Do you want to stand out in your industry? The strategy canvas is a helpful tool for visualizing your company’s strategy and finding areas to improve. It can help you understand the current state of your business and make informed decisions for growth and success.

In this article, we will explore how to use the strategy canvas to enhance your business strategy and reach your goals.

Understanding the Strategy Canvas

Difference between Blue Ocean and Red Ocean

In a Blue Ocean strategy, companies aim to create new market spaces and make competition irrelevant. They focus on innovation and generating new demand. On the other hand, in a Red Ocean strategy, companies compete in existing market spaces and strive to outperform rivals by offering current products.

In a Blue Ocean strategy, the competitive landscape offers ample room for growth and expansion. It is characterized by wide, open spaces. In contrast, a Red Ocean strategy is marked by intense competition, crowded businesses, and limited growth opportunities.

Value innovation is crucial in a Blue Ocean strategy, allowing companies to stand out from the competition and provide unique value to customers. In a Red Ocean strategy, value innovation often revolves around incremental enhancements, price rivalry, and the pursuit of competitive advantage within an established market space.

What a Strategy Canvas Does

A strategy canvas helps understand competition by graphically capturing an organization’s current strategy and its competitors. The canvas shows key elements such as competition factors, buyer offerings, and cost structures. It tells a story by displaying where the organization and its competitors are investing, industry factors being competed on, and what customers receive. It helps visualize differentiation and competitive advantage.

The canvas has horizontal and vertical axes. The horizontal axis shows competitive factors like price, while the vertical axis shows buyer offerings. By plotting these, the canvas helps understand each player’s strategy.

It can identify competitive advantage and differentiation by showcasing offerings across key factors. By connecting these offerings, the canvas highlights where the organization stands compared to competitors, providing insights into potential advantages.

Why Use a Strategy Canvas

Using a strategy canvas has many benefits. It gives a clear picture of an organization’s current strategy and its future prospects in a single visual representation.

A strategy canvas also communicates key elements of a strategy, such as competition factors, offering levels, and an organization’s and its competitors’ strategic profiles and cost structures.

It helps understand competitive positioning by showing how an organization configures its offering in relation to its competitors, allowing insight into where investments are occurring.

It also identifies areas of differentiation in the market by visually representing the product, service, and delivery factors the industry is competing on, informing users what customers receive from existing competitive offerings.

Drawing a strategy canvas allows users to plot their offering against that of an industry leader or a strong competitor, resulting in a comprehensive understanding of strategic profiles and value curves.

Setting Up Your Strategy Canvas

Know Who You’re Up Against

To gain an edge, you need to understand your main competitors and how they stand out in your industry. The Strategy Canvas app’s tools help businesses compare their strengths and weaknesses to those of their competitors, identifying unmet customer needs. Using a 5-point scale, the app visualizes competition factors and offering levels, helping businesses take specific actions to differentiate their strategy.

For example, if a competitor excels in an area that customers value, a business can focus on improving its offerings in that area. Analyzing competitors’ strategies can reveal insights that drive innovation and set companies apart in the industry.

Figure Out What You’re Competing On

In the Strategy Canvas Application, it’s important to identify the key areas of competition in an industry to stand out from competitors.

Users can use the application to pinpoint these factors and understand how their company compares to others.

Factors like price, customer service, innovation, and product quality are important to consider.

After comparing these factors to competitors, users can see where their company excels and where it may lag behind.

This helps in developing differentiation strategies with clear advantages.

The application provides a strategic profile that helps companies make informed decisions and create successful strategies for the future.

How Well Do Your Rivals Do

The Strategy Canvas Application helps businesses compare their performance with rivals. It lists competing factors on the horizontal axis and plots offering levels on the vertical axis. This visual representation makes it easy for businesses to analyze their performance.

For example, if a rival offers higher levels of a key factor at an attractive price, businesses can see areas for improvement. Sharing the strategy canvases with the team via email or social media allows for discussion on specific areas of improvement. This helps businesses formulate their To-Be strategy by considering their rivals’ strengths and taking necessary steps to enhance their own performance in those areas.

Draw a Line for Each Part You Compete On

When setting up your strategy canvas, it’s important to identify key factors that your industry competes on. Then, rate the relative offering level of each factor using a 5-point scale. Plot a relatively low offering level lower on the vertical axis and a relatively high offering level higher.

The strategy canvas within the app makes it easy to list key competition factors and calculate offering levels. Drawing a line for each part you compete on is significant. It helps you gain keen insight into your industry’s strategic profile and value curve.

By plotting the offering level across each factor and connecting the dots, you can visualize your strategic profile and the value curves of your competitors. Drawing your own line on how well you do helps in charting how you stand out.

This also allows you to examine the industry’s competing factors, your offerings, and to see in which areas a clear strategic picture is formed. This assists you to develop a compelling blue ocean strategy.

Draw Your Own Line of How Well You Do

Businesses can use the Strategy Canvas App to assess their performance in comparison to their competitors. They can focus on the big picture first by listing their industry’s key competing factors along the horizontal axis. Then, they can plot their own and their competitors’ offering levels across the vertical axis to gain insight into the strategic profiles or value curves of their industry.

To determine how well they do in relation to their competition, businesses can use the Eliminate-Reduce-Raise-Create (ERRC) Grid. This helps in formulating their To-Be strategy. Lead by Chan Kim and Renée Mauborgne, this framework drives businesses to consider each of the four actions – eliminate, reduce, raise, and create – that assist in finding the line and unlocking a new blue ocean strategy that allows them to break away from the competition.

Using the Four Actions to Change Your Plan

The four actions can help a business focus on important areas. By getting rid of things that don’t add value, and reducing investment in less important areas, resources can be directed to areas that need improvement and new areas that can make the business unique.

Strategies for using the four actions to improve a business’s competitive position include:

• Removing elements that increase costs without adding value for customers
• Cutting investment in areas not essential for brand identity or quality
• Enhancing important areas valued by customers
• Introducing new elements of value that competitors don’t offer

Following these strategies can help a company create a new market space and stand out from competitors. This can attract new customers and give existing customers more reasons to stay loyal.

Charting How You Stand Out

When using the Strategy Canvas app, it’s important to identify the key areas where a company competes with its industry peers. Understanding and mapping out crucial competitive factors, such as price, customer service, product range, and quality, helps companies visualize the strategic landscape. By comparing their strategic profile to those of competitors, companies can see where they stand out and where they need to focus attention.

This information helps businesses decide where to invest more to position themselves uniquely and differentiate their offerings from others in the industry. Success in uncovering differences from the competition can guide a company towards strategic innovation and market leadership.