Cirque du Soleil is the perfect example of competing in the “blue ocean,” where there are few competitors and abundant opportunities.
The traditional, three-ring circus performed by the likes of the Ringling Brothers is largely in a state of decline. Animal welfare activism coupled with the ready availability of video and Internet entertainment have made what was once highly popular family fun a nostalgic anachronism.
So how do you explain the success of Cirque de Soleil? While the enterprise has struggled of late (“The Wall Street Journal” reports revenues dropped from $1 billion in 2012 to $850 million in 2013), Cirque de Soleil retains a strong brand identity, much more so than the Ringling Brothers which has adopted some of Cirque de Soleil’s playbook to remain viable.
In its heyday, Cirque de Soleil steadily increased revenues as it redefined the experience of going to the circus. It continues to serve as the classic example of “blue ocean strategy.” The Harvard Business Review describes this approach as going “after uncontested market space that ma[kes] the competition irrelevant.” In the case of Cirque de Soleil, that meant:
- Targeting adults and corporate clients who normally patronized theater, opera or ballet and who, not incidentally, were accustomed to higher ticket prices for a flashy and much-talked about entertainment experience.
- Providing a theater/opera/ballet experience in the context of a circus setting. Blue Oceans and Red Oceans The Blue Ocean Strategy is a concept developed by two academics, W. Chan Kin and Renée Mauborgne, first as a book, then a regular newsletter and teaching institute. A blue ocean is a metaphor for a clear, uncrowded and uncontested space where there is no competition, as contrasted with the classic business framework of a red ocean, clouded by the blood of competitors trying to devour each other’s markets.
- Look different. No animals, no rings, no traditional performers and no rural venues.
- Streamline and eliminate costs. No animals to feed, no large traveling retinues to transport, no multiple simultaneous performances. People come to the circus rather than the circus coming to them.
- Identify new unaddressed segments. Upscale, urban audiences.
- Introduce something new. Music, sophisticated and dramatic story lines, acrobatics as performance art and dance.
How One SMB Pursued the Blue Ocean
Freemarkets is a procurement and supply management software company, acquired by Ariba Inc. in 2004. It was founded by Glen Meakem and employed a blue ocean strategy that relied heavily on what our own John Meyers terms the “power of observation.” As “Business Forward” reports, Freemarkets products and services were unique, but the company didn’t know who its customers were. Front-line employees viewed Freemarkets as a threat to their jobs.
The company could have tried to sell Freemarkets to CEOs as a way to replace their purchasing people (red ocean strategy). Instead, it targeted vice presidents of purchasing, who became “heroes” within their organizations for delivering bottom-line savings through the adoption of Freemarkets technologies and leading their people in the use of them (blue ocean strategy).
Diving Into the Blue Ocean
Stop doing what everyone else is doing. Do something different. How do you make your coffee shop any different from Starbucks? Maybe you sell some used vinyl, let patrons pick their favorite albums and maybe have a regular “listening night” when they get to play some tracks while people listening to the music are drinking your choice beverages. To swim in a blue ocean, you need to:
- Differentiate. Why would someone buy your product instead of something similar from someone else?
- Find out who your customers are and what they don’t yet realize what they need or want. Consumer tastes are always changing. Remember when Blackberry was the market leader? And when Apple came along with a touchscreen, they just figured everyone would want a real physical keyboard. Turns out, a lot of people were willing to use a touchscreen. They’re called iPhone and Android users.
- Minimize expenses. The more you can economize, the more you can pass savings along to your customers.
- Do your research. What emerging trends and needs can you uniquely address and how can you sell that to potential customers? Remember the famous Henry Ford quote: that if he’d asked people what they wanted, they’d only have said faster horses.
- Innovate. Continually. Again, Apple is the exemplar of a blue ocean strategist. There was a time when people wondered why anyone needed an iPod. Today, they wonder the same thing, but only because the functionality is now already built into the iPhone, which has become the defacto Swiss Army knife of mobile computing. Now out comes the Apple watch, which is supposed to help wean you off the need to look at your iPhone all the time (even if you do need an iPhone to make the watch work). You could say that Apple is competing against itself, but it’s okay if the shark pack eats it own if there aren’t any other fish in the water.
Finding Bluer Oceans
Maybe you’re a red ocean kind of person. You’re competitive. You think that if someone is going to win, someone else has to lose. That state of affairs isn’t going away. But consider this interesting fact from “Blue Ocean Strategy,” as cited by The Entrepreneur Mind: of 108 companies that launched new businesses, those that pursued a red ocean strategy, 86 percent, accounted for only 39 percent of total profits reported. The comparative minority, 14 percent, that went blue ocean accounted for 61 percent of total profits. Meaning that the conventional marketers had to work harder to make proportionately less than the unconventional marketers.
Swimming in the blue ocean, then, would seem not only easier, but it gets you to your destination faster, without anything to nip at your heels.