Brand Blue-After early success Blue Man Group could have cashed in (think Disney rides and blue cola). Instead, it found a way to grow without selling its soul.

When Chris Wink talks about the challenges facing his organization, he doesn’t quote from Who Moved My Cheese? but rather from the Detroit rock duo the White Stripes. He points to the song "Little Room," whose lyrics run in full: "Well, you’re in your little room, and you’re working on something good. But if it’s really good, you’re gonna need a bigger room. And when you’re in the bigger room, you might not know what to do. You might have to think of how you got started, sitting in your little room."

FORTUNE SMALL BUSINESS

By Rob Walker

Sometimes the best management ideas are found in the unlikeliest places, and that lesson comes up often in the business that Wink and partners Matt Goldman and Phil Stanton founded in 1988, Blue Man Group. Aside from their appearance in some Intel ads, you might not know what Blue Man Group is, but plenty of people do: Its unique style of performance art is now permanently established in four U.S. cities, its first CD just went gold, and it’s about to release a second this spring. The three founders manage more than 500 employees, and while they politely decline to give any financials, Blue Man Group performers put on 38 shows a week for more than 20,000 people paying $43 to $88 a ticket. So by one rough estimate, if every show sells out, that’s about $1.4 million in revenue every week from the performances alone.

Big Blue World
There are now 38 Blue Man Group performers (thousands more have tried out), which has allowed the three founders to expand their show into a mini-empire. Here’s what it looks like.

Performances

The group has permanent shows in four locations–New York, Boston, Chicago, and Las Vegas–with more than 20,000 tickets sold in a given week. International cities like London, Berlin, and Tokyo are now being scouted.

Albums

Its first CD, Audio, released in 1999, was nominated for a Grammy and sold 500,000 copies. The second, The Complex, is due this April and features performances by Dave Matthews and Dan the Automator, among others.

Tours

After performing with Moby’s Area2 music tour last summer, Blue Man is now finalizing plans to launch its own tour this spring, with new material. Dates are tentatively scheduled for 35 cities throughout the U.S.

For the benefit of those who haven’t seen a Blue Man show, this might be time for a primer. It’s nothing like traditional theater. There’s no obvious plot. The three performers are slathered in brilliant blue greasepaint and never speak. Instead they do things like twirl a canvas while spitting paint on it, creating a small work of art. Sometimes they play music by drumming on homemade instruments built from PVC pipe. They make rhythmic noises by chomping on Cap’n Crunch cereal, and in a bit involving Twinkies they split one in half with a jigsaw. It’s hard to describe, but the most important thing is this–it’s fun.

Of course, if you are familiar with Blue Man, you might be puzzled to be reading about it here. As entertaining as the shows are, why would a business magazine care? In fact, Blue Man is a powerful case study in how to grow a brand without losing focus. We’ve all heard stories about companies that start off like a rocket–then crash and burn because they didn’t stay in control of their original vision. Fifteen years after bursting onto the cultural scene, Blue Man has managed to avoid that fate, largely by making smart choices and turning down opportunities that a lot of entrepreneurs might have jumped at.

To hear exactly how they did it, I came to New York City to meet Wink, Stanton, and Goldman. Not surprisingly, they don’t use words like "branding," but while we talk, it becomes clear that they’ve thought a lot about how to define their enterprise, stretch it, and reach a larger audience without losing the things that made Blue Man Group special when they were starting out, a problem any growing business deals with. Nobody mentions Tom Peters or Peter Drucker, but at times they do cite Penn & Teller and Francis Ford Coppola. It is pretty much what I’d hoped for.

