Blue Ocean Strategy vs Porter's Five Forces: Create New Space or Compete in the Industry?
Comparing W. Chan Kim and Renée Mauborgne's Blue Ocean Strategy with Michael Porter's five forces: where they disagree, what each is good for, and how to use them together.
Two ideas dominate how people talk about competitive strategy: Michael Porter's five forces, which explain how industries compete, and Blue Ocean Strategy by W. Chan Kim and Renée Mauborgne, which urges companies to stop competing and make the competition irrelevant. People compare them because the second is often presented as a rebuttal to the first.
What is the core difference?
Porter's starting point is that industries differ in how profitable they can be, and that a firm earns above-average returns by choosing a distinctive position and making trade-offs. The work is analysis of structure followed by choice of position.
Kim and Mauborgne's starting point is that fighting for share in a crowded industry, which they call a red ocean, produces thin returns. They urge firms to look for a blue ocean, an uncontested space where competition is not the main driver.
So one asks how to win within an industry. The other asks whether you need to be in that industry's contest at all.
What does Porter say?
Porter's Competitive Strategy (1980) set out the five forces, and Competitive Advantage (1985) added the value chain and the generic strategies of cost leadership, differentiation, and focus. His 1996 article What Is Strategy? argues that strategy requires a unique position, trade-offs, and activities that fit together.
A central claim is that attempting to be everything to everyone leaves a company stuck in the middle. Operational effectiveness, doing the same things better, does not by itself make a strategy. His framework is meant to be applied to a defined industry.
What do Kim and Mauborgne say?
Blue Ocean Strategy (2005) argues that companies should create new demand rather than fight over existing demand. The central idea is value innovation: pursuing differentiation and low cost at the same time. Two tools carry the method. The strategy canvas plots how offerings in an industry compare on the factors buyers care about. The Four Actions framework asks which factors to eliminate, reduce, raise, or create.
Examples in the book include Cirque du Soleil and Southwest Airlines. Blue Ocean Shift (2017) added a more process-oriented approach, aimed at teams applying the ideas.
How do they compare?
| Dimension | Kim and Mauborgne | Porter |
|---|---|---|
| Starting question | How can we create uncontested space? | How is this industry structured, and where should we stand? |
| View of competition | Something to make irrelevant | A condition to analyze and position against |
| Trade-offs | Can be escaped through value innovation | Central, and necessary for a strategy |
| Key tools | Strategy canvas, Four Actions framework | Five forces, value chain, generic strategies |
| Typical output | A new offering and market space | A chosen position within an industry |
| Main criticism | Cases identified in hindsight; hard to repeat | Seen as static in fast-moving markets |
| Best known for | Blue Ocean Strategy (2005), by Kim and Mauborgne jointly | Competitive Strategy (1980) |
When does each one fit?
Porter's framework fits when you need to understand an industry: whether to enter, how strong buyers and suppliers are, and what substitutes might erode returns. It also helps when your task is to defend a position.
The blue ocean tools fit when your industry competes on the same factors everywhere and customers are underserved or overserved, or when you are looking for a new angle. The canvas makes the sameness visible.
Where an industry is stable and a position is already strong, the analysis may be all you need. Where you are stuck in a crowded field, the blue ocean questions may help more, provided you check them with customers.
What does this look like in practice?
A small gym chain in a crowded city sees fierce rivalry on price and equipment. A five forces review confirms low switching costs and plenty of substitutes such as home workouts.
A blue ocean pass draws the canvas: price, equipment range, class variety, locker rooms, personal trainers. Everyone scores high on equipment and low on community. The team asks what to eliminate (expensive machines few use), reduce (class variety), raise (coaching quality), and create (a small-group program with progress tracking). The result may not be a new market, but it is a distinct offer. Porter's analysis then checks whether that offer is defensible.
