5. Using the Strategy Canvas for Differentiation

In this lesson, we’ll explore the Strategy Canvas as a tool for analyzing competitive positioning and identifying potential areas of differentiation. This section will apply the Strategy Canvas to Netflix and its industry evolution to provide an example of how you can leverage this tool for strategic insights in any sector.

Revisiting Netflix’s Competitive Landscape

When Netflix began as a streaming service, it was competing primarily with cable television and physical rental stores. Each alternative offered different elements that mattered to users:

• Cable TV required installation, came with technical support, provided sports, commercials, and an extensive variety of channels.
• Rental stores provided personalized movie recommendations, had no commercials, but required in-person visits and individual payments for rentals.

Strategy Canvas Analysis: Early Days of Netflix Streaming

In the early streaming phase, Netflix capitalized on a handful of core values and intentionally eliminated other industry standards. For instance:

• Reduced Costs: Instead of charging per view like rental stores or using high-priced subscription models like cable TV, Netflix offered a single, lower monthly fee.
• Eliminated Commercials and Live Sports: Netflix stripped away traditional ads and live content, focusing on uninterrupted, on-demand streaming.
• Created Key Differentiators: Netflix made binge-watching (watching entire series in one go) possible by offering complete series upfront, plus access from any device—computer, phone, or TV—without setup.

Visual Representation on the Strategy Canvas

If mapped out on a Strategy Canvas, Netflix’s early strategy showed low scores in areas like sports, commercials, and technical support (eliminated factors). Instead, it scored highly in content accessibility (watch from any device) and convenience (no installation or commercials). This made Netflix’s differentiation from cable and rentals clear, leveraging these unique attributes.

Netflix in a Changing Streaming Market

Fast forward to 2022–2023, where the streaming landscape has changed dramatically:

• The dominance of streaming has led to increased competition, with other platforms like Amazon Prime Video, Disney+, and HBO Max entering the market.
• These new entrants often include live sports options, partnerships for discounts, and competitive original content libraries.

Strategy Canvas Analysis: Current State of Streaming

In this evolved landscape, Netflix has lost some of its original differentiators:

• Content Availability and Original Series: Most streaming services now offer original content, making it challenging for Netflix to stand out solely on programming.
• Binge-Watching and Device Accessibility: These features, once unique, are now standard across major platforms.
• Bundling and Pricing: Competitors provide unique bundling options (for example, combining streaming with other services) and partnerships that Netflix currently lacks.

Thus, the Strategy Canvas for Netflix in this phase would illustrate a nearly level playing field, where both Netflix and its competitors offer comparable values across most attributes. This reflects the “commoditization” trend, where features once unique to Netflix have become industry standards.

Using the Strategy Canvas to Guide Differentiation

Steps to Apply the Strategy Canvas

1. Define Core Value Elements: Identify what customers value in your industry—attributes that influence their purchasing decisions.
2. Rate Yourself and Competitors: For each attribute, assess how your company and competitors perform.
3. Identify Actions: Choose which attributes to eliminate, reduce, raise, or create to build unique positioning.

Limitations and Best Practices

The Strategy Canvas is a strategic guide rather than a strict directive. It has inherent subjectivity, so always:

• Involve multiple perspectives: Gather input from team members and users to reduce bias.
• Rely on real feedback: Use qualitative and quantitative data to assess whether users recognize and appreciate your differentiators.
• Continuously update: Markets evolve, so revisit the Strategy Canvas regularly to capture emerging attributes and changes in competition.

By applying this framework consistently, companies can align on a shared vision for differentiation and guide product strategy.