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In the world of business strategy, few stories are as captivating as that of Cirque du Soleil. A onetime accordion player, stilt walker, and fire-eater, Guy Laliberté, the CEO of Cirque du Soleil, has orchestrated one of Canada’s largest cultural exports into a global phenomenon. Founded in 1984 by a group of street performers, Cirque has staged dozens of productions seen by over 40 million people in 90 cities worldwide. In just two decades, Cirque achieved revenues that Ringling Bros. and Barnum & Bailey—the world’s leading circus—took more than a century to attain.
The circus industry, once a dominant form of entertainment, had been in long-term decline when Cirque du Soleil entered the scene. Alternative forms of entertainment like television, video games, and sporting events had overshadowed traditional circuses. Children, the primary audience for circuses, preferred PlayStations to circus acts. Rising sentiment against the use of animals, a staple of the traditional circus, further compounded the industry’s challenges. Costs were increasing, and audiences were shrinking, making the industry an unattractive space for new entrants.
Yet, in this hostile environment, Cirque du Soleil not only survived but thrived. The secret to its success lies in a concept known as Blue Ocean Strategy—a strategy that allows companies to create uncontested market space and render competition irrelevant. Cirque’s approach didn’t just steal customers from existing circuses; it redefined the circus experience, attracting a new audience willing to pay a premium for this innovative form of entertainment.
To understand Cirque du Soleil’s achievement, it's essential to grasp the difference between red and blue oceans. Red oceans represent all existing industries today—the known market space. Here, companies compete to outperform each other, fighting over the same pool of customers. The competitive rules are well understood, and as the space becomes more crowded, growth prospects diminish, and profit margins shrink. Products become commodities, and competition turns the water bloody, hence the term "red oceans."
In contrast, blue oceans denote all the industries not in existence today—the unknown market space, untainted by competition. In blue oceans, companies create demand rather than compete for it. There’s ample opportunity for growth that is both profitable and rapid. Blue ocean strategies involve creating new markets or redefining the boundaries of existing industries to unlock new demand.
Cirque du Soleil exemplified this strategy by blending elements of the circus with those of theater, opera, and ballet to create a unique and sophisticated form of entertainment that appealed to adults and corporate clients—customers who were traditionally non-circus-goers.
Cirque du Soleil’s tagline, “We reinvent the circus,” perfectly captures its strategic approach. The company didn’t try to compete within the confines of the existing circus industry. Instead, it created an uncontested market space—a blue ocean—by offering a unique value proposition that made the competition irrelevant.
Traditional circuses focused on animal acts, star performers, and three-ring shows, all of which were expensive to maintain and increasingly out of favor with modern audiences. Cirque du Soleil, on the other hand, eliminated the most costly and controversial elements—such as animal acts—and focused on human performance, creativity, and artistic flair. The company also reimagined the circus tent, turning it into a luxurious, comfortable venue that enhanced the overall experience.
Cirque borrowed elements from the world of theater to create a more sophisticated entertainment experience. Each Cirque production has a theme and story line, similar to a Broadway show, with original music and artistic performances that appeal to a more mature audience. By doing so, Cirque was able to charge several times more than the price of a conventional circus ticket, attracting a new group of customers who were willing to pay for this unprecedented entertainment experience.
Cirque du Soleil’s success highlights a paradox in business strategy: while most companies focus on competing in red oceans, the real opportunities for growth lie in creating blue oceans. In a study of business launches across 108 companies, researchers found that 86% of new ventures were line extensions—incremental improvements to existing industry offerings—while only 14% aimed at creating new markets or industries. Despite accounting for a smaller share of total revenues, these new market creations delivered a staggering 61% of total profits.
So why do so few companies pursue blue ocean strategies? Part of the explanation lies in the roots of corporate strategy, which is heavily influenced by military strategy. The language of business strategy is filled with military metaphors—executive "officers," "headquarters," "troops," and "front lines." This mindset drives companies to focus on beating the competition rather than creating new market space.
But blue ocean strategy challenges this traditional approach. It’s not about competing in an existing market; it’s about creating new market space where competition is irrelevant. This shift in strategic mindset is fundamental and requires companies to rethink their approach to value creation.
Cirque du Soleil’s success didn’t happen overnight. The company’s founders had to think beyond the conventional circus industry and reconstruct the boundaries between circus and theater. By eliminating, reducing, raising, and creating new elements, Cirque was able to offer a leap in value for customers while simultaneously reducing costs—a hallmark of blue ocean strategy.
For example, by eliminating animal acts and star performers, Cirque dramatically reduced its cost structure. At the same time, by introducing elements from theater and Broadway, it increased the sophistication and appeal of its performances, allowing it to charge higher ticket prices. This simultaneous pursuit of differentiation and low cost is what makes blue ocean strategy so powerful.
Companies that successfully create blue oceans often enjoy a significant competitive advantage for years, if not decades. Cirque du Soleil’s success, like that of other blue ocean pioneers such as Ford with the Model T and Apple with the iPhone, demonstrates the lasting impact of creating new market space.
Cirque du Soleil’s journey from a group of street performers to a global entertainment powerhouse offers valuable lessons for today’s businesses. As markets become increasingly saturated and competitive, the need for blue ocean strategies becomes more pressing. Companies must look beyond traditional market boundaries and explore new ways to create value for customers.
The key takeaway is that blue ocean strategy is not about outperforming the competition; it’s about making the competition irrelevant by creating new demand and unlocking new market space. This requires a shift in strategic thinking—from focusing on existing demand to creating and capturing new demand.
In a rapidly changing business landscape, companies that can embrace the principles of blue ocean strategy will be better positioned to achieve sustainable growth and long-term success. Just as Cirque du Soleil redefined the circus industry, today’s businesses have the opportunity to redefine their own industries and create blue oceans of uncontested market space.
By understanding and applying the principles of blue ocean strategy, companies can break free from the constraints of red ocean competition and chart a course toward new horizons of growth and profitability.
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