A Cirque du Soleil Blue Ocean Strategy
Created in 1984 by a group of street performers, Cirque’s productions have been seen by almost forty million people in ninety cities around the world. In less than twenty years Cirque du Soleil has achieved a level of revenues that took Ringling Bros. and Barnum & Bailey—the global champion of the circus industry—more than one hundred years to attain.
What makes this rapid growth all the more remarkable is that it was not achieved in an attractive industry but rather 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.
Alternative forms of entertainment— ranging from various kinds of urban live entertainment to sporting events to home entertainment—cast an increasingly long shadow. Children cried out for PlayStations rather than a visit to the traveling circus. Partially as a result, the industry was suffering from steadily decreasing audiences and, in turn, declining revenue and profits. There was also increasing sentiment against the use of animals in circuses by animal rights groups. Ringling Bros. and Barnum & Bailey set the standard, and competing smaller circuses essentially followed with scaled-down versions.
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 circus industry, which historically catered to children. Cirque du Soleil did not compete with Ringling Bros. and Barnum & Bailey. 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 several times as great as traditional circuses for an unprecedented entertainment experience.
Significantly, one of the first Cirque productions was titled “We Reinvent the Circus.”
Any goal can be pursued in a variety of ways. It is the job of strategy to choose the most effective course of action for attaining objectives.
Whether a small or an ambitious one, projects which do not have enough ressources allocated are bound to fail
I wanted my team to understand that strategy is disciplined thinking that requires tough choices and is all about winning. Grow or grow faster is not a strategy. Build market share is not a strategy. Ten percent or greater earnings-per-share growth is not a strategy. Beat XYZ competitor is not a strategy. A strategy is a coordinated and integrated set of where-to-play, how-to-win, core capability, and management system choices that uniquely meet a consumer’s needs, thereby creating competitive advantage and superior value for a business.
Strategy is a way to win—and nothing less.
From 20,000 sold units on the first year to 300,000 the following one, how a brand which was born out of a brainstorming session at Toyota in 1983 jumped over the competition so successfully?
Part of the reason has to do with the marketing strategy, another is in the financial resources Toyota was willing to put in :
The first Lexus took six years and one billion dollars to build.
Chester Dawson, author of “Lexus: The Relentless Pursuit said:
“When I had the opportunity to speak to the Chairman of Toyota a couple of years ago, I asked him about expenses. He said that he told his crew to spend as much money as they needed to, but the company would not be willing to put a dime into building a maintenance network in the U.S. because it expected the car to never break because of all the funds that were being put into it. That was obviously an overstatement, but it reflected this kind of thinking. They plowed all kinds of money into it and they took apart the competition. Literally. They went into every car—the S Class, the 7 Series BMW—broke them down into each component ...