There are strategic planning tools for just about any goal a manager can think of. However, it can be difficult for managers and entrepreneurs looking to innovate their business model to make the leap from traditional thinking to creative but realistic thinking that can drive the next generation of sustainable profits.
By knowing the types of tools you can use for different business strategy tasks, you can get much more innovative results in strategy development sessions, reducing the time it takes to develop good business models.
Tools to display and dominate undeniable marketplaces
1. The basis of the strategy
The Strategy Canvas is a tool first introduced in the book Blue Ocean Strategy by W. Chan Kim and Rene Mauborgne. This is a chart that displays the position of business competitors in relation to factors that are important to the customer market. The horizontal axis represents competition factors (which hopefully are established by customer knowledge), and the vertical axis represents the degree of supply or service level.
Using this chart, you can graphically depict the differences between current and potential business competitors. The main purpose of the strategy canvas is to illustrate the divergence between market and business strategies in terms of customer needs. Using the strategy framework, you can create new value innovation that removes the conflict between low cost and differentiation – the essence of blue ocean strategy.
The strategy canvas is also an excellent tool for developing USP.
2. Index of strategic control points
It is a tool used to assess the level of strategic control of a business in its industry compared to competing businesses and organizations. This is best articulated by management consultant Adrian Slivotzki in The Profit Zone (a book I highly recommend). The Strategic Benchmark Index ranks these benchmarks according to the level of “profit protection power” they provide to the business.
In simple terms, this is a simple description of the path to monopoly power (or at least almost monopoly) in any business design. The profit protection of these strategic milestones ranges from None, Low, Medium to High. Some examples of strategic control points cited by Slivottsky include:
- Reducing the cost of a commercial product from 10 to 20 percent (low)
- Yearly gap from product development (slightly higher, but still low)
- 2-Year Product Development Guide (Intermediate)
- Brand, copyright (slightly higher, but still average)
- Customer Relationship Ownership (High)
- Overdominant Market Positions Row (Higher)
- Value chain management (even higher)
- Compliance with standards (higher)
3. 6-way framework
This analytical tool is another of the blue ocean strategy and masterfully empowers strategists to think across the “six traditional frontiers of competition” to systematically make new assumptions and drive breakthroughs in product or business design. The idea is that one of these unconventional ways of looking at the competitive landscape can lead to a strategic breakthrough.
but) Look at the industries – Compete with alternatives and substitutes for your product / service, not those that you think are your competitors.
b) Look at strategic groups – See how your new strategy can evolve between the natural strategic boundaries of your industry.
in) Look at the customer chain – Consider how you can change the rules of the game by changing certain “core buyers”.
d) Check out additional products and services – Consider the whole system of your client’s typical solution (in which your current proposal may only be a small part).
e) Rate functional or emotional attractiveness – Explore how you can create a new value curve by adding emotion to a functionally oriented industry, or by removing the exclusion of emotion and reducing a product or service to its functional core.
e) See through time – Adjust your time horizon to a different point or cycle than is typical for the rest of your industry.
4. Business design matrix
The Business Design Matrix is a great analytical tool you can use to help you understand and analyze your competitors’ business models at a glance. This is largely borrowed from the work of Dr. Adrian Slivotsky. The criteria by which you analyze your competitors, as well as your own organization, include:
- Client’s choice
- Profit fixing system (s)
- Differentiation / strategic control
- Offer volume and presence
These four key considerations provide the foundation for making a marketing strategy decision — a foundation upon which a larger business strategy can comfortably rest.