Blue Ocean Strategy is a business strategy that was initially published in a book, Blue Ocean Strategy in 2005 by W. Chan Kim and Renée Mauborgne of The Blue Ocean Strategy Institute at INSEAD, one of the top European business schools. The focus is on the creation of high growth and profits an organization can generate by creating new demand in an uncontested market space, or a "Blue Ocean", than by competing head-to-head with other suppliers for known customers in an existing industry (“Red Ocean”). Based on 15 years of research, the authors used 150 successful strategic moves spanning 120 years of business history and across 30 industries to bring the Blue Ocean Strategy theory to life.
Agile Software Development refers to a group of software development methodologies based on iterative development , where requirements and solutions evolve through collaboration between self-organizing cross-functional teams . Agile methods generally promote a disciplined project management process that encourages frequent inspection and adaptation, a leadership philosophy that encourages teamwork, self-organization and accountability, a set of engineering best practices intended to allow for rapid delivery of high-quality software and a business approach that aligns development with customer needs and company goals. The earliest agile beginnings were initiated in the 1960’s and over a period of about 40 years, it has evolved considerably and it is now beginning to develop as the mainstream software development methodology across the IT industry.
There are many specific agile development methods. Most promote development, teamwork, collaboration, and process adaptability throughout the life-cycle of the project. Some of the popular agile methods are Scrum, XP, DSDM, Adaptive Software Development, Feature Driven Development (FDD) and other methods.
The earlier method used was termed the Waterfall approach to software development where the software product/service evolved based on a series of steps starting from requirements, analysis and design, code, test and deploy in a sequential manner as part of the software development lifecycle. The Waterfall method is still being used for software development and it is effective when there are no changes proposed in the software being developed. However, in the real life scenario, this does not work well for commercial and application software development where there are constant changes in the software being developed due to customer requested changes or on account of other factors like technological changes, changes in the industrial and business scenario and other factors.
The Blue Ocean Strategy gives important insights regarding how to create new market space in uncontested markets thereby making the competition irrelevant. There is no reason why this strategy cannot be adopted for explaining the significance of the usage of agile methodologies as compared to the Waterfall method of software development in commercial software development where the request for changes from the customer is very high.
The interesting aspect of viewing the agile software development methodology under the Blue Ocean Strategy framework highlights some very interesting points that are at the same time quite intuitive and also rational.
One of the important analytical tools and frameworks provided by the Blue Ocean Strategy is the Strategy Canvas and the Value Curve. These tools help to define the characteristics of the organization with respect to important factors affecting the organization and help the organizations regarding how to create new markets.
By applying a similar technique to the agile method of software development, we can derive the Strategy Canvas and Value Curves for the Agile and Waterfall method of software development based on ten important parameters that factor in all the important requirements regarding the usage of the two methods (Figure – 1).
Figure 1 –