In markets with low differentiation like Morocco's telecom sector, "blue ocean" moves require value innovation, not just differentiation. Based on the launch of a new entrant's wholesale arm (EXXING #2) and fiber infrastructure in new cities (EXXING #69–75), we apply Kim & Mauborgne's grid to eliminate subsidies, reduce regulatory friction, raise SLA guarantees, and create shared rural towers.
The Eliminate-Reduce-Raise-Create framework works best when grounded in infrastructure economics. In Morocco, this approach enabled a new entrant to capture 18% wholesale market share in 36 months—without competing on retail price.
This article examines the Blue Ocean Strategy framework developed by W. Chan Kim and Renée Mauborgne at INSEAD [1], and its practical application to TMT strategy, drawing on EXXING's experience in Morocco and Tunisia where infrastructure economics demand value innovation over price competition.
The Blue Ocean Framework: Beyond Competition
Blue Ocean Strategy rests upon a fundamental principle: the most effective way to beat the competition is to make it irrelevant [1]. Rather than fighting for market share within existing industry boundaries (red oceans), companies should create new market spaces (blue oceans) where they can grow profitably without direct competition.
Red Ocean Versus Blue Ocean Characteristics
| Dimension | Red Ocean | Blue Ocean |
|---|---|---|
| Market space | Compete within existing boundaries | Create uncontested market space |
| Competition | Beat the competition | Make competition irrelevant |
| Demand | Exploit existing demand | Create and capture new demand |
| Value-cost trade-off | Choose between differentiation OR low cost | Pursue differentiation AND low cost |
| Strategic alignment | Align activities with strategic choice | Align activities with both differentiation and low cost |
The critical insight is the rejection of the traditional strategy paradigm that forces a choice between differentiation and cost leadership. Blue ocean creators achieve value innovation: the simultaneous pursuit of differentiation and low cost that opens new market space [1].
Foundational Example: Free Mobile (France, 2012)
When Free entered the French mobile market, the three incumbent operators—Orange, SFR, and Bouygues Telecom—competed in a classic red ocean:
- Massive smartphone subsidies tied to 24-month contracts
- Expensive retail networks with high fixed costs
- Complex tariff structures designed to obscure true pricing
- Prohibitive international roaming charges
Free created a blue ocean by systematically applying the Four Actions Framework:
| Action | Implementation | Impact |
|---|---|---|
| Eliminate | Smartphone subsidies, physical retail, roaming fees in 70 countries | Removed major cost drivers |
| Reduce | Customer service (online only), marketing spend, offer complexity | Lowered operating costs |
| Raise | Price transparency, included data (20GB vs 500MB), simplicity (2 plans only) | Enhanced customer value |
| Create | €19.99 unlimited plan (vs €60-80 market), no commitment, free hotline | New value proposition |
The results transformed the French telecommunications market. Free acquired 13 million subscribers within five years, triggered a 30% reduction in market prices, and forced incumbents to fundamentally restructure their operations [2]. ARCEP, the French telecommunications regulator, documented the market transformation in detail, noting that Free's entry created approximately €7 billion in annual consumer surplus [3].
Practical Blue Ocean Tools
The Strategy Canvas
The Strategy Canvas is a diagnostic visualisation tool that compares value propositions across the factors on which an industry competes. It reveals both competitive convergence (where all players invest similarly) and opportunities for differentiation.
Case Study: West African Fibre Operator
EXXING applied the Strategy Canvas for a client launching FTTH (Fibre to the Home) services in Senegal. The analysis revealed that all existing operators competed on identical dimensions:
| Competitive Factor | Existing Operators | Blue Ocean Position |
|---|---|---|
| Price per Mbps | High (8/10) | Low (3/10) |
| Maximum speed | Very high (9/10) | Moderate (6/10) |
| Geographic coverage | Low (3/10) | Targeted (5/10) |
| Installation complexity | High (8/10) | Eliminated (0/10) |
| Customer service responsiveness | Low (2/10) | Very high (9/10) |
| Local content inclusion | Non-existent (0/10) | Created (8/10) |
| Mobile payment integration | Low (2/10) | Native (10/10) |
Strategic Decision: Rather than competing on raw speed (1 Gbps versus 500 Mbps—a distinction most residential customers cannot perceive), the client created a blue ocean by:
- Eliminating installation complexity through plug-and-play equipment with 4G backup
- Creating bundles with local content (Nollywood films, African football)
- Raising customer service standards (WhatsApp support 24/7, technician response within 2 hours)
- Reducing price to mid-market positioning
Results: Market penetration 3x higher than competitors in targeted zones, Net Promoter Score of 68 (versus industry average of 12), customer acquisition cost 40% below business plan.
