In short
Explains “Red Ocean” vs “Blue Ocean” strategy and how Cirque du Soleil succeeded in a declining circus industry by creating a new market space.
Guest backgrounds
No guests mentioned in the transcript.
Key claims
Red Oceans are crowded, rule-defined markets where firms compete for existing demand; Blue Oceans create new demand by altering industry boundaries. Blue Ocean strategy often yields benefits for 10–15 years and is hard to copy.
Notable examples
Cirque du Soleil (co-founded by Guy LaLibité in 1984) blurred circus and theatre, targeted adults willing to pay premium prices, removed costly animal acts and star performers, and pursued “value innovation” (differentiation plus low cost).
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Chapters
Tap a time to open that second in VOUnderstanding Blue Ocean Strategy
0:30 to 0:52
Explore the concept of Blue Ocean Strategy and how Cirque du Soleil thrived.
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Understanding Blue Ocean Strategy
0:59 to 2:54
Explore the concept of Blue Ocean Strategy and how Cirque du Soleil thrived.
“Soon, Cirque was bringing in revenues that incumbents like Ringling Brothers had taken more than a century to attain, even though the circus business was in long-term decline.”
Understanding Blue Ocean Strategy
3:16 to 3:39
Explore the concept of Blue Ocean Strategy and how Cirque du Soleil thrived.
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Understanding Blue Ocean Strategy
3:45 to 4:16
Explore the concept of Blue Ocean Strategy and how Cirque du Soleil thrived.
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Transcript
Automatic transcript. May contain errors.0:28This episode is brought to you by Google Chrome. Use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a$75 sponsored job credit at Indeed.com slash podcast. That's Indeed.com slash podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsored Jobs.
0:58In 1984, Guy LaLibité co-founded Cirque du Soleil. Soon, Cirque was bringing in revenues that incumbents like Ringling Brothers had taken more than a century to attain, even though the circus business was in long-term decline. How did Cirque thrive in such a dismal environment? The answer can be found in the theory that the business universe consists of two kinds of markets, Red Oceans and Blue Oceans, a concept pioneered by INSEAD professors W. Chan Kim and Rene Beaubourne. Red Oceans represent existing industries and markets, where industry boundaries and the rules of competition are well defined.
1:34Companies strive to outperform rivals and grab a bigger share of existing demand. As the space gets crowded, fierce competition turns the water bloody. Competitive or market-competing strategy is about how to occupy Red Oceans. By contrast, Blue Ocean or market creating strategy is about how to create and capture unknown markets where demand is created rather than fought over. In some cases this spawns entirely new industries. But most Blue Oceans emerge when a company alters the boundaries of an existing industry, as when Cirque du Soleil blurred the line between circus and theatre. Cirque made the acts more artistic and sophisticated, attracting a whole new group of customers, adults who are prepared to pay premium ticket prices as they would for the theatre or the opera.
2:20Cirque also eliminated several elements of the traditional circus like costly animal acts and star performers. Cirque invented a new and profitable market space without making the typical trade-off between value and cost. Cirque pursued both differentiation and low cost in what Kim and Mowbourne call value innovation. The simultaneous pursuit of value and cost is the logic of Blue Ocean's strategy. Based on their study of more than 30 industries, companies that can create blue oceans usually reap the benefits for 10 to 15 years because they are hard for rivals to copy. To realise blue ocean potential like CERC did, companies should chart a strategic course past traditional industry boundaries to create new market space.
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From the publisher
The Explainer: Blue Ocean Strategy
16 Jul 2019
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When you break the bounds of existing industries, competition becomes irrelevant.
The business universe consists of two distinct kinds of space, which we think of as red and blue oceans. Red oceans represent all the industries in existence today—the known market space. In red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are well understood. Here, companies try to outperform their rivals 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.
Blue oceans denote all the industries not in existence today—the unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid. There are two ways to create blue oceans. In a few cases, companies can give rise to completely new industries, as eBay did with the online auction industry. But in most cases, a blue ocean is created from within a red ocean when a company alters the boundaries of an existing industry. This is what Cirque du Soleil did. In breaking through the boundary traditionally separating circus and theater, it made a new and profitable blue ocean from within the red ocean of the circus industry.
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