Strategy Canvas

What is a Strategy Canvas?

A Strategy Canvas is a tool that compares the product factors that a sample of incumbent products compete on, based on the value that a particular customer segment receives from them, in a two-dimensional chart.

It was created by W. Chan Kim and Renée Mauborgne for their book Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant, published in 2004.

The Strategy Canvas is a great tool to visually compare how the solutions you propose (i.e. your products and services) compare to others available to the same customers.

The idea behind comparing solutions against each other is to identify factors on which the incumbents are competing and brainstorm ideas for products with a different value proposition.

By looking at the canvas, you can quickly see which factors incumbents believe customers value the most, so by reviewing them you can try to come up with ideas for products with a totally different {value proposition} that serve a particular set of customers within that market.

In a nutshell, the process to build a Strategy Canvas is a follows:

1. Define the scope of the analysis: You may use a Strategy Canvas to compare solutions within a particular industry or market, or to compare solutions targeting particular customer segments.
2. Identify the factors incumbents compete on: Start by identifying 5-10 factors that current solutions or incumbents compete on. Our recommendation is to always include price as one of them, and to always include factors that try to measure the “quality” of the offer, such as performance, perceived value, etc.
3. Rank the factors incumbents compete on: Next, you have to assign a numeric value that measures the relative value that each particular factor delivers to customers for each of the competing solutions you have on your chart. We recommend using a scale from zero to five, where zero is “none”, one is “well below average”, two is “somewhat below average” three is “average”, four is “somewhat above average” and five is “well above average”.
4. Draw your Canvas: Now, with your ranked factors at hand, draw the canvas for each solution you want to plot. Kim and Mauborgne recommend putting price as the first factor to the left, so than everything to its right shows the value customers get for the price they pay.
5. Plot your solution against incumbents: If your goal is to compare your existing or proposed products and services to incumbents, you can do that now and see how they divert from existing solutions.

Professors Kim and Mauborgne highlight three existing opportunities, or “levers” as they call them, to create products with a divergent value proposition using their tool:

1. Opportunities to further increase customer value along factors the incumbents compete on, and that are most appreciated by customers,
2. Opportunities to eliminate or reduce the factors where the players compete today that would produce an important cost reduction, and
3. Opportunities to create new elements of customer value that the customer has never received before.

Through those levers, executives can create new products with innovative value propositions, and sometimes even reduce costs with respect to other solutions.

For example, a Strategy Canvas for the content streaming industry, could look like this:

In that Strategy Canvas, you can easily see how Netflix’s streaming service, currently the leader in the space, compares to other competing solutions like HBO Go and conventional cable.

While looking at your Strategy Canvas, keep thinking about the reasons why people consume these products and why non-consumers don’t. This exercise can help you find new ways to create value, and potentially an entirely new product category or market as Pfizer did with Viagra.

See our Innovation Strategy article for a more complete approach to the development of new products, services and markets.

H2: References:

Wu, Sun. Strategy for Executives, this book can now be downloaded for free here.

Kim, W. Chan; Mauborgne, Renée. Blue Ocean Strategy, Expanded Edition: How to Create Uncontested Market Space and Make the Competition Irrelevant. Harvard Business Review Press. Kindle Edition.

Kim, W. Chan; Mauborgne, Renée. Blue Ocean Shift: Beyond Competing – Proven Steps to Inspire Confidence and Seize New Growth. Hachette Books. Kindle Edition.