The Strategy Canvas 101: How to visualize your market and stand out from the competition

Operating and scaling a business requires strategic positioning, market awareness, and lots of hard work. And even when you’ve achieved all of this, you still have a constant challenge to face: outperforming your competition. 

But what if you didn’t have to fight for a bigger slice of the pie? What if you could identify entirely new market opportunities untouched by your competition?

That is the goal of the Strategy Canvas. 

What is the Strategy Canvas?

The Strategy Canvas is a tool that helps leaders visualize their current strategic landscape so they can visualize where their business fits in and what opportunities exist to expand into new markets. 

The Strategy Canvas was developed by W. Chan Kim and Renée Mauborgne, the authors of Blue Ocean Strategy: How To Create Uncontested Market Space And Make The Competition Irrelevant. 

According to their website, the Strategy Canvas is “a central diagnostic tool and an action framework that graphically captures, in one simple picture, the current strategic landscape and the future prospects for an organization.”

So how does it work? 

To understand the Strategy Canvas, we first need to understand the Blue Ocean vs. Red Ocean strategic approach. 

Blue Ocean vs. Red Ocean strategy

Kim and Mauborgne frame the market landscape through the lens of Blue Ocean and Red Ocean strategies. 

Red oceans comprise the known market space, including all industries in existence today. In red oceans, companies try to outperform each other and gain greater market share in a competitive landscape. 

Blue oceans represent all the industries that do not yet exist. These are the unknown market spaces, untapped by competition. According to Kim and Mauborgne, these blue oceans are where the greatest opportunities lie for growth and differentiation. Much like the world's oceans that are vast, blue, and widely unknown.

In other words, why compete in the current market when you can create your own? 

To build a Blue Ocean Strategy, you first have to understand the current market landscape. Then you can identify opportunities to differentiate and create new demand. 

The Strategy Canvas has two main purposes:

1. To reveal the current state of the competitive landscape and known market space, allowing leaders to see the factors that their industry competes on and invests in and what value buyers receive.
    
2. To drive action towards a “blue ocean” strategic move by reframing the approach from competitors to alternatives, or put simply, to reveal untapped opportunities in the market. 

Benefits and use cases of the Strategy Canvas

The main benefit of using a Strategy Canvas is understanding the competitive landscape so you can identify opportunities to differentiate your business.  

The Strategy Canvas was originally designed as a tool for evaluating high-level business strategies and uncovering new markets, but it can also be applied to individual product strategies. 

For instance, you can plot the value curve of specific competing products instead of mapping an entire industry. This can help teams to both design and market their products more effectively—contributing to overall business success in the industry.  

Whether you apply it to individual products or for high-level business analysis, you can use the Strategy Canvas in two ways: 

1. To capture the current state of the competitive landscape. 
2. To drive change by mapping your future state strategic value.

The current state Strategy Canvas lays the foundation for your future-state map. 

How to set up a Strategy Canvas

Here’s how to set up your own model: 

1. Identify your top competitors

Conduct in-depth market research to identify your top 3-5 competitors. Keep in mind that competitors can come from outside your own industry. 

These competitors can be represented either as one combined industry line or as individual lines for each company.   

2. Define the key factors of competition

These are the main factors you and your industry compete on and the factors that matter most to your customers. For example, key factors for the airline industry might include price, meals, seating choice, lounges, speed, and connectivity. 

This will also require in-depth market and customer research. Use existing data and talk to your customers directly to make sure you have a clear picture. The better you understand your customers, the more accurate and useful your final Strategy Canvas will be. 

List the key factors for your industry along the horizontal axis of your Strategy Canvas. 

3. Rank your competitors’ investment in each factor

Next, assess the industry’s investment or focus on each factor and plot the value on the vertical axis. So, the greater the investment, the higher the plot point will be on the graph.

4. Map a value curve connecting each factor

Connect the dots! This will create a line graph (or value curve) helping you visualize industry trends. 

5. Chart your own business value curve

Next, map your business’ value curve. Plot your company’s (or product’s) values for each key factor and connect the dots to see how your trend line compares.

You can do this for your current-state strategy as well as your future-state strategy. 

The goal of a future-state strategy is to chart a line that is significantly differentiated from your competition. For a future-state visualization, you’ll need to follow the next step.

6. Apply the Four Actions Framework

The Four Action Framework supports the Strategy Canvas by challenging your assumptions about the industry and your customers. 

The framework has you consider four key questions: 

1. Eliminate: What key factors can I eliminate that the rest of the industry invests in?
2. Reduce: Which key factors can be reduced below industry standard?
3. Raise: What key factors should be significantly increased above industry standards?
4. Create: What factors should be created or added that the industry doesn’t offer?

By uncovering opportunities to reduce and eliminate factors, your business can then take those investment savings and use them to focus on factors that set your company apart. 

Remember that the industry values aren’t necessarily what customers want and need. These discrepancies are where you can make your impact and stand out from competitors.