When Black Swan Meets Blue Ocean
In the first few months of the Covid lockdowns of 2020, news came of two great companies filing for bankruptcy. Both were global brands, very familiar, yet aspirational. Both were examples of the Blue Ocean strategy.
First, a company that achieved success in an unlikely category: circus. Cirque du Soleil created a unique position in an industry that was in decline. Combining the best of both worlds of a circus and the opera, Cirque grew into a profitable global brand.
Second, a 200-year old business that reinvented its category several times with innovative products. Brooks Brothers started out as a tailoring company but came to be known for its sharp suits that have been preferred by Presidents and investment bankers alike.
Even though the two brands belong to completely different sectors, what has hit them is the strengthening of the Isolation Economy due to the pandemic.
Businessmen, politicians and others have been moving away from formal dressing to more casual attire for years. But, the sudden enforcement of work-from-home has caused us to completely change our views about being dressed up. Even if we have dress formally, we have limited it to the upper body – since that’s what is visible in a video meeting!
Similarly, outdoor entertainment has been under pressure from personalised content streamed right into our palms for a few years. The lockdown just shifted the bar to 100%. Not only are we able to choose from multiple varieties of entertainment, we can even be immersed in augmented/virtual/social experiences.
It is not that we will not ever dress formally or visit live shows again; it is just that the frequency will be lower than what it was before. And businesses that have been built on scale economics, have to reinvent and/or restructure themselves. The bankruptcy filings by Cirque and Brooks appear to be an attempt at the latter.
Think about product categories or brands that we frequently used prior to the lockdown but haven’t connected for several months during the lockdowns. They face the same risk of behaviour change that fatally hit Cirque du Soleil and Brooks Brothers. A Black Swan hitting Blue Ocean strategies.
In my case, it wasĀ Watches, Hotels, Airlines, Formal Clothes/Shoes, Bags, Taxis, Cinema, Shopping Malls, etc. that saw almost zero use by me. Which of these would see quick recovery and which would continue to face “demand zero”? And what can these companies do to reinvent themselves, before they are forced to restructure?
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FAQ SECTION
1. What is Blue Ocean strategy, and how did Cirque du Soleil exemplify it?
Blue Ocean strategy is about creating uncontested market space rather than competing head-on in existing markets ā Cirque du Soleil did this by combining elements of circus and opera into a unique, profitable global brand within a declining circus industry.
2. Why did Cirque du Soleil and Brooks Brothers both file for bankruptcy despite being successful Blue Ocean examples?
Both were hit by the pandemic-driven “Isolation Economy” ā Brooks Brothers by the collapse of formal dressing demand under work-from-home, and Cirque by the near-total suspension of live, in-person entertainment.
3. What does the article mean by “Black Swan meets Blue Ocean”?
It refers to how an unpredictable, high-impact event (a Black Swan, like the pandemic) can undermine even brands built on genuinely differentiated, uncontested market strategies (Blue Ocean) that had previously seemed durable.
4. Why did formal clothing brands see reduced demand even before the pandemic?
Business and political culture had already been shifting toward casual attire for years; the pandemic’s shift to video meetings ā where only the upper body is visible ā accelerated and normalized this trend further.
5. What product categories did the author personally identify as being at risk of the same “demand zero” fate?
Watches, hotels, airlines, formal clothes/shoes, bags, taxis, cinema, and shopping malls ā categories the author says saw almost zero personal use during the pandemic lockdowns.
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