Use a Strategy Table with the Business Model Canvas
Imagine that you want to hike across an Alaskan Wilderness. Do you start hiking with a plan to “pivot” when the trail veers from your intended direction or do you first consult an overview map? Whether you are developing business strategy or exploring, surveying the landscape first provides important context and the best initial plan, especially when that plan will be modified later. Osterwalder’s Business Model Canvas is a fantastic tool for start-ups and established businesses to develop and communicate the interlocking components of a business model. Its power comes from its predefined structure. The limitation, however, is that the Business Model Canvas leads teams to look at only one candidate business model at a time; teams lose the ability to consider trade-offs between alternative models or generate creative hybrids.
Use a Business Strategy Table To See the Big Picture
To expand the range of business model options and understand trade-offs between alternatives, ICG uses a Strategy Table. Think of the Business Strategy Table as the overview map, and the Business Model Canvas as the detailed trail guide. Use the Strategy Table to understand the big picture and then use the Business Model Canvas to build out detail.
As shown in the simple Strategy Table below, “Decision Areas” are chosen to be those dimensions of the Business Model Canvas that you consider most critical or uncertain (for example Value Proposition, Channels, Key Activities, Cost Structure, etc.). “Choice Points” are the many alternative approaches you might take for each “Decision Area”. Finally, a “Strategy” is a unique series of “Choice Points” – one per “Decision Area” – that creates an optimized and consistent business model.
For example, assume that a startup owns a materials technology to make lighter and stronger bike helmets. That startup has several strategic options to align its business model and its value proposition.
- In a “Highest Performance” strategy the value proposition revolves around delivering the highest performance helmets, whatever the cost. Consequentially, the company might keep design, materials R&D and brand in-house, partner for manufacturing, tailor the value proposition to leading edge enthusiasts, sell through channel to independent bike shops, and work in a low volume/high mix/ high margin business model.
- In a “Low Cost” strategy all activities and business choices are oriented to provide the lowest cost helmet to mass markets. Partners, Channels, and Cost Structure choices are made to minimize costs of manufacturing, marketing, and delivery to a mass market.
- Finally, a “Low Touch” strategy emphasizes licensing and partnerships to deliver helmets to both the mass market and professionals though different partnership arrangements.
Using this business strategy table, you can create and consider different strategies, with each Strategy representing one potential Business Model Canvas. Once the trade-offs are understood in a qualitative way, the team should work to remove uncertainties and quantify the risks and value of different paths before ultimately choosing a single strategy.
Translate Back to the Business Model Canvas
It can be helpful to translate a particular Strategy from the Strategy Table into the Business Model Canvas format, adding detail and filling out any remaining dimensions. Keep the Strategy Table handy, though, to communicate with investors and to help determine the direction of future, inevitable, business model pivots.
Beyond Business Models
ICG uses Business Strategy Tables to inject rigor and creativity into ambiguous and complex Adjacent Business Growth strategy decisions. While in this simple implementation the columns are more-or-less fixed by the dimensions of the Business Model Canvas, in more sophisticated strategy work, the columns are flexible and chosen to be aligned with the specific decision areas that are core for a particular business.
In either case, the Strategy Table creates an invaluable overview of the landscape and allows you to create a path through a treacherous maze of deep valleys, cliffs, and mountain peaks.
Author: Grant Pease