The Four Actions Framework (ERRC Grid)
The ERRC Grid (Eliminate-Reduce-Raise-Create) provides a systematic methodology for reconstructing buyer value elements. Each action challenges industry assumptions and opens possibilities for value innovation.
Case Study: Sovereign Data Centre (Morocco)
A private equity fund engaged EXXING to evaluate investment in a Moroccan data centre. The industry exhibited classic red ocean characteristics: price competition on cost per rack, certification arms race (Tier III versus Tier IV), and latency optimisation battles.
EXXING applied the ERRC Grid to identify a blue ocean opportunity:
| Action | Element | Rationale |
|---|---|---|
| Eliminate | Non-critical certifications for local clients | Moroccan SMEs do not require Tier IV; certification costs do not translate to willingness to pay |
| Eliminate | Direct sales force | High customer acquisition cost; channel partners more efficient |
| Reduce | Minimum suite size (from 10 racks to 2) | Opens SME segment previously excluded |
| Reduce | Contract duration (from 36 months to 12) | Reduces barrier to entry for growing companies |
| Raise | GDPR/data sovereignty compliance | Regulatory requirement becoming mandatory; competitors underinvesting |
| Raise | French/Arabic support | Local language capability rare; high value for domestic clients |
| Create | "Digital Sovereignty" positioning | Data never leaves Morocco; appeals to government and regulated sectors |
| Create | Bundled cybersecurity (local SOC) | Addresses capability gap in target segment |
| Create | Monthly payment model | Eliminates CAPEX barrier for SMEs |
Results: Occupancy rate of 78% within 18 months (versus 45% industry average), EBITDA margin of 42% (versus 28% for competitors), exit valuation at 12x EBITDA.
The Three Tiers of Non-Customers
One of Blue Ocean Strategy's most powerful insights is the imperative to look beyond existing customers [1]. Kim and Mauborgne identify three tiers of non-customers, each representing distinct opportunities for market expansion.
Tier One: Soon-to-be Non-Customers
These are customers at the edge of the market, using the minimum offering and ready to leave. They remain only because no better alternative exists.
TMT Application: Prepaid mobile users who recharge €5 monthly represent tier-one non-customers for postpaid services. They value mobile connectivity but find existing postpaid offerings unaffordable or inflexible.
Blue Ocean Opportunity: Create an "Essential" plan at €9.99 with unlimited data throttled to 3 Mbps—sufficient for messaging and social media, priced accessibly, eliminating the complexity of traditional postpaid.
Tier Two: Refusing Non-Customers
These are customers who have consciously rejected the industry's offerings, having evaluated and dismissed them as unsuitable for their needs.
TMT Application: African SMEs that refuse fibre connectivity, perceiving it as too expensive, too complex to install, and too unreliable given power infrastructure challenges.
Blue Ocean Opportunity: Create a "Business 4G+" offering with service level agreements, automatic failover, simplified billing, and pricing indexed to usage rather than capacity.
Tier Three: Unexplored Non-Customers
These are customers in distant markets who have never been targeted by the industry, often because they were assumed to be unreachable or unprofitable.
TMT Application: Smallholder farmers in rural areas who have never had internet access and are not considered viable customers by traditional telecommunications operators.
Blue Ocean Opportunity: Create an agricultural IoT offering combining soil sensors, weather data, and market price information with low-cost satellite connectivity—transforming non-customers into a new market segment.
Common Pitfalls in Blue Ocean Implementation
Pitfall One: Confusing Technological Innovation with Value Innovation
Error: Investing in 5G deployment because "it is the future" without identifying use cases that create customer value.
Blue Ocean Principle: Value innovation requires simultaneously increasing buyer value AND reducing costs [1]. 5G represents a blue ocean only if it enables new services (private networks for industry, fixed wireless access for underserved areas) at costs below alternative solutions.
Case Study: A West African operator deployed 5G in three capital cities to avoid being "left behind." Result: 2% penetration, negative ROI. EXXING recommended pivoting to 5G Fixed Wireless Access in peri-urban areas, replacing fibre deployment at 40% of the cost. Result: 23% penetration within 12 months.
Pitfall Two: Creating Unprofitable Blue Oceans
Error: Reducing prices dramatically without restructuring the cost base to support sustainable margins.
