A strategy canvas is a visual tool that helps businesses understand their market position by mapping out how they and their competitors perform across key factors important to customers. By simplifying complex data into an easy-to-read graph, it reveals strengths, weaknesses, and opportunities at a glance. This guide will explain the basics of a strategy canvas, show you how to use it effectively, and provide templates to get you started, offering valuable insights to enhance your strategic planning.
What is a Strategy Canvas
A strategy canvas is a visual snapshot of how a company’s key competing factors measure up against industry benchmarks. This powerful tool helps businesses understand their market positioning and identify strategic gaps. Represented as a line graph, the strategy canvas plots the key competitive factors on the horizontal axis while the vertical axis shows the offering levels provided by various competitors. Essentially, it provides a one-page, objective view of the competitive landscape, enabling organizations to communicate their strategies clearly and align internally.
Origin and Purpose
The strategy canvas was introduced by W. Chan Kim and Renée Mauborgne in their book Blue Ocean Strategy. It was developed to help businesses see how they stack up against competitors and find new ways to stand out in the market. The idea behind the strategy canvas is to visualize the key factors that matter to customers and compare how different companies perform in these areas.
The purpose of the strategy canvas is twofold.
- First, it helps businesses understand their competitive position by clearly showing where they excel or fall short compared to others.
- Second, it identifies opportunities for innovation by highlighting gaps in the market that competitors might not be addressing.
Essentially, the strategy canvas provides a simple yet powerful way to analyze and improve your business strategy by focusing on what truly matters to customers and how you can offer something different or better.
Key Components of a Strategy Canvas
A strategy canvas is made up of a few essential parts that work together to give you a clear view of your competitive landscape:
- Horizontal Axis (X-Axis): This is where you list the key factors that influence customer decisions. These could be features like price, quality, customer service, or any other elements that matter to your customers.
- Vertical Axis (Y-Axis): This shows how well each company performs on the factors listed on the horizontal axis. It measures performance levels, such as high, medium, or low.
- Lines: Each company or product has its own line on the canvas. These lines represent how well they perform across the different factors. By looking at these lines, you can see where each competitor excels or lags behind.
These components together create a visual map that helps you compare and analyze your business’s strengths and weaknesses relative to others. This clear, graphical representation makes it easier to spot opportunities for improvement and areas where you can stand out in the market.
Benefits of Using a Strategy Canvas
A strategy canvas makes strategic planning easier and more effective. It helps you understand your market position, find areas to improve, and focus on what customers care about. Here’s how it can benefit your business:
- Clear visual representation: A strategy canvas gives you a simple, easy-to-understand map of how different businesses or products perform on key factors. This helps you quickly see where you and your competitors stand.
- Insight into competitive position: By comparing your performance with others, you can understand your strengths and weaknesses in the market. This helps you see where you fit compared to your competitors.
- Identification of strategic gaps: The canvas shows areas where competitors might be missing opportunities. This helps you spot where you can improve or innovate to stand out.
- Focus on customer needs: It highlights which factors are most important to customers and how well you meet these needs compared to others. This ensures your strategies align with what customers want.
- Simplified decision-making: With a clear visual summary, the strategy canvas makes complex data easier to understand. This helps you make better decisions and focus on the most important actions.
How to Create a Strategy Canvas
Follow these steps to visually compare your business strategy to your competitors and identify areas for differentiation.
1. Identify your primary competitors
Start by brainstorming and listing down the key competitors within your industry. You can use a mind map to identify and categorize them if the list is too large. Focus on those who directly compete with your business, offering similar products or services. This step is vital as it sets the stage for the entire process. Consider competitors that hold significant market share or those that directly appeal to your target customers. Knowing who you’re up against provides a solid foundation for comparison and analysis.
2. Define the competitive factors
Collaborate with stakeholders to brainstorm the factors that customers value the most. These could include price, quality, service, or innovation. Conduct market research through surveys or interviews to gather accurate data on what drives customers to choose one product over another. Selecting the right factors helps ensure that your strategy canvas is meaningful and aligns with market realities. It’s important to focus on factors that are truly impactful, avoiding irrelevant details that might cloud your analysis.
3. Evaluate competitors’ performance in each factor
Once you’ve established the competitive factors, evaluate how your competitors perform in each one. This involves analyzing their strengths and weaknesses across all identified factors using a SWOT analysis. For example, you might find that one competitor excels in customer service while another dominates in product innovation. Rank their performance based on how much they invest in each area, whether through financial resources, operational focus, or marketing efforts. This step provides a clearer picture of where competitors are focusing their efforts.
4. Draw a value curve
Create a value curve by connecting the performance of each competitor across the identified factors on the graph. Each competitor will have a distinct line representing their performance, allowing you to see the differences in their strategies. The value curve highlights areas where competitors might be over-investing or under-investing, helping you identify patterns in the market. This visual representation makes it easier to understand how competitors compare to one another and where the market opportunities lie.
5. Chart your own value curve
Plot your business’s performance on the same graph, creating a value curve that shows how you compare with competitors. This helps you see where you stand in relation to the competition and identify areas where you excel or lag. By visualizing your strengths and weaknesses, you can better understand your current positioning in the market. This step is crucial for recognizing opportunities for improvement and areas where you can differentiate yourself from competitors.
6. Create a strategic profile
Use the insights from your value curve comparison to refine your strategy. Decide whether to adjust your current approach or develop a new one that better aligns with customer needs and differentiates you from competitors.
7. Apply the Four Actions framework
Use the four actions framework to refine your strategy based on the insights from your strategy canvas:
- Eliminate: Identify factors that add little value to your customers or where your competitors are over-investing. Consider cutting these elements from your strategy to reduce costs and streamline operations.
