Strategy Explore

Ohmae's 3C Model

In Ohmae's 3C model, strategy has to hold the company, the customer, and the competition in view at the same time.

The questionWhere do what a customer segment buys on, what competitors offer, and what we do better actually line up?

Also called the strategic triangle, which is Ohmae's own term.

Model · Kenichi Ohmae, 1982

CustomersSegments, by what each one buys on
CorporationStrengths relative to named rivals
CompetitorsNamed rivals serving the same buyers

Schematic of the strategic triangle, with the three parties that a strategy has to hold in view together.

When to use it

A client's strategy document describes the company's strengths at length and says little about what a named group of customers will pay for.
You are entering a new segment or country and need a first structured view of buyers, rivals, and the client's own position before any numbers exist.
A product team is arguing from a competitor's feature list instead of from what customers are trying to get done.
Strategy work has stalled because marketing owns the customer view, sales owns the competitor view, and operations owns the capability view, and nobody has joined them.

When to avoid it

The question is how an industry is structured and where profit sits in it. Five Forces or a profit-pool analysis answers that, and the triangle does not.
The market is already settled and the decision is internal, such as how to organize a function or redesign a process.
The decision needs numbers, such as a price or an investment case. The triangle frames the question and quantifies nothing.
The client cannot get any evidence on competitors or on why customers choose. The corners will be filled with opinion.

Overview

Ohmae’s triangle asks a strategist to look at three parties together: the customers a business wants to serve, the competitors already serving them, and the company itself. A strategy holds up only if it gives a specific group of customers a reason to buy, rests on something the company does better than named rivals, and is hard for those rivals to match. It supports a choice about where to compete and what to build on.

The difference from a SWOT is that every claim is relative. A strength means better than a particular competitor, on something a particular segment chooses on. Anything that cannot be stated that way stays off the page. The model gives no scoring rule, so it works best when you have win-loss records and cost data in hand.

The three Cs

Customers

Ohmae starts here. Split the market by what customers are trying to do with the product, and by which customers, channels, and regions the firm can afford to cover. Segments that look the same on demographics can buy on different grounds, and those grounds define what winning means in each. Everything else in the model is read against one segment at a time.

Corporation

The company's own strengths and weaknesses, judged relative to competitors and not in the abstract. Ohmae looks at functions such as purchasing, design, engineering, sales, and service, and at how resources are allocated among them. The firm does not need an edge everywhere. It needs one where customers in the chosen segment make their choice.

Competitors

The rivals that serve the same customers, compared function by function with the firm. The point is to find where a competitor's cost, product, or service differs from yours in a way the customer can see. Name the competitors. A corner reading "the market" or "competition" cannot be compared with anything.

What it is not

A SWOT drawn as a triangle. A SWOT can say "strong brand" without saying for whom or compared with whom. In the triangle every claim has to name a customer segment and a competitor, or it does not belong on the page.
An industry analysis. It does not explain why an industry is or is not profitable. It places one firm against named rivals for named customers.

The steps

Fix the scope

Pick one business and one market. The triangle is read for a business unit, a product line, or a market entry, not for a diversified group. Write down the decision it should inform.
Segment the customers

Divide buyers by what they are trying to do and by what you can reach, not by demographics alone. For each segment that matters, write what the buyer chooses on. Win-loss interviews and sales records are better sources than a workshop. You should leave this step with two to five segments and a buying criterion for each.
Name the success factors

For the segment you care about most, list the few things a supplier must do well to win. Keep the list short enough that the team can rank it. Ask recent buyers and recent lost deals what decided them. Do not accept the executive team's list of what it already does well.
Compare firm and rivals on each factor

Score the company and two or three named competitors against each factor, with a line of evidence next to each score, such as a delivery record, a cost figure, or a win rate. The output is a grid of relative strengths. If the company is not compared with anyone, you are doing a SWOT.
Choose where to build

Find the factors where the firm leads and customers decide on them, and plan to build on those. Where a rival leads on something the segment cares about, decide whether to close the gap or leave that segment. State what you will stop.
Check the triangle closes

Ask whether the customer benefit, the company's strength, and the competitor gap support each other. Then ask how long it would take a rival to copy the advantage. If the answer is shorter than your planning horizon, the advantage is a feature, and it will not last.

In practice

The strategy deck for a managed print services provider had forty slides on capability and four on customers, and it described the firm's edge as "service quality." Asked who rated the service and compared with whom, the room had no answer. The team split the customer base by how clients buy. Law firms and clinics bought on uptime and document security. Schools and councils bought through tenders on cost per page.

Win-loss records showed two national rivals taking the tender segment on price, and local dealers competing for the first segment with slower repairs. The provider's overhead was too high to win tenders, but its technicians were closer to clients and fixed machines faster than either set of rivals. The plan changed from "grow across all public and private accounts" to "stop bidding on most tenders and go after the first segment." The target list was rewritten around that choice.

What you leave with

Customer segments described by what each one buys on.
A short list of success factors for each priority segment, with the evidence behind each.
A comparison of the firm and named competitors on each factor.
A decision on which segment or function to build on, and which segments to leave.

Failure points

One customer in the singular

The deck talks about "the customer" and the profile is an average of several different buyers. The success factors that come out are generic, such as quality and service, because no one segment buys on all of them. Segmenting is where the model earns its keep.

Self-assessment in absolute terms

The Corporation corner is filled in by management's view of its own strengths, and no rival is named. Everyone rates their own function as good. Insist that each strength is stated against a competitor and supported by something a third party could check.

Today's rivals only

The competitor list is drawn from firms that share the client's business model. The threat comes from a different kind of supplier serving the same customer need, and it never appears on the page. Ask who else a customer could use to get the same job done.

Success factors taken from the executives

The factors are the things the company already does well, relabeled. A grid built from them shows the company ahead on everything. Check each factor against lost deals and against customers who left.

A one-time slide

The triangle is drawn once for the planning cycle and filed. A rival cuts price or a segment changes how it buys, and the analysis is stale without anyone noticing. Set a date to redo the comparison.

The failures above are usually Framing: the wrong problem was chosen before this framework was applied.

Origin

Kenichi Ohmae set out the strategic triangle in The Mind of the Strategist (McGraw-Hill, 1982). He wrote it while at McKinsey, where he helped build the firm's strategy practice and later ran its Japan operations. The triangle is one chapter of a book about how strategists think, and it sits alongside a separate chapter on identifying the factors that decide success in a given business. The shorthand "3Cs" comes mostly from later textbooks and training material.

Marketing texts often stretch the model to four or five Cs by adding items such as collaborators and context. Those are extensions, not Ohmae's. The model is not trademarked or licensed.