Make Sense of Strategy Canvas Analysis
Have you ever wondered how successful companies create and sustain their competitive advantage? One of the powerful tools they use is called the strategy canvas analysis. This tool allows businesses to visually map out their competitive landscape and identify areas for strategic innovation.
In this article, we will delve into the concept of strategy canvas analysis. We’ll explore how it can help businesses make important decisions to achieve success in the market.
What Is a Strategy Canvas?
Blue Ocean and Red Ocean: Know the Difference
A blue ocean strategy focuses on creating new market spaces and generating new demand. A red ocean strategy revolves around competing in existing market spaces. Understanding the difference between these two strategies is beneficial for a business. It allows them to see beyond existing market boundaries and create new opportunities for growth and profitability.
With the use of a strategy canvas, businesses can clearly visualize the factors of competition, their offering level to buyers, and their competitors’ strategic profiles and cost structures. This tool helps in identifying areas where the business can innovate and create value for customers, thus moving away from head-to-head competition in crowded markets.
Main Goals of Using a Strategy Canvas
The goals of using a strategy canvas are to:
- Visually map out an organization’s strategic landscape and prospects.
- Communicate the four key elements of strategy.
- Understand investment and competitive positioning.
When used to set business goals and objectives, a strategy canvas:
- Assists in focusing on unique value.
- Creates distinctive offerings.
- Identifies areas of differentiation.
- Helps in allocating resources effectively.
- Aligns internal processes towards customer needs.
Furthermore, a strategy canvas contributes to:
- Identifying and analyzing competition in the market.
- Comparing an organization’s value proposition with that of competitors.
- Evaluating the market factors being competed upon.
- Comprehending customer perceptions of existing competitive offerings.
This information enables informed decision-making and the advancement of innovative strategic approaches to gain a competitive edge and capture new demand.
Why Use a Strategy Canvas?
The strategy canvas is a helpful tool for business and strategic planning. It offers several benefits.
Firstly, it helps organizations create a clear visual representation of their current strategic landscape and future prospects. This provides a comprehensive understanding of where the company stands in relation to the competition and what the future holds.
Additionally, the strategy canvas communicates the elements of competition, the levels of offering for buyers, and the strategic profiles and cost structures of both the company and its competitors. This insight helps in identifying areas of investment, product, service, and delivery factors that the industry competes on, as well as what customers receive from existing competitive offerings.
Furthermore, a strategy canvas assists companies in standing out from competitors by helping them create a unique value proposition. It helps identify untapped areas for differentiation and innovation, and this unique value proposition can give companies a significant advantage in the market.
Therefore, the strategy canvas is an essential tool for identifying and focusing on key factors of competition and customer value, enabling companies to effectively differentiate themselves and succeed in the highly competitive marketplace.
Setting Up Your Strategy Canvas Step by Step
Step 1: Who Are Your Main Competitors?
Identifying the main competitors in the industry or market is a crucial step in the Strategy Canvas Analysis. Understanding who the key players are allows an organization to analyze their current strategic landscape and future prospects effectively.
By evaluating how competitors position themselves in the market, companies can identify their strengths and weaknesses, as well as the factors of competition. This information is vital for developing a compelling blue ocean strategy.
For example, examining the product, service, and delivery factors the industry competes on and understanding what customers receive from existing competitive offerings provides valuable insights.
By gaining visibility into where both the organization and competitors are currently investing, as well as the strategic profiles and cost structures, businesses can make informed decisions and refine their industry positioning.
This detailed analysis can enable companies to carve out a unique proposition that stands out in the market while meeting customer needs effectively.
Step 2: What Competes for Customers’ Attention?
The market has many elements competing for customers’ attention. These include product quality, pricing, customer service, and brand reputation.
Businesses need to identify and prioritize these factors to stand out from competitors and attract their target audience.
A Strategy Canvas Analysis can provide valuable insights into the strategic landscape, competition factors, and the level of offerings buyers receive.
This analysis helps businesses understand where they and their competitors are investing, the product/service/delivery factors the industry competes on, and what customers receive from existing competitive offerings.
Armed with this knowledge, businesses can implement strategies like innovation, unique value propositions, and targeted marketing efforts to stand out from competition.
These strategies help create a compelling blue ocean strategy, allowing businesses to carve a niche in the market and attract customers based on what truly matters to them.
Step 3: Give Each Factor of Competition a Score
When assigning scores to factors in the Strategy Canvas Analysis, consider market share, price, quality, customer service, and innovation.
These factors determine an organization’s competitive position. To ensure consistency, establish specific criteria and a standardized scoring process. For example, create a scale based on effectiveness, efficiency, and impact.
This will provide an objective evaluation of each factor. When developing the scoring scale, consider criteria like customer satisfaction, brand reputation, operational excellence, and adaptability to market changes.
This approach standardizes and comprehensively assesses each factor’s competitive strength in the industry.
Step 4: Connect the Dots to See Your Value
Connecting the dots on a strategy canvas can help businesses understand their unique offering compared to competitors. By mapping out competition factors and buyer levels, businesses can identify their strategic advantage. This process also reveals investment focus and customer benefits from existing offerings. Creating a value curve is important because it visually displays cost structures for comparison. This comparison helps identify new market opportunities and areas for cost reduction.
Make Your Business Stand Out: Your Value Curve
Using a strategy canvas helps businesses in a few key ways:
- Visualizing the current strategic landscape.
- Understanding future prospects for the organization.
- Communicating key elements of strategy.
This tool allows businesses to clearly compare their offerings to competitors, identifying areas for innovation and unique value creation.
A value curve helps businesses stand out by showcasing factors of competition, the level of offering buyers receive, and strategic profiles and cost structures of the business and its competitors. Analyzing this information helps identify which factors to reduce, eliminate, raise, or create to shape the strategy and value curve uniquely in the market.
Four actions can change a business’s strategy and value curve:
- Reduce overinvested factors.
- Eliminate non-customer-centric factors.
- Raise neglected but valued factors.
- Create new industry-offered factors.
Taking these actions helps businesses revamp their strategies and value curves to differentiate from the competition.
The Four Actions to Change Up Your Strategy
Using a strategy canvas has main goals:
- Capturing the current strategic landscape and future prospects of an organization.
- Understanding factors of competition and the level of offering buyers receive in relation to competitors.
Companies should use a strategy canvas to:
- Graphically communicate their strategic profile and cost structure.
- Gain a clear understanding of competitive offerings and customer satisfaction.
The four actions help change up a company’s strategy by:
- Offering a visual representation of where the company and its competitors are currently investing.
- Identifying the factors the industry is competing on.
- Understanding the customer value received from existing offerings.
This leads to a deeper understanding of the market and enables companies to identify new opportunities for differentiation and innovation in their strategic approach.
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