The strategy that let Cirque du Soleil, Netflix, and Southwest Airlines escape bloody competition - and how you can use it too.
I want you to think about the last time you competed on price.
How did that feel? My guess: not great.
Price wars are exhausting. You drop your price, they drop theirs. Margins shrink. Everyone works harder for less money. And somehow the customer still thinks you're all the same.
This is what strategists call a "red ocean" - bloody competition where everyone fights for the same customers, doing more or less the same thing.
But there's another way.
The Blue Ocean Idea
In the early 2000s, two professors (W. Chan Kim and Renee Mauborgne) studied decades of business success stories. They wanted to know: what separates companies that break out from companies that just grind along?
Their finding: The most successful companies didn't win by fighting competitors. They won by making competition irrelevant.
They created "blue oceans" - uncontested market space where they were the only option for customers who wanted what they offered.
The Classic Examples
Cirque du Soleil: Traditional circuses competed on more elephants, bigger tents, cheaper tickets. Cirque eliminated animals entirely, added artistic performance and music, and charged 10x the price. They weren't a better circus - they were the only one doing what they did.
Southwest Airlines: While other airlines competed on routes, food, and seating classes, Southwest eliminated assigned seating, meals, and hub connections. Instead, they offered fun culture, point-to-point routes, and frequent flights. Different customers. Different value.
Netflix (the early version): While Blockbuster competed on store locations and late fees, Netflix eliminated stores entirely and mailed DVDs. They weren't better at what Blockbuster did - they did something fundamentally different.
Notice the pattern? They didn't try to win the existing game. They changed the game.
The Four Actions Framework
Here's how you create a blue ocean. You ask four questions about every element in your industry:
- 1. ELIMINATE
What factors does your industry compete on that could be eliminated entirely?
These are often things everyone offers because "that's just how it's done" - but customers might not actually value them.
Examples: Cirque eliminated animals (expensive, ethically problematic, not unique). Southwest eliminated meals (people just want to get there). A successful salon I know eliminated walk-ins entirely (created scarcity and better scheduling).
Question for you: What do you offer because competitors do, not because customers truly value it?
- 2. REDUCE
What factors could be reduced well below industry standard?
Some things matter, but maybe not as much as the industry thinks.
Examples: Southwest reduced flight attendant count (smaller planes). Netflix reduced selection (focused on popular titles). A boutique consulting firm reduced face-to-face meetings (clients actually preferred email updates).
Question for you: Where are you over-delivering on things customers don't really need?
- 3. RAISE
What factors should be raised well above industry standard?
What do customers desperately want that the industry under-delivers on?
Examples: Cirque raised artistic quality (performers were athletes and artists). Southwest raised flight frequency (more convenient departures). A house cleaning service raised reliability (same cleaner every time, guaranteed).
Question for you: What pain points does your industry ignore that you could solve better than anyone?
- 4. CREATE
What factors could be created that the industry has never offered?
This is where real differentiation lives - offering something no one else even thinks to offer.
Examples: Cirque created storylines and themes (a narrative arc to the show). Southwest created fun (boarding announcements became entertainment). A financial advisor created visual retirement roadmaps (clients could see their future).
Question for you: What could you offer that would make customers say "I've never seen that before"?
The Strategy Canvas
There's a visual tool that makes this concrete. It's called a Strategy Canvas.
- 1. List the factors your industry competes on (price, quality, speed, selection, service, etc.)
- 2. Score your competitors on each factor (1-5 scale)
- 3. Score yourself on each factor
- 4. Plot it on a graph
If your line looks like everyone else's line, you're in a red ocean. You're competing. You're probably fighting on price.
A blue ocean strategy creates a different shaped line - low where competitors are high, high where competitors are low, and with factors that aren't on their canvas at all.
A Real Example (Simplified)
Let me tell you about a pizza shop owner I worked with.
Her competitors competed on: Low prices. Fast delivery. Large menu. Convenience.
She was doing the same thing, just trying to do it a little better. Margins were razor thin.
We did the four actions:
ELIMINATE: Large menu. She went from 40 options to 8. (Customers actually spent less time deciding, and she wasted less food.)
REDUCE: Delivery radius. She stopped delivering to distant areas where food arrived cold. (Customer satisfaction went up.)
RAISE: Ingredient quality. Way up. She could afford it because she eliminated menu waste.
CREATE: Monthly "pizza experience" events with local beer pairings. No one else was doing this.
Result? Higher prices, better margins, loyal customers, and no competition - because no one else in town was offering the same thing.
The Hard Part
Here's what I won't pretend: this is easy.
Blue ocean strategy requires you to stop doing some things you've always done. That feels risky.
It requires you to be different, not just better. That's uncomfortable.
And not every blue ocean attempt works. Some markets genuinely want what already exists.
But here's what I've learned in 20 years: grinding in red oceans is also hard. It's hard and it doesn't get easier over time - it gets harder as margins shrink.
Blue ocean strategy is hard once. Then you have something competitors can't easily copy.
Getting Started
You don't need to transform your entire business overnight.
Start with one product or service. Ask the four questions: What can we eliminate? What can we reduce? What can we raise? What can we create?
See what ideas emerge. Test one. Learn.
The goal isn't to find the perfect blue ocean on day one. It's to start thinking differently about competition - to stop asking "how do we beat them?" and start asking "how do we make them irrelevant?"
This is the final article in a series on strategic frameworks that actually work for small and medium businesses. If you found value in these frameworks, imagine having them applied to your specific business, with real-time data about your market and competitors.
About StratBear: We bring Fortune 500 strategic frameworks to businesses that don't have Fortune 500 budgets. Because everyone deserves access to the tools that actually work.