Despite the circus industry's long-term decline, Cirque du Soleil profitably increased revenue 22-fold. Rather than competing within the existing industry, Cirque developed market space — and made the competition irrelevant.
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Similarly, although traditional circuses promoted their performers as stars, Cirque realized that the public no longer thought of circus artists as stars, at least not in the movie star sense. Cirque did away with traditional three-ring shows, too. Not only did these create confusion among spectators forced to switch their attention from one ring to another, they also increased the number of performers needed, with obvious cost implications.
Cirque offers the best of both circus and theater. And by eliminating many of the most expensive elements of the circus, it has been able to dramatically reduce its cost structure, achieving both differentiation and low cost. By driving down costs while simultaneously driving up value for buyers, a company can achieve a leap in value for both itself and its customers.
When imitation requires companies to make changes to their whole system of activities, organizational politics may impede a would-be competitor’s ability to switch to the divergent business model of a blue ocean strategy. For instance, airlines trying to follow Southwest’s example of offering the speed of air travel with the flexibility and cost of driving would have faced major revisions in routing, training, marketing, and pricing, not to mention culture.
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