Consider Cirque du Soleil, founded in 1984 by a group of street performers. In the past two decades, 40 million people have seen its productions, and it has achieved levels of revenues that Ringling Bros. and Barnum & Bailey—the world’s leading circus—took more than a century to reach. Cirque thrives in an industry suffering a decrease in demand and intense competition by making the competition irrelevant. While the circus industry has long been in a tailspin, Cirque stepped outside the confines of the existing paradigm and targeted a new customer base. It created a blue ocean of uncontested market space by offering the thrills of the circus and the intellectual sophistication of the theater.

Cirque does away with conventional circus standards—the animals and star performers—and injects new elements drawn from the theater. Cirque mounts multiple productions based on different story lines with original musical scores. This pulls in a new demographic: adults and corporate clients accustomed to opera and ballet, who are prepared to pay several times more than the price of a circus ticket for a new experience.

The Metaphor is our Message
There are two ways to create blue oceans. In a few cases, companies can create a new market, as eBay did with online auctions. But in most cases, a blue ocean is created within a red ocean when a company alters the boundaries of an existing industry. By punching through the wall separating circus and theater, Cirque made a new and profitable blue ocean from within the red ocean of the circus industry. We studied 150 companies in more than 30 industries that created blue oceans—and their less-successful competitors. We saw a consistent pattern of thinking behind the creation of new markets, what we call blue-ocean strategy.