Time for a Blue Ocean Strategy® for Companies in the Oil and Gas Industry?


This is not a blog about large global companies coping with the $40 a barrel price for oil. Hopefully, they understand Blue Ocean Strategy® thinking and are putting it into practice, or they are just sitting it out until prices recover.

No, this is about all those companies that support the conglomerates. They too are trying to figure out how to thrive in a market that has experienced not just a decline but a veritable crash of unexpected and dramatic proportions.

These are the small, mid-market companies that erect scaffolding, install piping, build living space on riggings, manufacture seals and gaskets, and manage data analysis. And these days, they are often run by the company CEOs sitting in my lectures on “Change Matters: How to Find New Market Space” or on Blue Ocean Strategy.

For them, as I have been hearing so loudly, they have to find ways to stay in business and grow again, not just shrink and hope. What can they really do? 

Maybe it is a great time to go exploring? For their business to thrive!

This is more than just a temporary downturn.

Every time I head out to speak in Houston or Louisiana, I realize that I am talking to folks in a zone deeply impacted by the collapse of the oil and gas industry. They feel geographically constrained as well as in dramatic decline.

As one CEO in a data analysis company said to me at a break in my presentation, “Why can’t I learn not to follow the ebb and flow of the oil industry? How many times do I have to swim in these bloody red oceans?” It is painful to explain to him that humans are herd animals and we are most comfortable following that herd up and down through the proverbial cycles.

Another CEO has several companies that provide safety services, train people and install piping. He realized that he is locked into one industry and needs to break out. Yet, he is in a geographic area that is so closely tied to oil and gas that he doesn’t know where to look for new opportunities.

He is not alone. For the vast majority of these companies, the impact of low oil prices is a crisis that seems interminable. Many CEOs have shrunk their businesses as much as they can, laying off engineers and long-time employees in all departments. Now, they realize, it is time to re-imagine their purpose.

Perhaps it is time for a new strategy, Blue Ocean Style? 

What is a Blue Ocean Strategy (BOS) you ask? You can read lots about it in our blogs or on our website. The short version is that these companies are competing among others just like them in a market space that is well-defined but limiting. This is literally a “bloody red ocean.” Our Houston and Louisiana folks thrived as long as the oil and gas industry did, too. 

Now they need to go visually exploring — always a good second step in the BOS process — to break out of the constrained market space and search for new markets. They need to think that they are once again entrepreneurs creating new business in expanding markets.

Indeed, we talk about BOS in terms of market creators: searching for nonusers with unmet needs where you can offer value in innovative ways. This is where the opportunities await you — in your Blue Ocean.

The 5 key questions we ask these CEOs as we help them rethink their businesses go like this:

  1. Who could use you that isn’t using your solutions right now? For the company that provides data capture and analysis services, it wasn’t hard to begin to rethink how to apply their solutions to other market sectors. Safety solutions are not unique to just oil and gas. And for the company that builds housing for oil rigs, the ideas focusing on where they could be of value were exciting. 
  2. What are the unmet needs you can solve? This is all about value + innovation and finding new solutions to existing problems. Also, it requires zeroing in on the ways you aren’t doing a good job right now. How can you help the industry reduce or eliminate expenses to open margins at low prices? What is it doing that only adds limited value?  One example I love is what Rockwell Automation has done to utilize the IoT (Internet of Things) to digitize oil fields, thereby connecting upstream, midstream and downstream operations. With smart devices embedded along the entire stream from wellheads to compressors to pump stations, refineries now have a wealth of information at their fingertips. With wireless technologies, integrated remote control systems and dashboards that are easily visualized, connectivity across the entire enterprise delivers speed and knowledge. The end result? Improved performance. In the oil fields, this is proving to be transformational. Can local companies capitalize on this innovation for their clients’ unmet needs?


  3. How can you make the competition irrelevant? Many of the companies we speak to see themselves “as good as the rest.” Neither the “best” nor the “only,” they are ready to make the competition irrelevant and create a new focus to differentiate themselves from the others. One CEO who attended one of my lectures has become really good at offering customized manufacturing solutions. But his business model was to wait for someone to come to him with drawings or specifications so he could design and build them. By the end of our session, he was ready to apply his expertise and unique capabilities to other industries. He had learned that he needed to actively seek out problems to solve rather than wait for people to find him. 
  4. What are ways you can create demand, not just fulfill it? This is a big area. Another notable lecture attendee was a businesswoman who runs a company that builds and manages housing on oil rigs. She came up with 6 big ideas that could help her business grow, both within the current industry sector and beyond, but confessed that she had no idea what it is like living in the residences she builds. By the time the lecture audience had reinvented her, there were many unsolved needs which she could confidently resolve. Creating demand would easily come from those living in the residences and this might really open up a new market space for her. 
  5. How can you Value Innovate? Most companies are quick to tell you how they create value. Yes, they add value. I get it. But in times of crisis, when the business environment is completely changed, can you value innovate? If you haven’t read the HBR article on value innovation, “Value Innovation: The Strategic Logic of High Growth,”  now is the time. 

W. Chan Kim and Renée Mauborgne conducted 5 years of research that eventually became their book, “Blue Ocean Strategy.” What they found was the difference between high growth companies and those that do not thrive comes down to how they approach “strategy.” Growth-oriented companies are value innovators. They approach the solutions they offer — value —i n very different ways.

You must change your basic assumption that your industry’s conditions are given rather than the industry can be shaped.

If you can shift your approach from the first part of the above sentence to the second, you might be amazed at how many different ways you can rei-magine your business and the solutions you provide for the oil and gas industry. But in addition, maybe there are other industries that could use your solutions if only you could cease being constrained by your old business model. 

Time to reinvent your business?

Perhaps BOS thinking and methods can help! Give us a call and we can set up a workshop designed just for you.

Better yet, buy my new book and read all about how Blue Ocean Strategy has worked for our clients.



Andi Simon, Ph.D.
Corporate Anthropologist | Blue Ocean Strategist

President, Simon Associates Management Consultants