blue ocean

5/23/2018 Blue Ocean

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Blue Ocean Strategy

A onetime accordion player, stilt walker, and fire-eater, Guy Lalibert is now CO of one

of Canada!s largest cultural e"ports, Cir#ue du Soleil$ %ounded in &'() by a group ofstreet performers, Cir#ue *as staged do+ens of productions seen by some ) million

people in ' cities around t*e world$ n . years, Cir#ue *as ac*ie/ed re/enues t*at0ingling Bros$ and Barnum 1 Bailey2t*e world!s leading circus2took more t*an a

century to attain$

Cir#ue!s rapid growt* occurred in an unlikely setting$ 3*e circus business was 4and still

is5 in long-term decline$ Alternati/e forms of entertainment2sporting e/ents, 36, and

/ideo games2were casting a growing s*adow$ C*ildren, t*e mainstay of t*e circusaudience, preferred 7layStations to circus acts$ 3*ere was also rising sentiment, fueled by

animal rig*ts groups, against t*e use of animals, traditionally an integral part of t*e

circus$ On t*e supply side, t*e star performers t*at 0ingling and t*e ot*er circuses relied

on to draw in t*e crowds could often name t*eir own terms$ As a result, t*e industry was

*it by steadily decreasing audiences and increasing costs$ 8*at!s more, any new entrantto t*is business would be competing against a formidable incumbent t*at for most of t*e

last century *ad set t*e industry standard$

9ow did Cir#ue profitably increase re/enues by a factor of .. o/er t*e last ten years insuc* an unattracti/e en/ironment: 3*e tagline for one of t*e first Cir#ue productions is

re/ealing;


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boundary traditionally separating circus and t*eater, it made a new and profitable blue

ocean from wit*in t*e red ocean of t*e circus industry$

Cir#ue is >ust one of more t*an &? blue ocean creations t*at we *a/e studied in o/er @industries, using data stretc*ing back more t*an & years$ 8e analy+ed companies t*at

created t*ose blue oceans and t*eir less successful competitors, w*ic* were caug*t in redoceans$ n studying t*ese data, we *a/e obser/ed a consistent pattern of strategic t*inking

be*ind t*e creation of new markets and industries, w*at we call blue ocean strategy$ 3*elogic be*ind blue ocean strategy parts wit* traditional models focused on competing in

e"isting market space$ ndeed, it can be argued t*at managers! failure to reali+e t*e

differences between red and blue ocean strategy lies be*ind t*e difficulties manycompanies encounter as t*ey try to break from t*e competition$

n t*is article, we present t*e concept of blue ocean strategy and describe its defining

c*aracteristics$ 8e assess t*e profit and growt* conse#uences of blue oceans and discuss

w*y t*eir creation is a rising imperati/e for companies in t*e future$ 8e belie/e t*at an

understanding of blue ocean strategy will *elp today!s companies as t*ey struggle tot*ri/e in an accelerating and e"panding business uni/erse$

Blue and 0ed Oceans

Alt*oug* t*e term may be new, blue oceans *a/e always been wit* us$ Look back &years and ask yourself w*ic* industries known today were t*en unknown$ 3*e answer;

ndustries as basic as automobiles, music recording, a/iation, petroc*emicals,

p*armaceuticals, and management consulting were un*eard-of or *ad >ust begun toemerge$ ow turn t*e clock back only @ years and ask yourself t*e same #uestion$

Again, a plet*ora of multibillion-dollar industries >ump out; mutual funds, cellular

telep*ones, biotec*nology, discount retailing, e"press package deli/ery, snowboards,coffee bars, and *ome /ideos, to name a few$ ust t*ree decades ago, none of t*eseindustries e"isted in a meaningful way$


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Adapted from The Wall Street Journal Guide to Management by Alan Murray,

published by Harper Business

3*e rapid pace of inno/ation and c*ange in recent years *as led sc*olars and e"ecuti/es

to searc* for an approac* to strategy t*at is more dynamic t*an 9ar/ard 7rofessoric*ael 7orter!s classic


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r$ Dim and s$ auborgne argue t*at businesses s*ould focus less on t*eir competitors

and more on alternati/esF t*ey also s*ould focus less on t*eir customers, and more on

non-customers, or potential new customers$

blue ocean

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