"My business is [description] and competes mainly on [factors]. Draft a strategy canvas with six to eight factors and score me and two rivals from one to ten. Propose what to eliminate, reduce, raise, and create. Then use the five forces to assess whether the resulting offer would be attractive and defensible, and name the weakest assumption."
Why it works: the canvas widens the options, and the forces test whether any of them is worth defending.
Can you use both together?
Yes. They suit different stages. Use the five forces to understand the terrain, the blue ocean tools to look for a different basis of competition, and the forces again to test what you find.
The tension is real but manageable. If you believe cost and differentiation can be combined, test it with unit economics rather than argument.
"Here is a new offering I think creates uncontested space: [describe]. Challenge it: who exactly are the customers, what do they use today, what would they stop paying for, and what would it cost me to deliver? Then say what in Porter's view could undermine it, such as easy imitation, strong supplier power, or a trade-off I am ignoring."
Why it works: forcing the idea through the harder questions separates a real opening from an appealing story.
For a related situation, see Competing Against a Much Bigger Rival Without Copying Them.
Where to go next
W. Chan Kim and Michael Porter both sit in the Business Strategist category. For the originals, read Blue Ocean Strategy by Kim and Mauborgne, and Competitive Strategy and What Is Strategy? by Porter. To work through a strategic choice before committing, Decision Brief is a $79 tool built for it.
Frequently asked questions
Do Kim and Mauborgne reject Porter's work?
They position Blue Ocean Strategy as an alternative to competition-based thinking, which they associate with the tradition of industry analysis Porter helped build. They argue that firms should aim to create uncontested market space instead of fighting rivals in an existing one. Porter's published view is that strategy requires trade-offs. Scholars have debated whether the two are alternatives or complements. Reading both side by side is the most reliable way to see where the disagreement is real and where it is a matter of emphasis.
What is value innovation?
It is Kim and Mauborgne's term for pursuing differentiation and lower cost together, instead of trading one for the other. They propose achieving it by eliminating or reducing factors the industry takes for granted and raising or creating others, using tools called the strategy canvas and the Four Actions framework. The claim that the trade-off can be escaped is where they most directly depart from Porter. Their tools for it are the strategy canvas and the Four Actions framework, which turn the idea into a structured exercise a team can run in a day.
What do the five forces actually measure?
They describe the pressures that shape average profitability in an industry: rivalry among existing firms, the threat of new entrants, the threat of substitutes, and the bargaining power of buyers and suppliers. The framework first appeared in Porter's 1979 Harvard Business Review article and in Competitive Strategy (1980). It is an analytical tool for reading an industry, not a plan. It is best used as a lens on a market you already know, not as a substitute for reading its prices and costs.
Are blue oceans real, or just hindsight?
That is a standing criticism. The book builds its framework from cases such as Cirque du Soleil and Southwest Airlines, and skeptics note that identifying a blue ocean after the fact is easier than planning one. Kim and Mauborgne's later work, Blue Ocean Shift (2017), offers a more process-oriented approach. Treat the tools as ways to generate options to test. Whatever the verdict on the cases, the underlying question of whether you are competing on the same factors as everyone else is a reasonable one.
Which is more useful for a small firm?
The documented work doesn't rank them. A small firm facing larger rivals may find the blue ocean tools helpful for finding a different basis of competition, and Porter's analysis helpful for checking whether the space it picks is attractive. Because small firms have limited room for error, both should be tested with real customers before investing. Test any new offer with a handful of customers and a rough cost model before deciding that the space is genuinely uncontested.
Can AI help me use either?
It can help you draft a strategy canvas, list factors to eliminate, reduce, raise, or create, and structure a five forces assessment. It has no access to your customers or cost structure. Use it to widen the options and challenge assumptions, and test the results with real buyers. Treat its suggestions as options to test, because it can produce a plausible canvas for a market it knows little about.
Written by Gareth Hoyle. Last updated 8 October 2026. Part of the authority.md guides library.
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