Using Blue Ocean Strategy to Foster DEI Buy-in & Unlock Competitive Advantage

What stops you from growing your business, creating new demand for your product or service, and standing apart from the competition?

According to W. Chan Kim and Renée Mauborgne, #1 management thinkers in the world and authors of “Blue Ocean Strategy”, more often than not, it’s the limited perspective among key decision makers.

Our job as leaders, particularly in a dynamic business landscape, is to be constantly seeking innovative ways to gain a competitive edge through a series of step functions and 1% improvements.

And one of the most powerful avenues for achieving this advantage lies in the often unexplored territory of Diversity, Equity & Inclusion (DEI).

In this article, we’ll explore how the goals of Blue Ocean and DEI strategies intersect and amplify one another and support your pursuit of superior business outcomes and uncontested market spaces.

A bit about Blue Ocean Strategy

For those that aren’t familiar, Blue Ocean Strategy (BoS) introduces a strategic framework for businesses to create uncontested market spaces, or “blue oceans,” rather than competing in overcrowded and competitive “red oceans.”

They describe it as the simultaneous pursuit of differentiation and low cost to open up a new market space, create new demand and make the competition irrelevant. It’s based on the view that market boundaries and industry structure are not a given and can be reconstructed by the actions and beliefs of industry players.

So, how does (ide)ate propose Blue Ocean and DEI strategy work together?

Companies operating in the “blue ocean” have a different way of thinking. Instead of trying to beat their rivals in the same market, they consider different things. They ask entirely different questions that help them notice and understand new and creative opportunities and challenges.

Similarly, when organisations approach DEI with a fresh perspective, they can unlock otherwise untapped perspectives, markets & problem-solving.

Below are a few examples of BoS principles & how they relate to DEI.

BoS Principle #1: Blue Ocean vs. Red Ocean

What Blue Ocean Strategy says:

Red oceans represent existing market spaces characterised by intense competition, where companies compete for the same customers and market share, often resulting in price wars and diminishing profits.

Blue oceans, on the other hand, are untapped market spaces where competition is irrelevant because the rules of the game have yet to be defined. The term “blue ocean” denotes all the industries not in existence today.

Through a DEI lens:

Just as blue oceans represent untouched market spaces, embracing diversity and inclusion in new and unconventional ways opens up a world of opportunities.

Leaders should take time to identify areas where diverse perspectives have been overlooked or, put another way, understand the “red ocean” of bias, assumption and exclusion they might be swimming in.

By identifying and reducing negative aspects, and then enhancing the positive elements of diversity, businesses can create a new standard of inclusion that differentiates them from others in the industry.

(We go into detail about questions you can ask in order to understand your perspective gaps in our article Driving Business Success through Inclusive Innovation (+ examples & prompts).

See Blue Ocean Strategy’s ‘Blue Ocean vs. Red Ocean’ here.

BoS Principle #2: Value Innovation

What Blue Ocean Strategy says:

Rather than choosing between differentiation and low cost, value innovation is about pursuing both simultaneously.

Value without innovation tends to focus on value creation on an incremental scale, and innovation without value often tends to be beyond what buyers want and are ready to accept and pay for today.

By offering a unique value proposition that combines elements of differentiation and cost-effectiveness, companies can create new markets and appeal to a wider range of customers.

Through a DEI lens:

Similar to how cost and differentiation are seen as being at odds with one another, with “red ocean” thinking, so too are productivity and diversity and inclusion.

Rather than thinking about diversity and inclusion as being at odds with productivity, we can look to the Value Innovation model to see that they can be complementary, pursued simultaneously and that it doesn’t need to be a zero-sum game.

Rather than chasing after industry norms, leaders could consider outdated practices, and create new ways to embrace and integrate diverse perspectives within the organisation, as opposed to viewing it as a nice-to-have.

We believe that this shift from traditional business practice to one that is more holistic sets a strong foundation for more inclusive innovation.

See Blue Ocean Strategy’s ‘Value Innovation’ here.

BoS Principle #3: Four Actions

What Blue Ocean Strategy says:

To create a blue ocean, the authors suggest companies simultaneously pursue four key strategic actions:

1. Eliminate: Identify and eliminate factors that the industry takes for granted and that do not add significant value to customers.
2. Reduce: Scale back or reduce certain aspects well below industry standards while still delivering adequate value.
3. Raise: Identify elements that can be enhanced or increased to deliver superior value to customers.
4. Create: Introduce entirely new features or attributes that have not been offered before in the industry.

Through a DEI lens:

1. Eliminate Biases and Barriers: Identify and eliminate the barriers and biases that hinder progress in diversity & inclusion. Scrutinise current practices, policies, and processes to eradicate anything that may perpetuate exclusion and challenge the current status quo by dismantling assumptions that hinder diversity.
2. Reduce Negative Aspects of Inclusion Efforts: This may include streamlining complex initiatives, removing tokenism, minimising performative actions that fail to drive meaningful change and dedicating resources to impactful, longer-term endeavours rather than only short-term ones.
3. Raise and Amplify Inclusive Practices: Elevate awareness, education, and communication about diversity & inclusion. Implement mentorship programs, resource groups, and opportunities for open dialogue to nurture an atmosphere of belonging.
4. Create Innovative Inclusive Strategies: Challenge traditional thinking by developing entirely new initiatives that cater to the diverse needs of your workforce and/or customers. Explore unconventional recruitment methods, craft unique customer experiences, and establish partnerships that resonate with underrepresented communities.

See Blue Ocean Strategy’s ‘Four Actions’ here.

BoS Principle #4: Non-Customer Focus

What Blue Ocean Strategy says:

Blue Ocean Strategy encourages companies to consider non-customers as well as existing ones.

These “non-customers” can be segmented into three tiers: soon-to-be customers, refusing customers (those who have rejected the current market offerings), and unexplored customers (those in completely different markets).

Few companies have keen insight into who non-customers are and how to unlock them. To convert this huge latent demand into real demand in the form of new customers, companies need to deepen their understanding of the universe of non-customers.

Through a DEI lens:

Expanding your perspective beyond the confines of traditional boundaries is a key principle of diversity and inclusion.

Consider the non-customers in this context: the potential employees who haven’t been considered, the untapped market of underrepresented talent, and the undiscovered insights among potential customers.

By focusing on these non-customers, leaders can uncover innovative ways to promote diversity & inclusion, reaching new audiences and creating a stronger, more diverse workforce.

See Blue Ocean Strategy’s ‘Non-Customer Focus’ here.

Conclusion

For many organisations, the blue oceans of diversity and inclusion are waiting to be explored — it’s up to visionary leaders to see this, and foster environments where all voices are heard, valued, and empowered.

Incorporating diversity and inclusion into your existing business strategies not only puts you in better standing compared to your competitors, but also, if done well, creates new customer segments, happy shareholders and teams, and is a far more sustainable approach in the long-term.

Thanks for making it to the end! If you want to see new articles as they’re published and hear more personal discoveries at the intersection of DEI, business strategy & innovation, you can 👉 Subscribe to (ide)ate Studio’s newsletter.