One of the many books published on strategy development is “Blue Ocean Strategy,” in which authors W. Chan Kim and Renée Mauborgne, professors of strategy at INSEAD and co-directors of the INSEAD Blue Ocean Strategy Institute, offer Cirque du Soleil as an example to highlight their ideas.
Rather than competing for a shrinking stake of entertainment focused on children, and facing challenges ranging from video games to animal rights activists, the organization created a show that appealed primarily to adults willing to pay premium prices for a unique product. As a result, Cirque du Soleil earned more revenue in 20 years than Ringling Bros. and Barnum & Bailey made in a century.
The story of reinventing the entire circus industry is recounted time and time again as a brilliant guide in how to render competition irrelevant. In Kim and Mauborgne’s book and articles, they use the images of blue oceans and red oceans to explain the strategy.
Red oceans, they say, represent all the industries that already exist in the known market. Industry rivals compete to outperform each other “in order to grab a greater share of existing demand. As the space gets more and more crowded, prospects for profits and growth are reduced.
“Products turn into commodities, and increasing competition turns the water bloody,” they write in a summary article published in Harvard Business Review in October 2004 (also called “Blue Ocean Strategy“).
Blue oceans represent industries not in existence today, which are untainted by competition. In the blue oceans of the unknown market space, “demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid,” Kim and Mauborgne say.
The full October 2004 HBR article is available on the HBR website, along with many others including their most recent article, “Blue Ocean Leadership,” from the May 2014 edition of HBR magazine.
Additional resources about strategy referenced in the accompanying Carrier Management article by Kathy Blumenfeld and Nichole Murton include:
- “Why Strategy Execution Unravels—and What to Do About It” by Donald Sull, Rebecca Homkes and Charles Sull in March 2015, also available at hbr.org.
- “Why Good Strategies Fail: Lessons for the C-Suite,” available at www.pmi.org in the Learning section under the PMO-Thought Leadership tab.