Concept explanation
Have you ever wondered: Should you fight with competitors on better prices and incrementally better features or focus on product innovation to create a new market?
In this concept, existing markets are known as the Red Ocean. Red Ocean has boundaries and rules that are well-known and accepted by businesses and consumers. Any new business in the red ocean is just another drop. In the Red Ocean, the main tools for growth are better prices and improvements to the product offering.
The Red Ocean Strategy is about capitalizing on existing demand. Growth is limited.
The Blue Ocean Strategy creates a new demand and as a result, a new market that will have no set rules and the potential for hyper-growth. In a Blue Ocean, your product is the first of its kind, making the competition irrelevant, similar to the famous examples of Uber vs. Classic taxis or Airbnb vs. hotels.
The key to building a Blue Ocean Strategy is The Strategy Canvas, which is a simple visualization that helps you understand the current market situation and the future possibilities for your business.
In the Strategy Canvas, the horizontal x-axis lists the different value factors that companies within an industry are competing on. On the vertical y-axis, you can indicate the buyer’s value for each of these factors.
Value factors could be anything, from better prices & special features to emotions customers get from interacting with your customer support team.
The buyer’s value could be collected through customer surveys, interviews, or public opinion in the press.
The strategy was developed by INSEAD professors W. Chan Kim & Renée Mauborgne in their 2004 bestseller titled “Blue Ocean Strategy.”
Use-cases
New product, feature, or market opportunity pitch
The Strategy Canvas could be very helpful when you want to pitch a certain idea to decision-makers, doesn't matter if it is just a new feature, a whole new product, or even prospects of a new market. With its help, you can highlight the strategic advantage your idea will give you over competitors.
Raising awareness on current business or product position on the market vs competitors
Often, when doing presentations, it might be extremely useful to contrast your product offering vs competitors. This might help your audience to get the necessary context for understanding and leaning toward your presentation idea.
Aligning teams/departments on where to spend money
Whether you pitch an idea or just want to raise awareness of an internal efficiency problem the strategy canvas might help you to visualize where it is worth investing money (i.e. your idea), and where spending should be eliminated.
How to use
Identify the value factors of the product/service your business is providing. Think of them as the unique characteristics your customer loves about your product.
Collect the buyer's value for each product value factor. You can do that via surveys (i.e. CSAT survey), direct customer interviews, or from reviews on your product found on the web.
Open Deckster's Strategy Canvas template, copy it to your Google Drive folder & open the attached Google Sheet with the graph's data.
Fill in all product value factors & corresponding buyers' values.
Suggestions from Deckster
Tailor the Strategy Canvas to your audience. The data in the graph should be familiar and easy to digest for the audience you will present to. Don't use complicated terms & unfamiliar brands.
Stick to the goal & don't overload. The main goal of Strategy Canvas is to help your audience understand and buy into your idea. Use data that is essential to sell your idea.
Blue Ocean Strategy Canvas Examples
Uber's Example of Strategy Canvas
Airbnb's Example of Strategy Canvas
