From Best Practices to Blue Oceans: ITIL as a Value Innovator
Blue Ocean and Red Ocean in a nutshell
In a world where IT is not a competitive advantage for organizations anymore, but rather a critical element for their operations, value creation becomes the real differentiator.
In 2005, W. Chan Kim and RenĂŠe Mauborgne published the book Blue Ocean Strategy. In this book, they present the theory with the same name, which in a few words proposes using innovation as the main tool to reach new markets or to offer innovative products and services to consumers, generating value through a real differentiating factor.This contrasts with the other theory presented by the authors: Red Oceans. These represent existing markets, services, or products that do not have a real differentiating factor among them.
Both theories represent, through their analogy, their main advantages and disadvantages. Red Oceans are aggressive âplaces,â full of competition, where it is easy to enter but difficult to differentiate, and therefore difficult to capture a significant portion of the market. On the other hand, Blue Oceans are peaceful, little-explored âplaces,â where differentiation is easier due to limited or nonexistent competition; however, reaching these spaces is the real challenge.
In this article, we connect Blue Ocean Strategy with ITIL in order to understand how the latter can help organizations reach their own Blue Oceans.
The problem of âRed Ocean ITâ
Many organizations, when implementing ITIL, primarily think about reducing costs, standardizing processes, and complying with audits. This is not inherently wrong; in fact, it is part of what organizations can achieve by implementing ITIL. However, staying only with this approach can result in an IT function that is efficient but undifferentiated. This situation can be described as âRed Ocean IT,â where organizations implement ITIL in a very âout-of-the-boxâ manner, reaching such a level of standardization that all organizations execute IT practices in essentially the same way. As a result, there is no real differentiating factor for the consumer, who receives the same experience and the same value proposition offered by competitors. This is often accompanied by mindsets in which IT is still seen simply as the organizationâs âtechnical support area,â and not as an engine of innovation capable of generating a differentiating factor of value compared to the competition.
Blue Ocean Strategy â Create value, not compete
The adoption of ITIL in organizations does not have to be approached as a âcookbook,â where all practices must be implemented strictly and in the short term. ITIL was not designed as a rigid framework, but rather as a flexible one that should be adapted to each organization in order to generate value according to its context.ITIL presents itself as a strong ally for organizational innovation, not focused solely on technological innovation, but on a more integral form of innovation that delivers value to consumers.ITIL (Version 5) emphasizes the concept of value co-creation, an approach in which the service provider and the service consumer actively work together to find, create, and improve the value of a product or service. Using the Blue Ocean analogy, value co-creation enables providers and consumers to discover those âBlue Oceansâ together, offering a differentiated experience compared to the competition.Within the ITIL Service Value System, two possible inputs are identified: Demand and Opportunity. Focusing only on fulfilling consumer demand aligns with Red Ocean thinking, as it addresses needs or desires for existing products or services.
In contrast, focusing on Opportunities aligns with Blue Ocean thinking, as it involves identifying new possibilities to add more value for consumers.There are two words that largely represent the core message of ITIL (Version 5): Value and Improvement. Both are closely related to the pursuit of Blue Oceans.
Value is present in one of the ITIL Guiding Principles: âFocus on Value.â This principle states that all activities carried out by the organization should be directly or indirectly related to generating value for the organization itself, its customers, or other stakeholders. Value is subjective and can differ for each stakeholder. Therefore, to understand what value means, organizations must first clearly identify their customers and stakeholders, and then understand what each perceives as valueâwhether that is revenue, customer loyalty, cost reduction, growth opportunities, or other outcomes.
This means that service providers should adopt a mindset in which, before focusing on the technical design and development of a product or service, they first seek to understand their customers and the value they expect to obtain, and then align design and development accordingly.
The evolution of ITIL (Version 5) deepens the focus on value realization, adaptability, and continuous alignment with organizational context.Improvement is a key element of ITIL (Version 5). It is present as a component of the Service Value System, as a practice, as part of the âSupportâ activity of the Product and Service Lifecycle and through the seven-step Continual Improvement Model.
By fostering a culture of improvement and innovationâwhere feedback from consumers and other stakeholders is continuously taken into accountâorganizations can identify and implement actions that generate even more value for consumers.
In this way, when organizations adopt ITIL with a focus on value and a culture of continuous improvement and innovation, they not only achieve the benefits of operational efficiency and standardization associated with Red Oceans, but also seek differentiation, generating greater value for consumers through Blue Oceans.
From Red Ocean to Blue Ocean: A practical change
Focusing on the exploration of Blue Oceans is not something organizations can do overnight. It requires time and resources dedicated to understanding current consumer needs, research, development, and testing. However, as discussed, the adoption of ITIL can help make this exploration easier and more structured.
A first step in this journey is changing the mindset that ITIL is merely a set of rigid processes that must be implemented strictly for compliance purposes. Instead, ITIL should be adapted to the organizationâs context and used as a means to generate value. This involves shifting the focus from primarily improving processes to improving experiences, and making the necessary adjustments to materialize those improvements.
To achieve a truly differentiating factor, IT must stop being seen as a âfirefightingâ area and instead be recognized as a key strategic function capable of understandingâand even anticipatingâconsumer needs. Even the service catalog should be structured in a way that allows consumers to clearly perceive the value they will receive and understand how the organizationâs services differ from those of the competition.
ITIL (Version 5) emphasizes the use of emerging technologies such as artificial intelligence, analytics, and robotic process automation (RPA). This can also act as catalysts for identifying Blue Oceans. However, these tools should be seen as enablers of value rather than ends in themselves. As these technologies become increasingly accessible, the real difference lies in the strategic use organizations make of them compared to their competitors.
Conclusion â ITIL as a differentiation engine
As shown, adopting ITIL in a strategic wayâand not simply for compliance purposesâcan enable organizations to offer services and products that are differentiated from those of their competitors, generating greater value for consumers, as proposed by Blue Ocean Strategy.
ITIL does not say what to innovate, but it does create the conditions for innovation to happen by taking into account elements such as the ITIL Guiding Principles, the Service Value System, and Continual Improvement. Emerging technologies should not be seen as ends in themselves, but as enablers of value creation. Before designing or building a service, organizations must understand the value the consumer expects to receive and align service design and development with that value expectation.
The evolution reinforced in ITIL (Version 5) confirms that ITIL is no longer about optimizing services in isolation, but about enabling adaptive, value-driven decision-making that allows organizations to continuously create and sustain their own Blue Oceans.
Organizations that use ITIL only to optimize operations will survive, but those that use it to create new value are the ones that will lead.