Like the founders of Hewlett-Packard, who started a company without any idea of what they would make, the creators of Blue Man Group began by tinkering. Instead of a garage, they shared a Manhattan apartment with no furniture. All three were in their mid-20s. Wink and Stanton worked for a catering company, and Goldman, Wink’s childhood friend, was a software designer. In 1988 they put on bald wigs, painted themselves blue, and held a "funeral for the ’80s." With friends (also blue) they carried a coffin of objects representing the worst aspects of the decade–such as a yuppie effigy and a Rambo doll–into New York City’s Central Park and burned them in a barrel. MTV recorded the event for posterity. They’ve never quite known how to answer the oft-asked question "Why blue?" but it seemed to work. Soon after, with a notable lack of formal training in music or acting, the trio started staging small performances. Just three years later they had an off-Broadway hit called Tubes and were spitting paint on The Tonight Show and Live! With Regis & Kathie Lee.

Their first real breakthrough didn’t come until several years later, when they belatedly saw the wisdom of advice they received from noted business philosopher Penn Jilette, half of the irreverent Penn & Teller comedy-magic duo.

"He saw the show in, like, the first month," says Goldman, who has a recurring grin that suggests he just got away with something. Jilette is a big man, and to recreate the moment, Goldman stands and looms over me, waving his hands. "He said, ‘Oh, my God! You guys can do what Teller and I can never do! You can clone yourselves!’ And we said, ‘No, you don’t get it, we’re more like a band.’ I actually thought he was, like …" he searches momentarily and finally settles on, "a wackhead."

So they continued on, three friends, doing their show. Six days a week, three years without a break, more than 1,200 consecutive performances. There was one understudy, to satisfy the group’s financial backers, but while he’d studied the show, he never so much as rehearsed it. The three began to feel like prisoners of their success. They weren’t creating new material, just performing Tubes over and over. Finally Stanton cut his hand one day while fooling around with a router. The understudy stepped in–and it worked.

"It was a catalytic event," Goldman says. Blue Man Group wasn’t a cult of personality. The founders could oversee the show without necessarily being in the show. That allowed them to take time off at last, but, more important, it gave them time to think about how to expand on what they’d started.

All along they’d had opportunities. After their initial success they were offered product endorsements and a bigger theater on Broadway. Disney talked of not just a movie but a related theme ride. Wink, Stanton, and Goldman rejected almost all of it. There was a conscious effort, they say, not to grab the quick payoff and risk becoming the next Cats. As Goldman puts it, they knew they wanted to create with the Blue Man character over decades, and they also knew that a steep growth curve–he holds his arm at about an 80-degree angle–"can come down on this kind of slope"–he tilts his arm so that it looks like an Enron stock chart.

Instead, they decided in 1995 to start a second show in Boston. The early rehearsals were fine, but the production ran into problems soon after opening. Wink, Stanton, and Goldman were alternating with new Blue Man performers, shuttling between New York and Boston, and the more they stepped away, the more flaws they noticed. The music, for example, had never been formally scored–it was only discussed in terms of the emotion it was supposed to evoke. One tune, "Tension Song," was meant to convey fright, but the founders discovered that "tension" can mean different things to different musicians, especially when there’s no sheet music to refer to. Trying to solve all the problems, they found themselves in another prison: the prison of meetings.

So they did what a lot of businesses never get around to–they wrote a detailed, 132-page operating manual. Based on notes taken over a year, the document came into being when the three founders locked themselves in an apartment with one of their creative directors, Michael Quinn, and a tape recorder. The journal is an edited transcript of the tapes they made.

Basically, it tells the story of the show step by step, but from the point of view of the Blue Men. Some explanations are straightforward–"The Blue Men are not aliens"–and others are more subtle, with references to everything from Being There to George Bernard Shaw to the caves of Lascaux. It’s a nontraditional set of instructions, but writing it down forced the founders to articulate ideas that had always simply been understood among them. It also taught them not just about their brand but also about a basic concept of management. Goldman cites Francis Ford Coppola’s theory that what makes the difference between a good movie and a bad movie is getting everyone involved to make the same movie.

These days Blue Man regularly holds open calls in cities across North America, and over the years thousands of people have auditioned to join a club that currently has just 38 members (counting the original three). Certain physical attributes are important, such as height and build, but other than that it’s wide open. One of the current Blue Men is African American, and for a few years there was a Blue Man in Boston who was actually a woman. The most important factor is not just memorizing a set of movements but truly understanding the character, which was only defined and recorded during the period when the manual was born. Looking back, Goldman says, "Everything in our project lives either before that moment or after that moment."

