Crafting a Winning Business Model: The Power of Strategy Canvas
In today’s fast-paced business landscape, innovators and entrepreneurs are constantly seeking new ways to outmaneuver the competition. One effective technique for building a solid business model is the strategy canvas. This versatile tool allows you to assess opportunities, evaluate competitors, and create a compelling value proposition.
What is a Strategy Canvas?
The strategy canvas was first introduced by W. Chan Kim in his 2014 best-selling book, “Blue Ocean Strategy.” Initially designed to evaluate hypercompetitive markets and find a way to leap into a competition-free “blue ocean,” the canvas has proven to be a valuable asset in various contexts.
A strategy canvas consists of three key components:
- Players: These are the entities being compared, which can be products, companies, or even market categories.
- Competing Factors: These are the criteria used to make comparisons, such as price, brand, speed, safety, luxury, and efficiency.
- Scores: Each player is scored on a scale (e.g., 0-6 or 0-10) to assess their performance in each competing factor.
Visualizing Your Strategy Canvas
Once you have identified your players, competing factors, and scores, you can visualize your results in the form of a strategy canvas. This living, ever-changing tool provides transparency around key competitors, their strengths and weaknesses, and market changes over time.
The Four Actions Framework
To strengthen your value proposition, outcompete others, or change the game’s rules, use the four actions framework:
- Raise: Identify factors to raise well above the industry’s standards.
- Reduce: Determine factors to reduce well below the industry’s standard to free up resources.
- Create: Develop new factors that the industry has yet to offer.
- Eliminate: Remove factors that no longer add value or have become irrelevant.
Real-World Examples
Two examples illustrate the power of the strategy canvas and the four actions framework:
- [yellow tail]: A wine producer that created a new market category by eliminating aging qualities, reducing wine complexity, creating ease of drinking and selection, and raising the price versus budget wines.
- Southwest Airlines: A carrier that combined the benefits of fast airlines and car travel by reducing seating choices, hub connectivity, lounges comfort, and meals options, while increasing overall speed of transport and friendliness of service.
Key Takeaways
The strategy canvas and the four actions framework are potent tools for:
- Mapping and comparing competitors
- Finding cross-industry inspiration
- Evaluating different market categories
- Planning and hypothesizing value propositions
Use the strategy canvas as a one-time planning exercise or a long-lived monitoring artifact to gain invaluable insights and stay ahead of the competition.