Competition is getting hard these days when anyone can do anything from anywhere. Most of companies have a hard time trying to figure out what they have to do to get differentiated from their competitors.
The authors of Blue Ocean book called those industries, where the competition is translated to war of price or bring out market share from your competitor, bloody oceans….or red oceans. A company that is competing in those industries has an strategy that usually converges with the other ones. So it’s almost impossible to be different. Companies usually enter in a war of price where only the customer is beneficiated, while the companies are losing profits and wasting resources into that fight.
So…how can a company get out of a red ocean?…by creating a blue one.
Blue oceans are market spaces where the competition disappears. When a company creates something that is beyond the industry in which it is competing a blue ocean is created. And going back to the beginning, if anyone can do anything from anywhere, you are called to do something that no one can do. Companies have to get through industry’s walls and create new spaces.
We have already talked about some companies that has created blue oceans, but the book comes up with another great and valued example.
Have you heard about Cirque Du Soleil? If you don’t, I recommend you check out their site, and get tickets when they might be in your city. It’s an experience that has a lot of content in just one place, you like the circus or not. A story, ballet, acrobatics and a delicate environment.
But why Cirque Du Soleil is related to blue oceans? Because the are one.
The creators of Cirque Du Soleil realized that the circus industry was declining. Children has other different options for entertainment like play stations, Wii, television, computers, etc. In the other hand, the circus cost was so high. It was associated to the care of animals and the artists. And finally, the spectator was not enjoying the animals’ shows anymore. With all of this, you might think that the circus in done, but it doesn’t. Cirque Du Soleil has gone through the industry’s walls and has created a new space. They combine a circus, a theater, a ballet and a musical show experience in one place. The customer is not children or the family anymore. The new customer is someone which can afford to pay a ticket as the same price as a theater or Broadway show.
So they basically, reduced all cost associated with an old circus (they don’t have any animal show), they changed the target customer, and they created something that it’s not a circus, not a theater, not a Broadway show…something that does not have any competition in the market. They have created a blue ocean.