There are strategic planning tools for pretty much any objective a business executive can conceive of. However, for managers and entrepreneurs wishing to innovate their business model, it can be challenging making the leap from conventional thinking to the sort of creative but realistic thinking from which the next generation of sustainable profits can develop.
Knowing the types of tools you can use for various kinds of business strategy tasks can you get far more innovative results from your strategy development sessions while cutting the time it takes to arrive at good business models.
Tools for Mapping and Dominating Uncontested Market Spaces
1. Strategy Canvas
The Strategy Canvas is a tool first introduced in the book, “Blue Ocean Strategy” by W. Chan Kim and Renee Mauborgne. It is a chart that plots the positions of business competitors relative to the factors important to the customer marketplace. The horizontal axis plots the factors of competition (hopefully established through customer knowledge), and the vertical axis plots the degree of offering or service level.
Using this chart differences between current and potential business competitors can be graphically portrayed. The primary point of the strategy canvas is to illustrate divergence between market and business strategies as it relates to customer needs. By using a strategy canvas, you can create a new value innovation that breaks the conflict between low cost and differentiation – the heart of blue ocean strategy.
The strategy canvas is also a great tool for USP development.
2. Strategic Control Point Index
This is a tool used to assess the level of strategic control a business has in its industry relative to competing businesses and organizations. It was best articulated by management consultant Adrian Slywotzky in “The Profit Zone” (a book which I highly recommend). The strategic control point index classifies these control points according to the level of “profit-protecting power” they confer to a business.
Simply put, it is a simple description of the path to monopoly power (or at least near-monopoly) in any business design. The profit protecting power of these strategic control points go from “None”, “low”, “medium” to “high”. Some examples of strategic control points given by Slywotzky include:
- 10 to 20 percent cost advantage in commodity product (low)
- One-year product development lead (slightly higher, but still low)
- Two-year product development lead (medium)
- Brand, copyright (slightly higher, but still medium)
- Customer relationship ownership (High)
- String of superdominant market positions (Higher)
- Management of the Value Chain (Even higher)
- Standards Ownership (Highest)
3. 6 Paths Framework
This analytical tool is another from “blue ocean strategy” and masterfully gives strategists a way to think across the “six conventional boundaries of competition” to systematically construct new assumptions and stimulate product or business design breakthroughs. The idea is that one of these unconventional ways of looking at the competitive landscape may crack open a strategic breakthrough.
a) Look across industries – Compete with alternatives and substitutes for your product/service rather than those you think are your competition.
b) Look across strategic groups – Look at how your new strategy can be developed between the naturally assumed strategic boundaries in your industry.
c) Look across the chain of buyers – Consider how you can change the game by changing the defined “primary buyers.
d) Look across complementary products and services – Thinking about the whole system of your customer’s typically solution (in which your current offering might be just a small part).
e) Look across functional or emotional appeal – Examine how you may be able to create a new value curve by adding emotion to a functionally oriented industry, or removing stripping out emotion and reducing a product or service to its functional core.
f) Look across time – Adjust your time horizon to a different point or cycle than is typical in the rest of your industry.
4. Business Design Matrix
The business design matrix is a great analytical tool that you can use to help understand and analyze “at a glance” the business models of your competitors. It is largely derived from the work of Dr. Adrian Slywotzky. The criteria across which you analyze your competitors as well as your own organization include:
- Customer selection
- Profit Capture System(s)
- Differentiation / Strategic Control
- Scope of offerings and presence
These core four considerations provide a foundation for deciding marketing strategy – a foundation upon which a larger business strategy can comfortably rest.