Don’t sink into the ‘Red Ocean’

ILLUSTRATION BY RUTH MACAPAGAL

Most companies today are stuck in what’s called a Red Ocean, a marketplace filled with intense competition, where businesses offer similar products and fight over the same customers.

Coined by W. Chan Kim and Renée Mauborgne, the term describes the bloodied waters of saturated markets, where everyone is trying to take a bigger slice of an already shrinking pie.

Here, the strategy is often about beating rivals through promotions, pricing, or minor product upgrades. But in doing so, many companies end up looking—and sounding—exactly the same.

The real challenge for executives? Not to outperform others in the same space, but to escape it altogether and build an uncontested market space, the Blue Ocean.

Why most companies stay red

The most common trap is legacy thinking. Many executives inherit systems, assumptions and cultures that favor predictability over innovation.

It’s not that they don’t want to innovate; it’s that everything around them is built to protect what already exists.

There’s also status quo bias. Success in the past makes companies double down on familiar moves: repackaging products, adjusting budgets, copying what worked before. Strategy turns into an annual ritual of cost tweaks and tactical promos.

But in a fast-changing market, staying the same is not a neutral move. It’s a risk, often the biggest one. Most try to stand out, but often end up being different in the same way.

Incremental improvements, like minor cost cuts or feature upgrades, may give a short-term boost. But they rarely open new demand from nonusers. Instead, they pull everyone into a race to the bottom, more discounts, more promotions, more of the same, copying the playbook of the market leader.

Even worse, the market leaders usually benefit the most, since their scale lets them absorb the costs. That’s why the rest of the players are often caught in a loop, competing harder, earning less.

Why Blue Ocean moves often come from “outsiders”

Many breakthrough strategies come from those who aren’t deeply entrenched in the category. Outsiders, or insiders who think like outsiders, aren’t burdened by “how it’s always been done.”

Free from legacy assumptions, they are more likely to spot overlooked problems or unmet needs others no longer see.

In contrast, those who have spent too long in the same industry often develop an ivory tower perspective, relying heavily on internal assumptions and success formulas that no longer reflect today’s reality.

While their deep expertise offers advantages, it can also lead to blind spots. They may be looking at the market, but not seeing it.

Outsiders, on the other hand, ask basic but important questions, the kind insiders have unconsciously trained themselves to skip. They are more curious than confident, more exploratory than defensive. And that mindset makes all the difference.

But here’s something important: outsiders don’t always come from outside the industry.

Take Bayad, for instance. It began as an internal Meralco solution, not to start a bills payment business, but to fix their own collection issues. At the time, paying multiple bills was inconvenient and scattered across providers. So Meralco created a one-stop shop for its customers.

What started as an operational fix evolved into a nationwide payments platform, offering convenience to millions, especially the unbanked.

Differentiation: Bayad solved a real problem by making bill payments easier, more accessible and faster.
Low cost: It scaled efficiently by partnering through a franchise model rather than building heavy infrastructure.
New demand: It served people who previously didn’t, or couldn’t, use formal payment systems.

Finding the Blue Ocean

How many internal fixes are you sitting on that could actually become your next growth engine?

Now consider Mega Sardines. At the time, they weren’t even a player in the canned food industry. In fact, they were primarily a fishing supplier to other canning companies.

But they saw a gap others had accepted as normal: the long delay between catching fish and getting them into cans. The longer the delay, the more quality was compromised, and yet, this was industry standard.

So instead of following the usual path, Mega decided to control the entire process themselves, introducing a “catch-to-can in 12 hours” system. This gave them an edge that competitors couldn’t easily copy, because it wasn’t just a branding message—it was an operational shift.

What began as a production insight (proprietary fish pump) became a market repositioning opportunity.

Differentiation: Mega offered fresher, better-tasting sardines, something rarely associated with canned food. It is now the only sardines considered a ‘superfood’, recognized by the Medical Wellness Association.
Low cost: By owning their upstream operations, they improved quality without drastically increasing prices.
New demand: They upgraded canned sardines from a basic survival item to a quality staple, appealing to both mass and quality-conscious consumers.

Instead of asking, “How can we compete with other sardine brands?,” they asked, “What if we changed how sardines were made?” That shift in framing changed their trajectory, and the industry.

Neither company set out to compete the same way. They simply looked at the market differently and solved real problems differently.

Why structure can kill innovation

Beyond mindset, there is the issue of structure. In large companies, decision-making is often slow, and experimentation is discouraged. Teams are rewarded for optimizing performance, not for trying new things.

Budgets go to protecting existing lines, not testing unproven ideas. And innovation efforts, if they exist, are isolated in a lab or side unit, far from the core business.

This makes it difficult to pursue Blue Ocean opportunities. Even when leaders are willing, the system pushes back.

Innovation feels optional, not essential, until it’s no longer optional.

What executives must do

Escaping the Red Ocean requires deliberate leadership. Here’s where to start:

Challenge assumptions. What industry “rules” are no longer relevant? What if your biggest product didn’t exist, how would you win?
Don’t just improve, rethink. Are you trying to do things better, or differently?
Know what to stop doing. Often, the breakthrough comes not from adding new things but from removing outdated practices.
Create space for value innovation. Empower cross-functional teams, set aside resources for experimentation, and be willing to test new customer propositions.

This is not just about thinking big. It’s about thinking strategically, with a mindset of service, not just scale.

Red Ocean as a strategic risk

Red Ocean dynamics often go unnoticed in risk discussions, but they should be flagged. Why? Because staying in an overcrowded market with no meaningful differentiation isn’t just inefficient. It’s dangerous.

Over time, it can drain margins, weaken brand value and erode long-term sustainability. Watch out for these indicators:

Flat or declining market share, even with increased marketing spend
Rising cost of acquisition, alongside stagnating customer lifetime value
Product margins are shrinking or expected to shrink in the future.
Promotions becoming default strategy
Strategic plans that are cut-and-paste from last year, not reinvented

These are signals of a slow bleed and a company running out of runway.

Think, see, do things differently

Breaking out of a Red Ocean isn’t easy. But staying in one is harder in the long run.

Blue Ocean strategy isn’t just for startups or tech giants. It’s for any company willing to think differently, to question industry norms, solve overlooked problems and create new value in ways competitors can’t easily copy.

And as Bayad and Mega Sardines show, you don’t have to leave your industry to act like an outsider.

Sometimes, the most disruptive ideas come from those already inside, if they’re willing to see things with fresh eyes.