?What is a Value Curve – and why should you care
Imagine every company in your industry running the same race, at the same pace, on the same track. That’s a bloody red ocean. Nobody stands out, everyone competes on price, and margins shrink.
A value curve is simply a diagram that shows how much a business invests in the key competitive factors of its industry. For hotels, those factors might be price, location, décor, amenities, dining, etc.
?The problem
When every competitor’s value curve looks almost identical, nobody has a distinctive advantage. The only way to “win” is to cut prices and spend more on advertising.
?The solution
Build a new value curve.
Change the shape of the graph: drastically reduce some factors, raise others far above the industry standard, eliminate some entirely, and – most importantly – create entirely new factors that the industry has never offered.
This is how you open up a blue ocean – a market space with no competition.
The classic example: Cirque du Soleil
- Eliminated: animals, star performers
- Reduced: kid-only humor, multiple shows per day
- Raised: artistic quality, theatrical atmosphere, live music
- Created: storyline, symbolic aesthetics, a whole new genre
Result? A completely different value curve. Cirque du Soleil didn’t just compete with other circuses – it created a space where the customers of theater and opera became circus-goers, too.
“Next time we talk about the Eliminate – Reduce – Raise – Create grid, remember: you’re not just playing with business model features. You’re deliberately drawing a new value curve that makes the competition irrelevant.”