Business Model Canvas
The business model canvas — as opposed to the traditional, intricate business plan — helps organizations conduct structured, tangible, and strategic conversations around new businesses or existing ones. Leading global companies like GE, P&G, and Nestlé use the canvas to manage strategy or create new growth engines, while start-ups use it in their search for the right business model. The canvas’s main objective is to help companies move beyond product-centric thinking and towards business model thinking.
To start, it lets you look at all nine building blocks of your business on one page:
How to use the canvas
The business model canvas is a shared language for describing, visualizing, assessing, and changing business models. It describes the rationale of how an organization creates, delivers, and captures value.
- Customer segments
List the top three segments. Look for the segments that provide the most revenue. - Value proposition
what are your products and services? What is the job you get done for your customer? - Revenue streams
List your top three revenue streams. If you do things for free, add them here too. - Channels
How do you communicate with your customer? How do you deliver the value proposition? - Customer relationships
How does this show up and how do you maintain the relationship? - Key activities
What do you do every day to run your business model? - Key resources
The people, knowledge, means, and money you need to run your business. - Key partners
List the partners that you can’t do business without (not suppliers). - Cost structure
List your top costs by looking at activities and resources.
Step by step guide
Before you start
You can learn a lot from your competition. Choose some competitors and map their business models. Armed with this information you’ll have deep insight into what customers want and what they are willing to pay for. You’ll have a clearer picture of just how customers’ needs are met across the entire industry, not just in your company. And, you’ll uncover vital information about how other businesses, maybe even very successful businesses, have created their own spaces in the market.
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Checklist
⊗ Get the right team of 3–5 people together
⊗ Grab a large chunk of wall space
⊗ Print or draw the canvas on a big sheet of paper
⊗ Have plenty of sticky notes and markers ready
⊗ Allow yourself 45–60 minutes of undisturbed time
High level
Start by mapping out the business on a high level: only the most important, vital aspects of the business model.
TIP! Try to make your criteria as clear as possible, so that you and others will still understand what they mean in three months time. split up more complex design criteria.
Connect the building blocks
Link up the building blocks: every value proposition needs a customer segment and a revenue stream! When everything is on the board, take a step back. Have a short break. Did you miss anything? Forget something?
Tip! If you have multiple customer segments it is best to pick a color for each segment in the post-it notes you use. That way you easily see if for each segment there is a value proposition and a revenue stream.
Current state
Don’t mix ideas for a future state with what is going on right now, and don’t mix different departments!
Tip! If you work for a large organization you might find varying value propositions and business models. In that case, ask the different departments to map out their own business models. You can compare them afterward.
Review
Take a step back to check if every customer segment is linked to a value proposition and a revenue stream. Make sure everything on the left side of the canvas is needed to support the right side of the canvas. Everything else can go.
Rank your business model’s performance (0:bad, 10:excellent) for each of the following questions:
⊗ How much do switching costs prevent your customers from churning?
⊗ How scalable is your business model?
⊗ Does your business model produce recurring revenues?
⊗ Do you earn before you spend?
⊗ How much of the work can be done by others?
⊗ Does your business model provide built-in protection from competition?
⊗ On what cost structure is your business model based?
References
A Better Way to Think About Your Business Model. (2013, May 6). Harvard Business Review. https://hbr.org/2013/05/a-better-way-to-think-about-yo
Business model canvas — Business design tool — Business Models Inc. (2021, March 3). Business Models Inc. https://www.businessmodelsinc.com/about-bmi/tools/business-model-canvas/