- Reduce: Determine which factors you can scale back without compromising customer satisfaction. Reducing investments in areas that are less critical can free up resources for more impactful initiatives.
- Raise: Pinpoint areas where you can outperform competitors by raising your performance. This might involve improving product quality, enhancing customer service, or offering better pricing.
- Create: Look for opportunities to introduce new factors that competitors have overlooked. Innovate by adding unique elements that can set your business apart and attract more customers.
Strategy Canvas Examples
CitizenM
CitizenM has created a powerful strategy canvas by targeting a unique market segment in the hospitality industry. Instead of following traditional luxury hotel benchmarks, CitizenM focuses on providing affordable, stylish accommodations with a focus on self-service and smart technology. This approach allows them to offer high-quality lodging solutions at a fraction of the cost, effectively differentiating themselves from larger hotel chains. Their innovative approach can be understood through their strategy canvas, which highlights their competitive advantages in cost and technology.
Apple
Apple’s strategy canvas sets them apart in the electronics and software industry through design innovation and ecosystem integration. By emphasizing user experience, design aesthetics, and a seamless ecosystem, Apple has carved out a unique competitive strategy that is visualized in their strategy canvas. This focus on high-end product design and a unified user experience positions Apple far above its competitors who focus primarily on technical specifications and price.
Southwest Airlines
Southwest Airlines successfully utilized the strategy canvas to identify and capitalize on unique market opportunities. By eliminating costly services like meal offerings and prioritizing frequent departures, Southwest managed to significantly reduce operational costs. Their strategy canvas reveals how focusing on punctuality and affordability has provided a competitive edge over traditional airlines, thereby reshaping the market and aligning with niche customer needs.
When to Use the Strategy Canvas
The strategy canvas is a versatile tool that can be used in various situations to enhance your strategic planning and decision-making process. Here are key scenarios where using a strategy canvas can be particularly beneficial:
1. Developing a new strategy
When you’re crafting a new business strategy, a strategy canvas helps you identify the competitive landscape and position your business effectively. By comparing your offerings with those of competitors, you can pinpoint opportunities to differentiate your products or services and create a unique market position.
2. Reevaluating your current strategy
If your business is experiencing stagnation or facing increased competition, the strategy canvas can be a valuable tool for reassessing your current strategy. It allows you to visualize where you stand relative to competitors and make necessary adjustments to stay competitive.
3. Entering a new market
When expanding into a new market, the strategy canvas helps you understand the competitive dynamics and customer preferences in that market. This insight is essential for tailoring your approach and ensuring that your offerings align with market demands.
4. Launching a new product or service
Before introducing a new product or service, use a strategy canvas to evaluate the competitive landscape. This helps you identify gaps in the market that your new offering can fill, ensuring a successful launch that meets customer needs and stands out from competitors.
5. Improving customer value
If your goal is to increase customer value, the strategy canvas can guide you in identifying areas where you can improve your offerings. By analyzing the factors that matter most to customers and how competitors perform in these areas, you can prioritize enhancements that will deliver the greatest impact.
6. Innovating or differentiating your business
When looking to innovate or set your business apart from the competition, the strategy canvas provides a clear view of where competitors are focused. This enables you to explore opportunities for differentiation by either excelling in areas that competitors overlook or introducing new value propositions that disrupt the market.
Using Creately to Create Your Strategy Canvas
Creately is a powerful tool that simplifies the process of creating a strategy canvas. Its features make it easy to visualize your competitive landscape and design effective strategies. Here’s how Creately can help:
Pre-built templates
Creately offers ready-made strategy canvas templates that save you time. You can jump right into creating your canvas without starting from scratch. These templates are customizable, allowing you to adjust them to fit your specific needs.
Drag-and-drop interface
The intuitive drag-and-drop interface makes it easy to add and arrange elements on your canvas. Whether you’re adding competitors, key factors, or value curves, you can do it all with a few clicks.
Collaborative tools
Creately’s collaboration features allow team members to work on the strategy canvas together, no matter where they are. You can share the canvas with your team, get real-time feedback, and make changes on the fly. Use its built-in collaborative brainstorming tools like the whiteboard, sticky note walls or mind maps to ensure everyone is aligned and contributes to the strategy. You can also add comments and annotations directly on the canvas. This feature makes it easy to provide feedback, ask questions, or highlight important areas without disrupting the design.
Customizable elements
You can personalize every aspect of your strategy canvas with Creately’s customization options. Adjust colors, fonts, and shapes to make your canvas visually appealing and easy to understand. This flexibility helps you create a canvas that truly reflects your brand and strategic goals.
Data integration
Creately allows you to integrate data directly into your strategy canvas. You can link data from spreadsheets or other sources to ensure your canvas is accurate and up-to-date. This feature helps you make informed decisions based on real numbers. Store additional information and data for reference with per item notes and data fields.
Export and share options
Once your strategy canvas is complete, Creately offers various export options. You can download it as a PDF, image, or even share a live link with stakeholders. This makes it easy to present your strategy to others, whether in meetings or through digital channels.
Presentation mode
Creately’s presentation mode lets you showcase your strategy canvas directly within the platform. You can walk through your strategy step by step, highlighting key points without needing to export your work to another tool.
Conclusion
The strategy canvas is a powerful tool that helps businesses visualize their competitive landscape and craft more effective strategies. By focusing on key factors that drive success in your industry, you can identify opportunities to differentiate your business and deliver greater value to customers. Whether you’re developing a new strategy, reassessing your current approach, or entering a new market, the strategy canvas provides a clear, actionable framework to guide your decisions. With its ability to simplify complex information and align teams around a shared vision, the strategy canvas is an essential resource for any business looking to stay competitive and innovate in today’s fast-paced market.
References: Blue Ocean Strategy Canvas
