# Blue Ocean Strategy

> USE THIS SKILL when the user asks about blue ocean strategy, value innovation, creating uncontested market space, strategy canvas, ERRC grid, eliminating competition, new market creation, non-customer analysis, or finding white space opportunities. Trigger terms: "blue ocean", "value innovation", "strategy canvas", "ERRC", "eliminate reduce raise create", "uncontested market", "white space", "new market space", "non-customers", "buyer utility", "six paths", "value curve", "make competition irrelevant", "market creation".

- Skill: `kaakati/blue-ocean-strategy` (Agent Skill)
- Install (CLI): `npx skillmds@latest add kaakati/blue-ocean-strategy`
- Raw SKILL.md: https://api.skillmd.com/api/skills/kaakati/blue-ocean-strategy/raw
- Safety review: pending
- Works with: Claude Code, Claude.ai, OpenAI Codex
- Category: Coding & Dev Tools
- Author: Kaakati (https://skillmd.com/u/kaakati)
- Updated: 2026-09-17
- Page: https://skillmd.com/skills/kaakati/blue-ocean-strategy

---


# Blue Ocean Strategy

Systematic application of Blue Ocean Strategy frameworks: Strategy Canvas, ERRC Grid, Six Paths, Buyer Utility Map, and Non-Customer Analysis to identify value innovation opportunities.

---

## Required Inputs

| Input | Description | Required? |
|---|---|---|
| Industry / market | The current competitive arena | Yes |
| Focal company | The company seeking blue ocean opportunity | Yes |
| Key competitors (3-5) | Major players in the current market | Yes |
| Current value proposition | What the focal company offers today | Yes |
| Customer segments | Current and potential buyers | Yes |
| Industry competitive factors | What the industry competes on (5-8 factors) | Yes |
| Pain points / frustrations | Known customer complaints and unmet needs | Recommended |
| Industry assumptions | "The way things are done" beliefs | Recommended |
| Adjacent industries | Related markets to explore | Recommended |

---

## Execution Steps

### Step 1: Map the Current Strategy Canvas

The Strategy Canvas is the diagnostic and action framework. It captures the current state of play.

1. **Identify competitive factors** (5-8 factors the industry competes on):
   - These are the factors companies invest in and market around
   - Include both product/service attributes and delivery factors
   - Examples: price, features, quality, speed, customization, brand, service level, channel convenience

2. **Rate each competitor** on each factor (1-5 scale):

   | Competitive Factor | Industry Avg | Comp 1 | Comp 2 | Comp 3 | Focal Co. |
   |---|---|---|---|---|---|
   | [Factor 1: e.g., Price] | [X] | [X] | [X] | [X] | [X] |
   | [Factor 2: e.g., Product range] | [X] | [X] | [X] | [X] | [X] |
   | [Factor 3: e.g., Quality] | [X] | [X] | [X] | [X] | [X] |
   | [Factor 4: e.g., Service level] | [X] | [X] | [X] | [X] | [X] |
   | [Factor 5: e.g., Technology] | [X] | [X] | [X] | [X] | [X] |
   | [Factor 6: e.g., Brand prestige] | [X] | [X] | [X] | [X] | [X] |
   | [Factor 7: e.g., Convenience] | [X] | [X] | [X] | [X] | [X] |

3. **Plot the value curves**: Visualize each player's profile across factors. If all curves look similar, the industry is a red ocean.

```
Rating  Factor1  Factor2  Factor3  Factor4  Factor5  Factor6  Factor7
  5  │                                                    ○
  4  │    ●──────●                          ●──────●──────●
  3  │    ○──────○──────○──────○──────○──────○
  2  │                   ●──────●──────●
  1  │
     └─────────────────────────────────────────────────────────

     ● = Focal company    ○ = Industry average
```

**Diagnostic questions**:
- Are all value curves converging? (Red ocean signal)
- Is the focal company's curve identical to competitors? (No differentiation)
- Which factors show the biggest gap between investment and customer value?

### Step 2: Apply the Six Paths Framework

Systematically explore six directions for creating new market space:

| Path | Question | Application |
|---|---|---|
| **Path 1: Alternative industries** | What alternative industries do customers choose between? What makes them switch? | Look beyond direct competitors to different industries solving the same problem |
| **Path 2: Strategic groups** | What strategic groups exist within the industry? Why do customers trade up or down? | Identify the factors that cause customers to choose between groups |
| **Path 3: Buyer chain** | Who is the buyer? User? Purchaser? Influencer? Can you shift to a different buyer? | Redefine who you target in the decision chain |
| **Path 4: Complementary offerings** | What happens before, during, and after your product is used? What are the pain points? | Extend value to adjacent needs |
| **Path 5: Functional-emotional appeal** | Does your industry compete on function or emotion? Can you switch? | If functional: add emotional value. If emotional: strip to functional |
| **Path 6: Trends over time** | What trends are reshaping the industry? How will they change buyer value? | Get ahead of irreversible trends that are forming now |

