The strongest strategic profiles have three complementary qualities:
- Focus – a clearly defined strategic profile or value curve helps companies avoid trying to be everything to all consumers
- Divergence – breaking away from the industry’s standard value curve to stand apart from the competition
- Compelling tagline – delivering a clear, truthful message that accurately reflects your strategic profile is a good way to test for a truly effective strategy
If a company’s strategic profile does not clearly reveal those qualities, its strategy will likely be muddled, undifferentiated, hard to communicate and costly to execute.
Drawing a strategy canvas shows:
- The strategic profile of an industry by clearly depicting the factors (and the possible future factors) that affect competition among industry players
- The strategic profile of current and potential competitors, identifying which factors they invest in strategically
- The company’s strategic profile—or value curve—depicting how it invests in the factors of competition and how it might invest in them in the future
To see how this works, consider Samsung Electronics of Korea. At one of its corporate conferences attended by top managers and CEO Jong Yong Yun, unit heads presented their canvases and implementation plans. Many unit heads argued that the freedom to form future strategies was constrained by the degree of competition they faced. That hypothesis proved to be false when one of the fastest- growing units—the mobile phone business—presented its strategy canvas. Not only did the unit have a distinctive value curve, but it also faced the most intense competition.
CEO Jong Yong Yun saw the dire need to break out of commodity-type competition and create products and businesses that were both differentiated and lower cost. He institutionalized the use of the strategy canvas by establishing the Value Innovation Program (VIP) Center in 1998.
Here, core cross-functional team members of its various business units come together to discuss their strategic projects, typically focusing on strategy canvases. Since the VIP Center was established, Samsung Electronics’ sales have grown from $16.6 billion in 1998 to $216.7 billion in 2013, catapulting the brand to one of the top-ten most valuable globally.
By focusing on the big picture rather than numbers, CEOs mitigate the planning risk of investing lots of time and effort but delivering only tactical red ocean moves, that is, moves within an overcrowded marketplace with shrinking profit margins and limited growth opportunities. This approach consistently produces strategies that unlock the creativity of a wide range of people within an organization and open their eyes to blue oceans, or new, uncontested marketplaces.
When business units present their strategy canvases to one another, they deepen their understanding of the total corporate portfolio, fostering the transfer of strategic best practices across units.
Do your business unit leaders understand the other businesses in your corporate portfolio? Are your strategic best practices poorly communicated across your business units? Are your low-performing units quick to blame their competitive situations for their results? If the answer to any of these questions is yes, try drawing, and then sharing, the strategy canvases of your business units.
See an example of a Strategy Canvas here.
This article is adapted from Blue Ocean Strategy, Expanded Edition: How to Create Uncontested Market Space and Make the Competition Irrelevant by W. Chan Kim and Renée Mauborgne. Copyright 2015. All rights reserved.