By Barb Kachelski, CAE
Introducing a successful new product or service requires both innovation and strategy. Bruno Cassiman explained how the two can be connected by taking my DLI II class through a case study of Cirque du Soleil, an entertainment empire derived by turning the ages-old concept of a circus on its head.
Cassiman, an associate professor of economics and strategy at DLI II host IESE Business School at the University of Navarra in Barcelona, Spain, noted that the entertainment giant started small and consciously decided what to keep, add and subtract. Cirque du Soleil leaders, he said, focused on a two-part strategy of "differential value creation" and cost reduction.
To differentiate itself and create value for customers, the company did four main things:
- Traditional circuses target children, while Cirque du Soleil focuses on adults, competing against theater and opera rather than children's venues. This new, more profitable pool of customers allows for higher ticket prices.
- Cirque du Soleil has no head-to-head competition, providing differentiation and, again, allowing it to charge a higher price
- One traditional circus looks much like others, and they do not change the look of their shows significantly. Cirque due Soleil features multiple productions, resulting in more visits per customer to bring higher volumes.
- Overall, the leap in value pulls new customers to Cirque du Soleil performances. Customers who have never been to theater or opera are attracted to see a "cirque" show.
To cut costs, the company did these three things:
- Traditional circuses feature star performers and high-cost animal acts. Cirque du Soleil eliminated these high costs. (Elimination of the animal acts also appealed to attendees who found them cruel or dirty.)
- Cirque releases roughly one new show per year, while continuing to run older shows. This yearly production schedule allows faster coverage of cirque's high fixed costs.
- Cirque du Soleil consciously leveraged untapped value by replacing star performers with a lower cost talent pool, gymnasts and performers from Russia, China, and Latin America.
To bring this model back to credit unions, DLI II participants mapped their institutions' value curves, answering four questions to aid them in strategic positioning and innovation:
- What dimensions do you compete on?
- What do customers value?
- What do customers not value?
- What do/could credit unions keep, eliminate, create?
Cassiman encouraged attendees to graph the value curve of their credit union relative to its competitors or alternatives. The graph is created by listing value factors on the Y axis (such as convenience, auto loans, best price) and listing a low to high value level of the credit union relative to its competitors or alternatives on the X axis. The curve can be used in positioning, identifying what type of members credit union leaders should target based on their CU's particular value proposition.
Barb Kachelski, CAE, is SVP/chief information officer for CUES and a former newspaper reporter.
Read more insights from DLI II in this Skybox post and this article.
