Competing in overcrowded industries is no way to sustain high performance. The real opportunity is to create blue oceans of uncontested market space.
by W. Chan Kim and RenéeMauborgne
A onetime accordion player, stilt walker, and fire-eater, Guy Laliberté is now CEO of one of Canada’s largest cultural exports, Cirque du Soleil. Founded in 1984 by a group of streetperformers, Cirque has staged dozens of productions seen by some 40 million people in 90 cities around the world. In 20 years, Cirque has achieved revenues that Ringling Bros. and Barnum & Bailey—theworld’s leading circus—took more than a century to attain.
Cirque’s rapid growth occurred in an unlikely setting. The circus business was (and still is) in long-term decline. Alternative forms ofentertainment—sporting events, TV, and video games—were casting a growing shadow. Children, the mainstay of the circus audience, preferred PlayStations to circus acts. There was also rising sentiment,fueled by animal rights groups, against the use of animals, traditionally an integral part of the circus. On the supply side, the star performers that Ringling and the other circuses relied on todraw in the crowds could often name their own terms. As a result, the industry was hit by steadily decreasing audiences and increasing costs. What’s more, any new entrant to this business would becompeting against a formidable incumbent that for most of the last century had set the industry standard.
How did Cirque profitably increase revenues by a factor of 22 over the last ten years in such anunattractive environment? The tagline for one of the first Cirque productions is revealing: “We reinvent the circus.” Cirque did not make its money by competing within the confines of the existingindustry or by stealing customers from Ringling and the others. Instead it created uncontested market space that made the competition irrelevant. It pulled in a whole new group of customers who were...