Sarah Barmak
corporate risk
The show is alive: the business strategy of Cirque du Soleil | Canadian Insurance

The show is alive: the business strategy of Cirque du Soleil

Up high in the air inside the Cirque du Soleil headquarters, trained staff step gingerly on taut metal wires. “Each cord can support 2,000 pounds,” says technical whiz David Charbonneau reassuringly, but numbers are little comfort. Standing up here is enough to make your stomach lurch—nothing but a grid of thin cables, spaced a fist’s width apart, lie between your feet and the polished concrete more than five storeys below.

“You have to make sure nothing is in your pockets,” says Charbonneau, Cirque’s chief of technical services for creative spaces. “If just a coin fell, it could really hurt someone.”

It is not the acrobats, however, who walk these wires, but the unseen riggers who operate the pulleys and ropes that hoist Cirque performers up into the air, swinging them high above the crowd. The wire lattice “floor” gives them a clear view of every complex move in the show. They practice here, in the hangar-like Studio A/B in the Cirque du Soleil International Headquarters in Montreal, a space big enough to accommodate the entire stage of the company’s trademark blue and yellow Grand Chapiteau. Performers run through each death-defying trick knowing everything will be exactly in the same place on opening night.

It’s here, in an out-of-the-way borough a 40-minute drive from downtown Montreal, that one of Canada’s greatest companies makes its magic. Before shows can be unveiled in front of audiences in Tokyo, Las Vegas and the Mayan Riviera, every gasp-inducing trick and routine is scripted and practiced in this sprawling complex, which president and CEO Daniel Lamarre calls Cirque’s “secret weapon.”

The company itself has rebounded since a couple of years ago, when some wondered whether Cirque’s days of world domination were numbered. Unchecked expansion and failed experiments, such as its 2009 vaudeville foray Banana Shpeel, resulted in poor reviews, early closures and falling profits. The horrific death of one of its aerialists on stage in June 2013—its first ever—marked a nadir for a company that values its people above all.

After 400 layoffs in January 2013 and some soul-searching, a leaner, more sober Cirque has emerged. In July, Guy Laliberté, the company co-founder who remained its majority shareholder, sold a reported 60 percent stake to U.S. private equity investor TPG Capital and 20 percent to Shanghai-based Fosun Capital Group. The move gives Cirque not just money, but new toeholds in Silicon Valley and the entertainment market in China, respectively. The last new touring show, 2014’s steampunk-inflected Kurios, has sold more than a million tickets to date, breaking sales records and winning the most enthusiastic reviews in years.

All that could be the prelude to its new arena show, scheduled for unveiling this December in Montreal. Toruk: The First Flight, based on James Cameron’s Avatar universe, will literally be huge— the first arena show to use almost the entire surface of a hockey rink rather than just one end. It will feature flying aliens and large-scale digital projections from the roof onto the set below. In this case, Cirque’s cavernous rehearsal spaces in Montreal were too small; Toruk had to rehearse partly on-site in Bossier City, Louisiana, where it will be showing previews.

For 31 years, Cirque du Soleil has been that unlikely thing: a Canadian company that takes genuine risks. Missteps or no, it remains a roughly billion-dollar business, selling 15 million tickets in 2014. In an age glutted with digital entertainment, Cirque enjoys an advantage—a live spectacle can’t be pirated. But each trick that bedazzles the crowd only heightens the pressure to keep innovating. “Show after show, the expectation is getting higher and higher,” says the short and barrel-chested Lamarre during a tour of the studio.

Cirque also works hard to maintain its je ne sais quoi. Just as a Pixar movie is always recognizable as Pixar, Cirque du Soleil must remain consistent in its otherworldliness, from the challenge of tossing blue aliens through the treetops in Toruk to the comedy and pathos of a clown chasing an elusive spotlight across the stage in the 13-year-old Varekai. “When the theatre door closes, when the tent doors are laced, we have to make sure the audience is transported to another place,” says Diane Quinn, senior vice-president of creative and artistic operations. “If we haven’t done that, we haven’t done our job. Even if it’s [a performer’s] 400th show that year, we still have to provide that freshness.”

Lamarre says his job is ultimately that: finding yet a new way to make the world say, “Oh my God, they got me again.”

Don’t touch the creative people

Cirque first toured outside of Canada in 1987, and kept expanding. Needing a central home and rehearsal space, it built its headquarters in 1997 then doubled its size in 2001 to bring its costume-makers under the same roof. The building is home to its creative studios (“the Studio” to staff)—a creativity factory where costumed clowns and acrobats walk the halls. Its workshops produce the 16,000 hats, wigs, shoes, costumes and props needed for its shows.

For several weeks this summer, the Studio’s 1,200 staff became accustomed to seeing performers from the new Avatar-themed show wander the halls wearing long, blue tails. Their coaches made the artists wear the appendages until they felt natural, a precaution to reduce the chance of becoming tangled in mid-air. The Studio is also where the company’s finance magicians and logistics wizards crunch numbers to ensure Cirque’s 18 concurrent shows around the world go on—on time and on budget. Because the clowns and the suits eat lunch in the same cafeteria, neither forgets the other exists—a dual emphasis that helps the company maintain the delicate balance between unbridled creativity and down-to-earth business sense.

