Canvas Strategy or Blue Ocean Strategy is a tool that assists a company in analyzing the industry it is operating within or plans to operate in. It is a graphical tool that assists a company in visualizing how other players in the industry are attracting customers. Moreover, it helps analyze how the customers select a product or service in that industry. Thus, this is a strategic option to find out the factors influencing the decision of the customers to buy that product. And how the competitors are encashing those factors to their advantage.
Knowing all these things helps a company to devise a strategy to differentiate its products or services to make them more attractive to the customers. As well as to make inroads in the competition’s customer base.
In simple words, we can say it is a line graph that shows all the factors that companies in an industry compete and invest in. The tool has other names, too, Value Canvas or Blue Ocean Strategy Canvas.
For example, suppose all players in an industry are competing on price. You can differentiate your product by competing not on price but on quality. In the real world, however, things are not that simple. So, a company has to work on several ends to make their product or service unique, rather than focusing on just one factor. And this is where the Canvas Strategy is helpful. And it is a continuous trial and error methodology one needs to adopt.
Southwest Airlines set an extremely splendid example of this. The airline was able to combine no-frills, convenience, and cost of traveling to improve the quality and speed of their service. Thereby they avoided distractions from managing the various conveniences and secondary services. And kept the focus on the key deliverables.
Benefits of Canvas Strategy
Following are the primary benefits of the Blue Ocean Strategy :
- It explains the current scenario of the industry, including the factors that companies compete on and influence their decision to invest in. Also, demonstrate what and how the customers receive the services or products from each company. It also showcases the profiles of all companies.
- It helps the management to focus more on making their product different from others by studying the strengths and weaknesses of the competitors vis-a-vis theirs.
- This tool makes it very easy for the management to communicate its strategy to the staff members across the vertical up to the ground level.
- Additionally, it allows a company to know its deficiencies by plotting its offering against the industry benchmark. And will enable them to gear up or rise to the occasion to capture more and more market share.
Steps to Prepare Strategy Canvas
By following the below steps, one can easily come up with a Blue Ocean Strategy:
Knowing about our rivals is extremely important not just for this tool but for any business strategy and any business segment. We can identify the rivals depending on the industry we are operating in. If there are fewer rivals, then we can name them individually. And, if the numbers of rivals are more, then we can place them in smaller semi-homogeneous groups. When identifying rivals, one must think from the perspective of the customer because the ultimate object is to get more and more market share.
Identify Factors of Competition
At this stage, one needs to come up with the factors that impact the customers’ buying decisions. Or the factors that the customers value when selecting a product or service. In the case of airlines, these factors are price, seating choices, and more. During the research, we would come across many factors, but we must consider only the relevant ones.
Speaking directly with the end-user/customers is the simplest and most straightforward way of identifying these various factors which attract and influence the customers. We can also do surveys or research to identify and implement these factors. It is important to talk to customers who buy our product and service and those who buy from other players in the industry.
Also, one must not solely depend on the feedback from these factors. Instead, one should also need to engage and analyze the data and feedback to come up with factors that could help one to differentiate their product.
Evaluate the Competition
Now we have to draw the graph. While drawing the graph, we need to dedicate one line for each of the competitors or group of competitors. Similarly, when working on the graph, we need to show how each competitor is performing in terms of the factors that the customers value. And that ultimately guides his decision to buy from that particular competitor.
The horizontal axis of the graph lists the factors that companies compete on and invest in. And the vertical axis lists the contribution from companies that customers get across all these key competing factors.
Chart your Competitive Differentiation
The last step is to use the findings of the third step to come up with a strategy to make our product or service better. Our aim should be to draw a line that is different (and offers more value) from the lines of any competitors or groups. This different line represents a unique combination of the different factors that customers value.
We need to go through several self-questioning exercises before we can come up with those combinations of factors to create differentiation. And those questions could be:
- Which factors do we want to increase and decrease for the purpose of achieving differentiation?
- Which factors do we want to add and drop?
How to come up with a Successful Canvas Strategy?
As we discussed, the ultimate objective of all these exercises is to know the ideal combination of these influencing factors. An ideal combination is the one that suits the majority of your target customers. Also, a point to note is that there could be more than one ideal combination of factors. Thus, we must be continuously taking feedback from the customers to better our combination of factors.
Also, it is always better to design this graph with a team. We can ask every team member to design their graph by selecting competitors and the factors. This could help get valuable feedback to better our product or service.
Canvas Strategy is a very useful tool that can help companies come up with successful strategies to make their product or service more popular amongst the customers. However, preparing this graph is not as easy as it looks. One needs to conduct an in-depth analysis of the industry, competitors, and customers to develop a successful Canvas Strategy. Moreover, when one comes up with more than one such ideal combination, again, an exercise is needed to select the preferred one.
- Ansoff Matrix – Meaning, Strategies, Steps and Examples
- Porter’s Generic Strategies – Meaning, Types, and Example
- Advantages and Disadvantages of Multidomestic Strategy
- Concentric Diversification – Meaning, Advantages, and More
- Advantages and Disadvantages of Cost Leadership Strategy
- Innovation Matrix – Meaning, Types and its Explanation