Take a moment to think back to your childhood. If we say the word “circus,” what comes to mind? For most people, it’s a vision of elephants, clowns, and acrobats; sawdust on the floor; and vendors hawking cotton candy and popcorn during the show. If you love the circus and want to create a company to compete in that space, Ringling Bros. is pretty stiff competition — it’s the 800-pound gorilla in the market!

But what if you strategized that the competition isn’t important — that there must be some space out there in which Ringling Bros. doesn’t compete. In other words, you want to find customers it doesn’t serve — a clear blue ocean of “uncontested market space.”

That’s exactly what the founders of Cirque du Soleil did when they invented a new art form that combines the best elements of the circus with an upscale theatrical experience. Guy Laliberté is the CEO and mastermind behind Cirque du Soleil, one of Canada’s biggest successes. The company began in 1984 when a group of street performers decided that they could play on a bigger stage. As they scanned the landscape, it didn’t seem like a very auspicious time to start a new circus act because the circus business was definitely in decline as other forms of entertainment took over. But Laliberté wasn’t going to start a traditional circus; he strategized that he could capture not only those people who enjoy the circus in its traditional form, but also those that seek a more cultured and sophisticated experience. According to Kim and Mauborgne, who wrote Blue Ocean Strategy, what the creator of Cirque du Soleil did was capture new customers and offer them new value in the form of more sophisticated entertainment. But that isn’t all he did. He also determined that to achieve the company’s big goal of becoming the circus for the 21st century, it needed a strategy that emphasized efficiency and speed. It also required tactics that would enable the company to streamline its costs, thereby producing bigger profits it could plow back into the company to facilitate rapid growth.

You may think that CEOs similar to Laliberté are the norm, because what he wanted to do makes perfect sense, but they’re not. In fact, their way of strategically thinking about the market definitely is in the minority. Why? Because most CEOs focus on the competition — they’re so concerned with beating the competition that they miss opportunities to actually render the competition irrelevant. Today’s companies need to think in terms of blue ocean strategy and do five important things:

1. Look for uncontested market space.

2. Ignore the competition — concentrate on making them irrelevant.

3. Create new value for customers.

4. Shatter the value/cost tradeoff.

5. Define a strategy that focuses the company on differentiation and low cost.