In 1997 they launched a third show in Chicago, which opened without the problems they had encountered in Boston. And it was at this point that the three finally started thinking about marketing. Early on, Blue Man ran almost no ads. Its philosophy was to create great shows and hope word would spread. (A few television appearances helped–Blue Man is a favorite of Jay Leno’s, and the founders have appeared on The Tonight Show 11 times.) But with their shows now running more independently, the founders could afford to look outward. They started slow, running a few clever print spots to help promote the Chicago show, but their most aggressive foray into advertising was actually in someone else’s ads–Intel’s.

They had turned down offers to tout credit cards, soft drinks, breath mints, a line of paints–almost any campaign that relied on the color blue–and they did the same when Intel first came calling. "We weren’t like, ‘Oh, we want to do it, but let’s negotiate,’ " Goldman emphasizes. "We said, ‘No, we don’t want to do it.’ They said, ‘What would it take?’ "

That gave them pause.

They thought it over and went back to Intel with some key terms. First, the ads had to say "Blue Man Group," and the three founders had to be actively involved, working with the ad agency on ideas and committing only after the storyboards were approved. (Of the seven commercials that eventually aired, five were based on ideas that originated with Blue Man Group; none of the ad agency’s original ideas made the cut.)

Two series of TV spots were produced, each a clever 23-second skit in which the Blue Men interacted with an Intel logo. In one spot a Blue Man covers himself in paint and slides down a wall to create the third stripe in the Pentium III logo. They come across as ads almost as much for Blue Man as for the chipmaker.

It’s worth noting that the three founders have not only managed their growth better than most creative groups, but they’ve managed it better than most businesses of any kind. "We’re not like a lot of arts organizations," Stanton says. "What takes place while you’re gone is just as important as what’s on stage–the management of it, the business of it. It’s not like we were …"

Wink jumps in, "crazy artists, with some manager taking care of us …"

"And then later we realized, ‘Oh, we better get into this business thing,’ " Stanton resumes.

Blue Man Group definitely operates in a "bigger room" these days, yet the founders make a concerted effort to stay in touch with their original, little-room vision. All decisions are still made by unanimous agreement. (In fact, they still share a single office.) And they know that every step toward a larger audience brings with it the problem of potential overexposure. While they’re a long way from Disney-level ubiquity, there’s no question that Blue Man’s core audience has always liked the show’s nonmainstream status.

Wink compares the struggle not to betray their vision to that of a recovering alcoholic who at any moment could make one wrong move and wreck years of careful discipline. The trick is to avoid the safe path of repeating themselves–but without straying too far and losing focus. It’s the same "Preserve the Core/Stimulate Progress" yin-yang that James B. Collins and Jerry I. Porras describe in Built to Last.

For example, the group is putting out its second CD this spring, The Complex, which features actual lyrics–a pretty big departure for the until-now silent Blue Man. It could put off some purists among the group’s fans, but with singing by artists like Dave Matthews and others, it’s also likely to attract new ones. Some of the material on that CD will be the centerpiece of the first-ever Blue Man tour, scheduled to start winding through 35 cities this April.

The founders still occasionally put the blue paint on–they’ll do their 12th Tonight Show appearance that same month–but they won’t be performing in the tour. Instead, it will feature a rotating set of senior Blue Men, as well as a lot of video elements and what Wink calls "flying jellyfish." And the group is carefully exploring new shows in Berlin, London, and Tokyo.

With each new project, though, they confront the same decisions they’ve faced since the beginning. As Wink says, "We’re gonna have to go through each idea and say, ‘Okay, that’s all good and well, that’s a nice thought–but is it Blue Man?’ "

http://www.fortune.com/fortune/smallbusiness/articles/0,15114,426909,00.html