Contents
W. Chan Kim and Renée Mauborgne distinguish between two kinds of markets. In red oceans, the boundaries are known, everyone fights for the same customers, and the water turns red with competition. Blue oceans are markets that do not yet exist. There, demand is created, not fought over. The launch of CNN is a vivid example of how someone opens up such a space – a Blue Ocean in the making.
News on a timetable
Situation
At the end of the 1970s, news in the United States follows a fixed rhythm. There are morning and evening papers and fixed newscasts on the big networks (ABC, CBS and NBC). If you want to know something, you wait for the next scheduled slot.
Link to the principle
The big networks are in a red ocean. They compete for the best evening broadcast, the best-known anchors, the highest ratings. Everyone plays by the same rules. Nobody questions the timetable itself.
A channel that never signs off
Situation
Ted Turner and Reese Schonfeld found CNN as a subsidiary of Turner Broadcasting. In December 1979, the satellite CNN is supposed to broadcast on is lost. After a legal dispute, the channel gets a slot on another satellite and can launch as planned. On June 1, 1980, at 6 p.m. Eastern Time, CNN goes on the air in Atlanta with around 300 employees and bureaus in six U.S. cities. Turner announces that CNN will not sign off until the end of the world.
Link to the principle
CNN does not compete with the evening news; it makes the timetable unnecessary. The new value is news at any time. With it, the channel appeals to people who are not even in front of the television at the fixed broadcast times. It creates demand instead of poaching it from others.
Eliminating and creating
Situation
In 1982, a second channel launches, CNN2, renamed Headline News in 1983. It broadcasts half-hour news blocks around the clock in a fixed rotation. Both channels rely on live reports and continuous updates.
Link to the principle
Kim and Mauborgne ask: what will you eliminate, what will you reduce, what will you raise, what will you create? CNN eliminates the fixed broadcast time and creates continuous coverage and constant availability. The result is an offering that can hardly be compared with the evening news. That is where the power of a blue ocean lies: comparison with the old players no longer fits.
When the world is watching
Situation
On January 28, 1986, CNN is the only television news channel to broadcast the launch of the space shuttle Challenger live, which breaks apart 73 seconds after liftoff. In October 1987, CNN reports extensively on the rescue of the toddler Jessica McClure from a well shaft in Texas. In January 1991, Bernard Shaw, John Holliman and Peter Arnett report live from a hotel in Baghdad on the start of the American air strikes. For the first time, CNN is ahead of the three big networks.
Link to the principle
A blue ocean often proves its worth only at the moment when the new benefit is needed. When events happen suddenly, a channel that is always on is unbeatable. The old providers cannot match that with their timetables.
The water changes color
Situation
In 1996, Time Warner acquires Turner Broadcasting. In the same year, two more round-the-clock news channels launch: MSNBC and Fox News.
Link to the principle
No blue ocean stays blue forever. When a new market pays off, imitators arrive. That is why Kim and Mauborgne stress that you have to watch your own lead and look for the next new space in good time.
Key takeaways
Key lessons
- Don’t just ask how you can be better than the others; ask which rule everyone follows without examining it.
- Look for people who don’t use the existing offering at all.
- Deliberately leave out what the industry takes for granted.
- Your new value often shows at the decisive moment.
- Be prepared for imitators, and look early for the next space.
Summary
In 1980, CNN did not compete with the evening news on ABC, CBS and NBC. Instead, Ted Turner and Reese Schonfeld created a new market: news around the clock. Events such as the Challenger disaster and the Gulf War showed the value of this offering. Later, imitators followed, and the blue ocean turned red.
Sources
- W. Chan Kim, Renée Mauborgne: Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant. Boston: Harvard Business School Press 2005.
