Over the holiday break, I took my family to see The Greatest Showman.   The movie, which chronicles American showman P. T. Barnum's rise as a creator of the modern circus, was excellent.  One of my adult kids felt it was one of the best movies he’d seen in a while.

Barnum innovated bringing those with extraordinary abilities together, such as acrobats and trapeze artists, to wow those in attendance and keep drawing more interest in the circus.

Another circus that has also innovated and continues to draw in huge crowds is Cirque du Soleil. Cirque used the “Blue Ocean Strategy” to put a wide gap between them and other circuses that are adrift in the red ocean. Thanks to this strategy, Cirque shows have been seen by more than 150 million people in 300 cities worldwide. In fact, Cirque achieved revenues that took both Ringling Bros. and Barnum & Bailey more than 100 years to attain.

Blue Ocean Strategy is a marketing theory from a book by the same name that was written by W. Chan Kim and Renée Mauborgne, professors at INSEAD, a leading international business school.  Kim and Mauborgne argue that companies can succeed by creating "blue oceans" of uncontested market space, as opposed to "red oceans" where competitors fight for dominance, the analogy being that an ocean full of vicious competition turns red with blood.

Blue Ocean-type strategic moves create a leap in value for the company, its buyers and its employees while unlocking new demand and making the competition irrelevant.

Using the Blue Ocean Strategy, Cirque du Soleil bucked the traditional standard of animals in the circus, saving millions on overhead and upkeep of the animals. Instead, it focused solely on acrobatics in a big tent. However, Cirque didn't stay solely in tents.

Cirque established tours not only in North America, but in Europe and Asia as well. Permanent shows were created in key locations, including several in my hometown of Las Vegas.

A one-time accordion player, stilt‐walker, and fire‐eater,  Cirque de Soleil’s CEO Guy Labiberte achieved in a few short years revenue levels that the global champions of the circus industry (Ringling Bros and Barnum & Bailey) had taken
hundreds of years to create.  In 2015, Labiberte sold his majority stake in the company at a valuation reported to be $1.5 billion.

What made Cirque’s rapid growth and value creation remarkable was that it was achieved in a declining industry, something traditional strategic analysis would have indicated was an unattractive, unprofitable and unsustainable opportunity.

Blue Ocean strategy is fundamentally a shift in mindset. It involves “expanding mental horizons and shifting understanding of where opportunity lies.”  It is basically thinking and executing outside the box.

Too often I see management companies and owners doing the same thing they’ve always done but hoping for a different, much better result.

Do you want to make your competition irrelevant?  Do you want to disrupt your market?

Consider Blue Ocean Strategy.

The book offers a process for creating opportunities and shows how a Blue Ocean initiative can be successfully implemented in even the most bureaucratic organization that is trapped in a bloody Red Ocean. The steps are:

1. Constructing the right team for the initiative.
2. Getting clear about the current state of the organization.
3. Uncovering the tenants’ hidden pain points that limit the market and discovering an ocean of non-customers.
4. Systematically reconstructing market boundaries and developing alternative Blue Ocean opportunities.
5. Identifying the disruptive innovation when it’s coming and harvesting the opportunity quickly, conducting rapid market tests, finalizing and launching the shift.

Multifamily owners and management firms should try implementing this process to develop some radically new ideas.

Disruptive innovations radically change any market. We’ve seen it often in the last decade. Businesses that have traditionally dominated the market need to adapt, and many new businesses have the opportunity to develop, grow and prosper as a consequence of the disruptive innovation. Identifying these opportunities and jumping at them is the key.

Now, apartment owners have their own opportunity to develop a Blue Ocean Strategy for the next five to 10 years. Several new ideas and systems are being created to disrupt the standard apartment system in use today.

Take, for instance, the Alexan Uptown collaboration. The collaboration used the Prescient steel system, instead of a normal wood-frame construction, to increase the height of the complex to 12 stories instead of the normal five-story building.

Besides building taller buildings, the Prescient system can also shave time off of both the construction schedule and off costs.

With a special focus on college students and the elderly, Nelson Brothers Property Management was recently ranked 129 in the 2017 Inc 500 with 3,111% sales growth in the past three years. Since its inception in 2007, Nelson Brothers has acquired and managed over $550 million in assets with 35 student housing properties and three assisted living properties across 14 states. It focuses on growth opportunities and value-added investments for its clients through capital improvements, cost efficiency and revenue maximization.

Another case to look at is a zero net energy multifamily development in Los Angeles. The Silver Star Apartments has a Solar Photovoltaic system that covers roofs and vertical portions of the buildings. The 49-unit building complex converts enough solar energy to offset 105 percent of all site energy use.

Ascent Multifamily Accounting is creating its own Blue Ocean strategy with accounting services tailored specifically to the multifamily industry. Its management has an average of 20 years’ experience in multifamily accounting and it is helping its clients become more efficient and profitable than they have ever been.

Ascent helps multifamily organizations streamline their operations as well has have greater flexibility by allowing them to outsource their back office.

By creating your own successful Blue Ocean Strategy, you can be at the forefront of your industry and create incredible value, instead of trying to keep up with the market.

Call me to discuss opportunities to create your own Blue Ocean strategy and set yourself apart from your competitors.  We’ve provided consulting services to real estate companies for more than two decades.

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