Unlike traditional models that focus on methods by which a firm survives within competitive fields, Blue Ocean looks to uncontested market-space and industries not yet in existence. The strategy of Blue Ocean is to avoid competitive fields altogether by moving into unknown market space with the theory that demand is created, not fought over. Blue Ocean recognizes the diminishing returns from shrinking red-ocean spaces that represent limited terrain and the need to beat an enemy to succeed. Red ocean strategy is a market-competing strategy, while blue ocean strategy is a market-creating strategy. Specifically, Blue Ocean rejects the fundamental tenet of conventional strategy: that a trade-off exists between value and cost. Meaning, that pursuing differentiation and low cost simultaneously drives up value for customers while driving down costs.

According to Sociologist Joel M.Podolny, status is a socially constructed perception of product quality in comparison to competing products. High Status companies enjoy a reputation for superior quality, allowing for increased pricing, greater sales growth, lowered costs, and access to financing. This also produces Greater Visibility (Matthew Effect) and the need to protect corporate image, which constrains both affiliations and partnerships. Importantly, superior status reduces the reluctance of consumers to purchase a product or service when there is uncertainty about a new product or service. An important distinction of high vs. low status companies is a greater willingness to take risks by high status, and less so by middle status companies. Middle status experiences a conservatism generated by lower security; fears of losing limited reputation generates a lack of confidence in terms of risk. Middle status companies are constrained by conformity. Middle-status actors must conform to expectations in order to avoid risking their standing. Whereas middle status firms are more tied to performance norms to ensure their legitimacy, high status firms have security, which equals greater freedom, to separate from market norms and increase opportunities.

There is a particular set of conditions that best indicates a firm’s willingness and ability to adopt Blue Ocean Strategy: Blue ocean is a strategic decision and as such involves risk and leadership. The creation of blue oceans, in other words, is a product of strategy and as such is a product of managerial action. Blue Ocean requires risk willingness, and is most likely to be a product of high status companies, who have the confidence to explore, and the ability to absorb a mistake should their blue ocean project fail. Regarding successful implementation, the important question is: what kind of company has the ability to successfully promote and market the “unknown?” This perhaps is where the benefits of status have significant impact. Kim & Mauborgne are clear that the traditional unit of strategic analysis- company and industry- have little explanatory power when it comes to analyzing how and why blue oceans are created. This makes it difficult to determine exactly what kind of company could or would explore or succeed in creating a blue ocean. The defining characteristics -never using competition as a benchmark and rejecting fundamental tenets of conventional strategy- are not specific to any particular kind of organization.

The question of successful implementation points to high status companies for the following reasons: new and unexplored territory- and no competition- exists, for the public, as fears and concerns of unknown products and services. A high-status company has the superior status and reputation to reduce the reluctance of consumers, when there is uncertainty about a new product or service. High-status companies have greater borrowing power, a desirable affiliation, and consumer trust; these companies can rely on the favorable social perceptions of quality to reduce consumer reluctance to purchase unknown products and services and would thus be more likely to successfully implement a blue ocean strategy, e.g. successfully market and sell the “unknown” using the reputation that comes from higher status.