**For each path, document**:
- Current industry assumption
- Alternative framing
- Potential value innovation opportunity
- Feasibility assessment (1-5)
- Impact potential (1-5)

### Step 3: Build the ERRC Grid

The Eliminate-Reduce-Raise-Create (ERRC) grid is the action framework:

| Action | Factors | Rationale | Cost Impact | Value Impact |
|---|---|---|---|---|
| **ELIMINATE** — Which factors that the industry takes for granted should be eliminated? | [Factor(s)] | [Why this can be removed without losing core value] | -$[X] savings | [Neutral / slight negative] |
| **ELIMINATE** | [Factor(s)] | [Rationale] | -$[X] | [Impact] |
| **REDUCE** — Which factors should be reduced well below the industry standard? | [Factor(s)] | [Why over-investment exists today] | -$[X] savings | [Minimal loss] |
| **REDUCE** | [Factor(s)] | [Rationale] | -$[X] | [Impact] |
| **RAISE** — Which factors should be raised well above the industry standard? | [Factor(s)] | [Why this creates disproportionate value] | +$[X] cost | [Significant gain] |
| **RAISE** | [Factor(s)] | [Rationale] | +$[X] | [Impact] |
| **CREATE** — Which factors should be created that the industry has never offered? | [Factor(s)] | [What unmet need this addresses] | +$[X] cost | [Breakthrough value] |
| **CREATE** | [Factor(s)] | [Rationale] | +$[X] | [Impact] |

**Net cost impact of ERRC**: $[X] (should be cost-neutral or cost-reducing)
**Net value impact of ERRC**: [Substantial value increase through new factors]

**Key test**: Does the ERRC grid simultaneously pursue differentiation AND low cost? If it only does one, it is not value innovation — it is conventional strategy.

### Step 4: Draw the Target Strategy Canvas

Plot the new value curve alongside the current industry:

| Competitive Factor | Industry Avg (Current) | Focal Co. (Current) | Focal Co. (Blue Ocean Target) | Change |
|---|---|---|---|---|
| [Factor 1 — Eliminated] | [X] | [X] | 0 | Eliminate |
| [Factor 2 — Reduced] | [X] | [X] | [Lower] | Reduce |
| [Factor 3 — Same] | [X] | [X] | [Same] | Maintain |
| [Factor 4 — Raised] | [X] | [X] | [Higher] | Raise |
| [Factor 5 — Raised] | [X] | [X] | [Higher] | Raise |
| [NEW Factor 6 — Created] | 0 | 0 | [High] | Create |
| [NEW Factor 7 — Created] | 0 | 0 | [High] | Create |

**Value curve divergence test**: The new curve must visually diverge from all existing curves. If it doesn't, you're still in the red ocean.

### Step 5: Buyer Utility Map

Map where the industry currently focuses and where new utility opportunities exist:

| | Purchase | Delivery | Use | Supplements | Maintenance | Disposal |
|---|---|---|---|---|---|---|
| **Customer productivity** | [Current/Opportunity/Blank] | [C/O/B] | [C/O/B] | [C/O/B] | [C/O/B] | [C/O/B] |
| **Simplicity** | [C/O/B] | [C/O/B] | [C/O/B] | [C/O/B] | [C/O/B] | [C/O/B] |
| **Convenience** | [C/O/B] | [C/O/B] | [C/O/B] | [C/O/B] | [C/O/B] | [C/O/B] |
| **Risk reduction** | [C/O/B] | [C/O/B] | [C/O/B] | [C/O/B] | [C/O/B] | [C/O/B] |
| **Fun and image** | [C/O/B] | [C/O/B] | [C/O/B] | [C/O/B] | [C/O/B] | [C/O/B] |
| **Environmental friendliness** | [C/O/B] | [C/O/B] | [C/O/B] | [C/O/B] | [C/O/B] | [C/O/B] |

**Key**: C = Current industry focus | O = Opportunity (underserved) | B = Blank (no one addresses)

**Priority opportunities**: Focus on cells marked "B" (blank) and "O" (opportunity) — these are the spaces where the industry is blind.

### Step 6: Three Tiers of Non-Customers

Identify growth beyond current customers:

| Tier | Definition | Size Estimate | Why They Don't Buy Today | What Would Convert Them |
|---|---|---|---|---|
| **Tier 1: Soon-to-be non-customers** | Sitting on the edge of the market, ready to leave | [N] | [Reason — usually the industry's pain points that are barely tolerated] | [Specific value innovation needed] |
| **Tier 2: Refusing non-customers** | Consciously chose against the industry | [N] | [Reason — the industry's offering doesn't fit their needs/values] | [Fundamental offering change needed] |
| **Tier 3: Unexplored non-customers** | Never considered the industry as an option | [N] | [Reason — assumed the industry was not for them] | [Category redefinition needed] |

