Poseidon was the God of the Sea in Greek mythology but his current namesake needs to master the 21st century business philosophy of Blue Ocean and Red Ocean.

Poseidon Concepts is the upstart Calgary energy service and supply company that rode a year-long wave of business success with its innovative fracking fluid tanks until this week when it released disappointing third quarter results. Its shares fell almost 70 per cent in two days.

The stock traded as high as $13.65 Wednesday but closed at $4.74 Friday on the TSX as more than 35 million shares changed hands. In less than 48 hours, more than $600 million in market capitalization disappeared.

Poseidon, in phraseology mastered by publicly traded companies, described the quarter as "a mixed period" for the company,

The Poseidon Misadventure might be more fitting.

The sell-off isn't simply market overreaction to a difficult quarter. There has been a sea change in Poseidon's operating environment that could serve as a cautionary tale for any company that unduly profits from what the business schools call the "first-mover advantage."

It also highlights the volatility that is a fact of life in the oilfield service sector. The ebb and flow of commodity prices tends to create more boom and bust conditions for the service companies that are actively working on well sites more than the big-name producers.

Poseidon carved out its niche as part of mid-size oil and gas producer Open Range Energy when it developed large-capacity storage tanks - they look like a giant, above-ground swimming pool - to hold fracking fluids. A surge in fracking and horizontal drilling opened huge untapped reservoirs of shale oil and gas in North America and created new opportunities.

Poseidon "essentially built" the tank subsector says investment firm FirstEnergy Capital.

Hello, Blue Ocean.

The Blue Ocean Strategy was a popular business book published in 2005 that explains an organizational strategy to generate growth and profits by creating new demand in an uncontested market rather than competing head-to-head against rivals in an existing industry.

Quebec's Cirque du Soleil is often cited as a successful Blue Ocean venture. Nobody did what it pioneered.

Poseidon did its first commercial fracking fluid tank rental in June 2010. Last November it was spun out from Open Range and was listed on the Toronto Stock Exchange as a stand-alone pure-play energy services company.

The business immediately took off. Last fall, it had 170 of its tanks in North America. Today, it has 440.

Open Range, meanwhile, was bought by Peyto Exploration for $114 million in August.

Poseidon - a receptionist said they were "swamped" with calls - did not respond to interview requests Friday.

On its website, the company declares it "has established a unique service offering and business model." It's the classic Blue Ocean scenario - create/capture new demand, uncontested markets, competition is irrelevant - and Poseidon took full advantage. Last month, Poseidon was honoured as the top emerging company in the Prairies at the Ernst and Young's 2012 Entrepreneur of the Year awards.

However, as any fan of TV's Shark Week can attest, a blue ocean teeming with opportunities quickly turns red.

Competitors - including established oilfield services companies like Precision Drilling and Mullen Group - saw the tank market emerge and moved. It's now a Red Ocean; competition in established markets and rivals exploiting existing demand. Competitors, like sharks, abound.

A similar situation emerged as early movers in shale development - such as Calgary-based Encana with gas and Crescent Point with oil - were rewarded before their initial success attracted more players to the unconventional plays and greatly increased competition.

Today, as depressed commodity prices slow oilpatch activity, companies in the well-site tank business have reduced day rates to attract and/or retain business among increasingly budget-conscious oil and gas producers.

Poseidon wrote down $9.8 million in bad debts in the third quarter as business conditions in the U.S. in particular worsened. Investment firm Peters' & Co. said the quarter revealed "significant vulnerability" with Poseidon's business model.

Poseidon has expanded its product lines to provide customers added well-site fluid handling products and services. It has also cut capital spending close to half and scaled back its guidance to investors for revenue and earnings going forward.

One stated goals for Poseidon is to pay "an attractive dividend on a sustainable basis." It has paid a nine cent dividend each month since inception but that could be under pressure given the dramatic change in the operating environment and financial outlook.

Despite the setbacks, Poseidon is doing the one thing it must; continue to innovate. It introduced three new products - fluid heating, remote fluid monitoring, water-transfer services - but they complement its current business. They don't create new markets.

Another of Poseidon's goals at its launch was "to continue to use its first-mover advantage to increase market penetration in North America." That's a Blue Ocean strategy in a Red Ocean world. It will have to change.

Fortunately, Poseidon has shown it can innovate. Now it has to prove it can adapt.