opportunity to take your skills and offer them via coaching services.

• Resource discipline: Small businesses often operate with lean budgets. Blue Ocean emphasizes strategic focus—prioritizing a few high-impact moves over scattershot efforts. This means you have to think carefully about your moves and decide quickly if what you're doing is in fact improvements to a Red ocean modus operandi or working within a Blue ocean.

• Customer-centric value proposition: The book’s emphasis on creating new value aligns well with small businesses that can tailor offerings to underserved segments or unaddressed jobs-to-be-done. This takes clarity of mind and critical thinking to understand trends and where the world may be in 10 to 20 years time.

• Digital acceleration: In 2026, the ability to identify and serve non-customers (people who are not currently buying in your category) using digital channels can be a multiplier for blue ocean thinking. The market place is now globalized due to technologies available, so make use of these to enlarge your territory and serve more people.

  
  

Strengths for practitioners

• Clarity of mindset: Encourages stepping back from direct head-to-head competition and reframing the problem space.

• Actionable tools: The Strategy Canvas and ERRC framework provide a repeatable process to challenge assumptions about a value proposition.

• Focus on noncustomers: Helps small businesses think about latent demand—customers you’re not currently serving, or new problems you could solve.

Limitations and caveats

• Real-world feasibility: Blue Ocean strategies can be ambitious. Not every idea will be practical or financially viable for a small operation, especially in tight margins or highly regulated industries.

• Risk of blue ocean mislabeling: Some markets labeled as “blue oceans” quickly attract competition if the underlying need is not unique or sustainable.

• Execution gap: Identifying a blue ocean is only the first step; successful execution—operational capabilities, supply chain, marketing, and customer education—matters just as much.

  
  

Relevance to value proposition improvement in 2026

• Reframing value: Use the Four Actions Framework to scrutinize your current proposition. Ask:

  • Which factors should be eliminated because they no longer deliver value?

  • Which factors should be reduced well below industry standards?

  • Which factors should be raised above competitors?

  • Which new factors should be created to unlock new demand?

• Noncustomer insight: Target three noncustomers (soon-to-be customers, refusing customers, and unserved customers) to uncover unmet needs. This can reveal new value propositions that are not obvious from incumbents’ perspective.

• Strategic sequences: After identifying a candidate new value proposition, test its viability via a simple utility, price, cost, and adoption (PEDA) sequence before scaling.

• Digital and service-enabled blue oceans: Small businesses can leverage digital platforms, automation, and service innovations to create differentiated, low-cost experiences (subscription models, DIY kits with professional support, on-demand services, etc.).

• Sustainability and ethics: In 2026, customers increasingly value transparent, sustainable, and ethically designed offerings. Blue Ocean thinking can help you redefine what “value” means in a way that aligns with these expectations.

  
  

Practical, small-business-ready steps

1. Run a quick Strategy Canvas exercise for your category to identify where you’re strong and where you’re behind.

2. Apply the Four Actions Framework to a current product/service to draft a blue-ocean value proposition.

3. Identify one noncustomer segment to prototype a tailored offering for (e.g., a new use case, a different price point, or a different delivery channel).

4. Create a minimal viable blue-ocean pilot: define scope, cost structure, and a simple metric (customer acquisition cost vs. lifetime value, time to value, churn).

5. Map a lightweight ERRC grid to guide resource allocation for the pilot.

6. Establish a feedback loop with early adopters to refine the proposition before broader rollout.

7. Review and adapt: every 6–12 weeks, reassess your strategy canvas, customer feedback, and financials to ensure the blue-ocean move remains viable and distinct.

   
   

Potential risks to watch

• Over-claiming value: Ensure the proposition is truly differentiated and sustainable, not just a rebranding of existing features.

• Imitation: If a blue ocean proves attractive, competitors may quickly follow. Be prepared to iterate.

• Resource constraints: For small teams, ambitious blue-ocean moves must be balanced with operational capability

  
  

Suggested reading approach for 2026

• Read with a practical lens: Focus on the Four Actions Framework and Strategy Canvas, then immediately map them to a real product or service you offer.

• Use case variations: Pay attention to success stories in your industry or adjacent sectors to see how blue oceans were created and defended.

• Combine with lean experimentation: Pair blue-ocean thinking with rapid, low-cost experiments (build-measure-learn) to test viability before committing heavy resources.

If you require assistance in setting the goals or review your current state of affairs, or go over your Value Proposition Canvas contact us at admin@cmgadvisory.co.nz or your senior advisory team to catch up and go through our strategy sessions - online or at our offices.