Send in the Clowns - Value Innovation in the Stagnant Circus Industry

In 1984, a small band of Canadian street performers set out to breathe life back into the tired circus industry. In creating Cirque de Soleil, a unique amalgam of circus, opera, theater, and spectacle, founders Guy Laliberté and Daniel Gauthier turned what used to be traditional circus shows for kids into unconventional entertainment, primarily targeted to adults. Matt Williamson, Professors Chan Kim, Renée Mauborgne, and Ben Bensaou, explore how this troupe went about creating a new market space, a strategy that has proven highly successful and hugely profitable.

by Ben Bensaou,Chan Kim,Renée Mauborgne
Last Updated: 23 Jul 2013

In 1768, Englishman Philip Astley stumbled upon a clever idea. He set up a ring, trained a few horses and sold tickets to an equestrian act. His idea caught on and the modern-day circus was born. Soon after, famous names like P. T. Barnum, George Bailey and the Ringling Brothers expanded on the idea, bringing clowns, acrobats, jugglers, and animal tricks to small towns across America. But the Great Depression and World War II combined to knock the air out of the once thriving circus industry, which hobbled along until 1984, when two clever Canadians succeeded in seeing something others couldn’t.

Their story is brought to us by Matt Williamson, INSEAD MBA 2000, under the supervision of INSEAD’s W. Chan Kim, The Boston Consulting Group Bruce D. Henderson Chaired Professor of International Management, Renée Mauborgne, INSEAD Distinguished Fellow and Affiliate Professor of Strategy and Management, and Ben Bensaou, Professor of Technology Management and Asian Business.

In Part A of the case we take a historical spin through the milestones of the circus industry, from its glory days in 1919, when Ringling Brothers and Barnum & Bailey Circus had a staff of 1,200 and commanded a train of 100 rail cars, to the debilitating effects of the Great Depression and World War II. Along the way, changing social interests, competition from television and film, and urban sprawl all do their part to change the face of the circus industry.

Part B takes us into the world of Cirque de Soleil, where founders Guy Laliberté and Daniel Gauthier replace the slap-stick comedy of floppy-shoed clowns and animal acts with the sophistication found in alternate industries, such as theatre and opera, to offer a tantalizing new experience featuring wild costumes, surreal lighting and original music.

In doing so, the duo redefined the traditional circus audience, adjusting prices accordingly. The show “O”, for example, which has been running in Las Vegas for years, continues to be one of the hardest ticket to find, despite its US $110 per seat price tag. Indeed, both the permanent shows in places such as Las Vegas and Disney World, as well as the touring shows, are moneymakers.

The case also outlines Cirque’s attempts to extend the brand through films and documentaries, and to explore new revenue streams, such as corporate sponsorship. This set of cases may be used in an MBA strategy course (emphasizing the concepts of Value Innovation and Creating New Market Space) or in executive education programs.

INSEAD 2002

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