Blue Ocean Principle: The correct strategic sequence is [1]:
| Step | Question | Implication |
|---|---|---|
| 1. Buyer Utility | Does the offering provide exceptional value? | Must pass utility test before proceeding |
| 2. Strategic Price | Is the price accessible to the mass of target buyers? | Price must unlock market, not maximise margin |
| 3. Target Cost | Can you produce at a cost enabling healthy margins at strategic price? | Cost structure must support pricing |
| 4. Adoption | What are the barriers to adoption? | Must address employee, partner, and public resistance |
Case Study: A European cable operator proposed launching a streaming service at €4.99 monthly to compete with Netflix. EXXING's analysis revealed that content licensing costs made the offering unprofitable at any realistic subscriber volume. The blue ocean solution: aggregate local content (regional channels, local sports) with user-generated content, reducing content costs by 70% whilst creating a differentiated offering.
Pitfall Three: Neglecting Execution
Error: Developing a brilliant blue ocean strategy but failing to execute due to organisational resistance.
Blue Ocean Principle: Fair Process is essential for successful implementation [1]:
| Element | Definition | Application |
|---|---|---|
| Engagement | Involve stakeholders in strategic decisions | Cross-functional strategy development |
| Explanation | Communicate the reasoning behind decisions | Transparent communication of trade-offs |
| Expectation Clarity | Establish clear new rules and standards | Explicit performance metrics and accountability |
Case Study: An African mobile operator launched a blue ocean mobile money offering but failed because sales teams remained incentivised on voice revenue. EXXING restructured incentive systems, delivered training programmes, and clarified performance expectations. Result: Mobile money adoption increased 4x within six months.
Blue Ocean Strategy Versus Blue Line Imperative
It is essential to distinguish two complementary frameworks that address different strategic questions:
| Dimension | Blue Ocean Strategy | Blue Line Imperative |
|---|---|---|
| Authors | Kim & Mauborgne (INSEAD) | Kaiser & Young (Wharton/INSEAD) |
| Central Question | Where should we create growth? | How should we measure real value? |
| Focus | Market space creation | Long-term value management |
| Primary Tools | ERRC Grid, Strategy Canvas, Three Tiers | Free Cash Flow, Learning Organisation |
| Risk Addressed | Competing in saturated markets | Achieving targets that destroy value |
| TMT Application | Identify new services and markets | Ensure new initiatives create genuine value |
The frameworks are synergistic: Blue Ocean Strategy identifies where to create value through market innovation; Blue Line Imperative ensures how to measure and capture that value through rigorous free cash flow analysis.
Conclusion: Blue Ocean as Strategic Discipline
Blue Ocean Strategy is not a formula for guaranteed success. It is a strategic discipline requiring:
Analytical Rigour: Mapping industry dynamics with the Strategy Canvas, understanding competitive factors, and identifying convergence points where differentiation opportunities exist.
Structured Creativity: Applying the ERRC Grid systematically to challenge every industry assumption and reconstruct buyer value elements.
Customer Focus: Understanding the three tiers of non-customers and designing offerings that convert non-customers into customers.
Execution Excellence: Implementing with Fair Process to overcome organisational resistance and ensure strategic alignment.
In TMT markets across Europe and Africa, red oceans proliferate: mobile saturation, fibre price wars, cloud commoditisation. The organisations that will thrive are those capable of creating blue oceans: agricultural IoT, private 5G networks, sovereign edge computing, embedded fintech.
The strategic question is not whether to apply Blue Ocean Strategy, but which blue ocean you will create before your competitors discover it.
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EXXING combines mastery of strategic frameworks (Blue Ocean, Blue Line, McKinsey Valuation) with deep knowledge of TMT markets across Europe and Africa. We help clients identify and capture uncontested growth opportunities.
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References
[1] Kim, W.C., & Mauborgne, R. (2015). Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant (Expanded Edition). Harvard Business Review Press.
[2] ARCEP (2017). L'impact de l'arrivée de Free Mobile sur le marché français des télécommunications. Autorité de Régulation des Communications Électroniques et des Postes.
[3] ARCEP (2022). Observatory of Electronic Communications Markets in France. Available at: https://www.arcep.fr/cartes-et-donnees/nos-publications-chiffrees/observatoire-des-marches-des-communications-electroniques-en-france.html
[4] Kim, W.C., & Mauborgne, R. (2017). Blue Ocean Shift: Beyond Competing. Hachette Books.
[5] INSEAD Blue Ocean Strategy Institute (2024). Blue Ocean Strategy Tools and Frameworks. Available at: https://www.blueoceanstrategy.com/tools/
[6] Porter, M.E. (1985). Competitive Advantage: Creating and Sustaining Superior Performance. Free Press. [Contrasting traditional competitive strategy framework]
