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TECH TALK: Blue Ocean Strategy: Cirque du Soleils Reinvention

May 2nd, 2006 · No Comments

Another example quoted in the book is the transformation of Cirque du Soleil. An excerpt from the book in Fast Company:

A one time accordion player, stilt-walker and fire-eater, Guy Laliberte is now CEO of one of Canada’s largest cultural exports, Cirque du Soleil. Created in 1984 by a group of street performers, Cirque’s productions have been seen by almost 40 million people in 90 cities around the world. In less than 20 years Cirque du Soleil has achieved a revenue level that took Ringling Brothers and Barnum & Bailey’s Circus – the global champion of the circus industry – more than one hundred years to attain.

What makes this all the more remarkable is that this rapid growth was not achieved in an attractive industry. It was in a declining industry in which traditional strategic analysis pointed to limited potential for growth. Supplier power on the part of star performers was strong. So was buyer power From the perspective of competition-based strategy, then, the circus industry appeared unattractive.

Another compelling aspect of Cirque du Soleil’s success is that it did not win by taking customers from the already shrinking demand for the circus industry, which historically catered to children. Cirque du Soleil did not compete with Ringling Brothers and Barnum & Bailey’s Circus to make this happen. Instead it created uncontested new market space that made the competition irrelevant. It appealed to a whole new group of customers – adults and corporate clients prepared to pay a price that is several times as expensive as traditional circuses for their unprecedented entertainment experience. Significantly, one of the first Cirque productions was titled “We Reinvent the Circus”.

Cirque du Soleil succeeded because it realized that to win in the future, companies must stop competing with each other. The only way to beat the competition is to stop trying to beat the competition.

In a brief article in Fast Company, Renee Mauborgne, the co-author of Blue Ocean Strategy, says companies can do what Cirque du Soleil did by following certain guidelines.

Water, water, everywhere
You don’t have to compete in a red ocean of bloody competition. Even exhausted industries — like the circus — can be reinvented.

Don’t swim with the school
Quit benchmarking the competition or setting your strategic agenda in the context of theirs.

Find new ponds to fish
Don’t assume your current customers have the insights you need to rethink your strategy. Look to noncustomers instead.

Cut bait on costs
Put as much emphasis on what you can eliminate as on what you can create.

Tomorrow: Dos and Donts


TECH TALK Blue Ocean Strategy+T

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