The company employs about 4,000 staff, down from a high of 5,000 in 2009. Keeping the company under a single roof helps Cirque control once-ballooning costs as it performs market research for new shows. “People here understand that in order to have the luxury of creating the best shows, we need to do it in a financial environment that makes sense,” says Lamarre. While the sale this year touched off concerns about Quebec losing the brand—and calls from politicians to keep ownership in the province—Lamarre says the Studio isn’t going anywhere. The area isn’t expensive, and Cirque benefits from Montreal’s unique creative economy. Moreover, the new owners are private equity groups, not Disney. They have no interest in messing with Cirque’s vision. “One thing I said to the new owners of this organization: We don’t touch the creative and the production people,” says Lamarre. “They’re the people who are going to continue to make us successful.”

In his third-floor office, above the worker elves who are making sure a squillion things are just so, Daniel Lamarre has just returned from a week touring China. Recent panic about the country’s flagging economy hasn’t fazed him. The country has a moneyed middle class of some 300 million, he says, and it’s a more fertile place for entertainment than it was in 2012, when Cirque prematurely closed its show Zaia in Macau.

“What I’m hearing now in China is that live entertainment is going to become in two or three years what the movie business has become [there],” says Lamarre. Cirque has chosen Hangzhou, with its reputation as a cultural hub, as the site of a new theatre and its first permanent Chinese show. “When you visit a ‘second-tier city,’ as they call it, it’s three times the size of Montreal….I would be disappointed if, in five years, I don’t have three more permanent shows in China.” He believes there are about 10 Chinese cities where Cirque could tour, adding an additional year of touring to all his productions. He says all this will help raise operating earnings to $350 million a year by 2019, which would be double what it was in 2014.

Fosun, which bought a minority stake, will provide deeper access to Chinese hotels, real estate and lifestyle partners. Cirque will work to incorporate local cultural angles to its shows, an effort that will involve far more than translating dialogue into Chinese. Yet with nearly 20 percent of Cirque’s artists already hailing from China, Lamarre doesn’t see it as a foreign culture.

Whatever new voice the company finds will be deeply inflected with a French-Canadian accent. Quebec businessman Mitch Garber is chair of Cirque’s new board of directors. Another board member is Christian Dubé of the pension-fund manager Caisse de dépôt et placement du Québec, which bought a 10 percent share of Cirque. Small stakes from TPG’s share were acquired by 21 Cirque executives, including Lamarre—a strategy, he says, designed to make sure everyone’s interests align.

A former TV exec, Lamarre joined Cirque in 2000 as its president and chief operating officer before becoming CEO. He represents the business side of Cirque, the left brain that balances its right brain. Laliberté still serves as the creative lobe, retaining not only 10 percent of the company but also an advisory role. Alongside him is the flamboyant Jean-François Bouchard, Cirque’s rising creative guru. Known at the company for his keen visual intelligence, teenage excitement about new ideas and taste in shoes, Bouchard has attracted a new coterie of young staff over the past three years.

How will Cirque maintain its high-wire balance between creative freedom and profit under foreign ownership? “The famous line from Guy was, ‘We’re a private company. That gives us the freedom to grow, as we didn’t have pressure to make quarterly earnings.’ I think that’s kind of gone now,” says Robert David, professor of strategic management at McGill, who has followed the company from its early days. “They’ve got hard-nosed investors who are going to want a return.” The company will still enjoy geographic growth, he says, but it won’t be driven by wild product innovation of the sort seen in O, its underwater show—it will be driven by exporting and tweaking existing ideas.

Yet Cirque has always used existing ideas, says Benoit Mathieu, vice-president of costumes and creative spaces. Like Apple, it borrows and improves. Cirque didn’t invent the famed Wheel of Death, which shocked audiences in Kooza, he says—but it was hung from wires rather than anchored to the ground, making it look more dangerous.

Down in Studio E, Elizabeth Ann Williams, a 25-year-old acrobat, grips a pair of aerial rings, presses up and rotates seamlessly into a handstand. Two weeks ago, she had never even touched the rings. Now, she’s spending an hour and a half a day training to replace someone on the touring show Totem, which is currently halfway around the world in Australia. She’ll be there in two weeks, and she’ll be ready. Cirque will make sure of it. It’s also updating her role to spotlight her dance talents.

That’s one of the mottos at Cirque: “The show is alive.” New artists are expected to not just fill old roles—but to leave their fingerprints on them.

In a third-floor boardroom wallpapered with drawings, a model of a stage sits in the corner, a huge sun-like circle in the centre. It’s Cirque’s new big top show for 2016, its name still under wraps. Whether it will break box office records, no one knows. But like everything else about Cirque du Soleil, it’s going to evolve.

A longer version of this article originally appeared in Canadian Business Fall 2015 issue.