**Total non-customer opportunity**: [N] (compare to current market of [N] customers)

**Conversion strategy per tier**:
1. Tier 1: [Specific actions to retain/attract edge customers]
2. Tier 2: [What the industry must stop doing to win refusers]
3. Tier 3: [How to redefine the category for unexplored non-customers]

### Step 7: Value Innovation Opportunity Scoring

Score each identified opportunity:

| Opportunity | Buyer Utility | Feasibility | Cost Impact | Revenue Potential | Competitive Response Risk | Total Score |
|---|---|---|---|---|---|---|
| [Opportunity 1] | [1-5] | [1-5] | [1-5] | [1-5] | [1-5] | [X]/25 |
| [Opportunity 2] | [1-5] | [1-5] | [1-5] | [1-5] | [1-5] | [X]/25 |
| [Opportunity 3] | [1-5] | [1-5] | [1-5] | [1-5] | [1-5] | [X]/25 |
| [Opportunity 4] | [1-5] | [1-5] | [1-5] | [1-5] | [1-5] | [X]/25 |

**Scoring guide**:
- Buyer Utility: 5 = solves major pain or creates breakthrough utility
- Feasibility: 5 = achievable with current capabilities within 12 months
- Cost Impact: 5 = reduces total cost structure significantly
- Revenue Potential: 5 = large addressable non-customer population
- Competitive Response Risk: 5 = extremely difficult for incumbents to copy (counter-positioned)

---

## Output Template

### Blue Ocean Strategy: [Company] in [Industry]

**Date**: [Date] | **Prepared for**: [Client/Project]

#### 1. Current Strategy Canvas

*(Include rated competitive factors table and value curve visualization from Step 1)*

**Red ocean diagnosis**: [Summary of where the industry is converging and competing on the same factors]

#### 2. Six Paths Exploration

| Path | Current Assumption | Blue Ocean Opportunity | Feasibility (1-5) | Impact (1-5) |
|---|---|---|---|---|
| Alternative industries | [Assumption] | [Opportunity] | [X] | [X] |
| Strategic groups | [Assumption] | [Opportunity] | [X] | [X] |
| Buyer chain | [Assumption] | [Opportunity] | [X] | [X] |
| Complementary offerings | [Assumption] | [Opportunity] | [X] | [X] |
| Functional-emotional | [Assumption] | [Opportunity] | [X] | [X] |
| Trends | [Assumption] | [Opportunity] | [X] | [X] |

**Most promising path(s)**: [Path X] because [rationale]

#### 3. ERRC Grid

*(Include full ERRC grid from Step 3 with cost and value impact)*

**Value innovation test**: Does this simultaneously achieve differentiation AND lower cost? [Yes/No — explain]

#### 4. Target Strategy Canvas

*(Include target vs. current competitive factor comparison table from Step 4)*

**Key divergence from industry**: [Summary of how the new value curve differs]

#### 5. Buyer Utility Map

*(Include 6x6 utility map from Step 5)*

**Top 3 utility opportunities**: [List the blank/opportunity cells with highest potential]

#### 6. Non-Customer Analysis

*(Include three tiers table from Step 6)*

**Total addressable non-customer opportunity**: [X] — [Y]x current market size

#### 7. Value Innovation Opportunity Matrix

*(Include scored opportunity matrix from Step 7)*

**Recommended priority**: [Opportunity X] — score [X]/25

#### 8. Strategic Roadmap

| Phase | Timeline | Actions | Investment | Expected Outcome |
|---|---|---|---|---|
| Quick wins | 0-3 months | [ERRC quick actions] | $[X] | [Outcome] |
| Core shift | 3-12 months | [Major value curve changes] | $[X] | [Outcome] |
| New market creation | 12-24 months | [Non-customer conversion] | $[X] | [Outcome] |

---

## Quality Checks

- [ ] Strategy canvas includes 5-8 competitive factors that the industry actually competes on
- [ ] Value curves are rated with evidence, not guesses (customer data, market research, or expert assessment)
- [ ] All six paths from the Six Paths Framework are explored with specific opportunities
- [ ] ERRC grid has at least 2 entries in each quadrant (Eliminate, Reduce, Raise, Create)
- [ ] ERRC simultaneously achieves differentiation AND cost reduction (value innovation test)
- [ ] Target value curve visibly diverges from current industry curves
- [ ] Buyer utility map identifies specific cells that are blank (no industry attention)
- [ ] Non-customer analysis quantifies the size of each tier, not just labels them
- [ ] Non-customer conversion strategies are specific to each tier's reason for non-consumption
- [ ] Value innovation opportunities are scored on feasibility, not just attractiveness
- [ ] Competitive response risk is assessed (can incumbents easily copy this?)
- [ ] Strategic roadmap is phased and actionable, not just a wish list
- [ ] Analysis avoids the "Red Ocean Traps": competing on existing factors or only doing RAISE without ELIMINATE/REDUCE