Business Model Canvas: Introduction
What is the Business Model Canvas?
Created by Alexander Osterwalder of Strategyzer, the Business Model Canvas is a great strategic management tool that helps you understand and structure your business plan methodically. Nine building blocks are laid out in a visual template that breaks down the business’s value proposition, infrastructure, customers, and finances.
What are the nine building blocks?
Customer Segments: Who are you selling to? What do they do? Feel? Think? Where are they located?
Value Propositions: Why do customers buy and use your product or service? Why would your customers use your product? What is your differentiator? How is your product positioned?
Channels: How is your product getting promoted, sold, and delivered? Why? To what extent is it working?
Customer Relationships: How are you interacting with the prospects through their ‘customer journey’?
Revenue Streams: How are you earning a revenue based on your value proposition?
Key Activities: How are you going to deliver your value proposition? What unique strategic activity do you need to do to function as a successful business?
Key Resources: What are the unique strategic assets your business needs to compete in the marketplace?
Key Partnerships: What does your company not have to do, that someone else could do, to make sure you focus on your Key Activities?
Cost Structure: What are your business’s major cost drivers? How do they link to your revenue?
Why use the Business Model Canvas Model?
By evaluating and breaking down each of the nine sections, anyone working on business development will be able to better evaluate their standing in the marketplace.
It is popularly used by entrepreneurs, intrapreneurs, and innovators who are looking to pursue a business idea. I find it helps to break through the noise, and deliver these four outcomes:
Focus: nine building blocks with a clear, methodical path to follow help create a starting point when I just have parts, but not a plan. Getting down a solid BMC improves the clarity and focus on diving deeper into each of the nine elements to sell and grow exponentially.
Flexibility: compared to other models that only look at parts of each of these nine elements, the BMC is an overview of them all which makes adjusting, pivoting, and trying something new easier and more straight forward. The whole plan is easily at a user’s finger tips.
Transparency: When working with a team, the BMC keeps everyone on the same page as to understand the key components of the business. This will not only strengthen the actual business, product, and value of your company, but also clarify your vision and benefit your team culture.
Simplicity: While you will still need to do the work and think through each answer, each of the nine building blocks can be clearly defined and answered. The BMC is about getting to the core of your business, not the details.
Let’s get started!
Grab your team, a pencil, sticky notes, and print out the canvas. Project the canvas on a wall or whiteboard, and start filling it in. Remember, this is a living document. Step back periodically, and ask yourself, “Does this make sense? Is this realistic? How does everything link together? What are the most important linkages and components of this plan?” Do not forget to update it as your business progresses and evolves.
