By:

In their excellent book, Blue Ocean Strategy, W. Chan Kim and Renee Mauborgne share a fascinating technique for visualizing competitive differentiation and innovation opportunities. Called the “strategy canvas,” it is both a diagnostic tool to show you what your current competitive situation looks like as well as a planning tool for identifying untapped innovation opportunities.

In their excellent book, Blue Ocean Strategy, W. Chan Kim and Renee Mauborgne share a fascinating technique for visualizing competitive differentiation and innovation opportunities. Called the “strategy canvas,” it is both a diagnostic tool to show you what your current competitive situation looks like as well as a planning tool for identifying untapped innovation opportunities.

The strategy canvas condenses a significant amount of information in a very compact formats. The horizontal axis contains a list of factors that the industry competes on and invests in, as well as potential areas were customer value could be created. The vertical axis indicates the degree to which each competitor invests in each factor. To create the strategy canvas, you simply plot points for the current performance of your company and all competitors, and then “connect the dots” to create a series of lines that represents the “value curve” for each company.

The strategy canvas offers several advantages to innovators:

  1. It enables you to quickly see areas were your strategy and those of your competitors converge (where everyone is following the same orthodoxy or set of assumptions on how business is done)
  2. It shows areas of divergence, where your company’s strategy differs significantly from that of your competitors.
  3. It also helps you to see “white space” opportunities for innovation and competitive differentiation.

The strategy canvas also reveals it if your company has taken a scattershot approach to creating customer value. If your company’s line on the strategy canvas looks like a zigzag, with high values in some areas and low values in other areas, it indicates that you and your strategic planning team needs to address that issue.

You can view an example of a strategy canvas here.

This example clearly shows how Southwest Airlines, by focusing on only three factors – friendly service, speed and frequent departures – has succeeded in differentiating its itself from other airlines and competing forms of transportation (i.e., via car).

The authors point out that one of the problems with traditional strategic planning sessions is that the managers usually bring their own biases and perceptions of what is important to the table, leading to a lack of consensus on the organization’s current situation, which competitive factors are most important to customers, and the organization’s future direction. The result is often a lengthy, ponderous, hard to read document that isn’t used to run the business.

The visually compelling strategy canvas, in contrast, enables executives to see their current situation and potential opportunities for business model innovation more clearly. It also provides a visual language that the team can use to build consensus.

I think this is a powerful planning tool that is also very easy to use (building collaboration on what it should look like and the competitive factors it should contain are much harder, of course).  Why not give it a try today in your business?