We Love the Business Model Canvas (and so should you!)

Posted by Fernando Solano on Jul 23, 2019 12:13:36 PM
Fernando Solano

In 2008,  Alex Osterwalder developed a tool to facilitate the analysis, mapping, and visualization of a company's business model. The “Business Model Canvas” is a summary (about the size of a page) of the strategic details that a company needs to generate, deliver, and capture value. The tool is divided into nine blocks that allow you to keep the focus on the most important strategic elements of your business.
Benefits of the Business Model Canvas

There are various benefits of the business model canvas. Among them are:

  • It promotes teamwork by generating a common language to hold conversations about the strategy.
  • Visual representation on a single page about what you need to do to generate and maintain a competitive advantage.
  • It promotes innovation by facilitating the design of new business ideas while allowing the visualization of existing businesses.
  • It promotes the strategic discipline of the company since it is a living document that needs to be constantly updated.



Guide to fill the Business Model Canvas

The Business Model Canvas contains 9 categories that answer important questions about your business. The correct way is to divide the Canvas into two large units of analysis: the right or market part, and the left part (internal company analysis)


Step 1: Previous activities

Print a Canvas format on a plotter size 841 x 1189 mm and paste it on a wall. Buy bookmarks and post-its. Because it is an intellectual property tool of Strategyzer (Alex Osterwalder company) you should always print the formats of the Business Model Canvas with the legend.


Business Model Canvas

 

Step 2: Complete the Business Model Canvas

Before completing the Canvas we recommend analyzing the environment taking into account the forces of the industry, the market, and key trends.


Analysis of the right part (or the market)

This section is where the innovation of the model occurs, and as such, where it is recommended to start the analysis.

  • Customer segments
    It is a group of customers that creates value or solves a problem. To analyze this block you can rely on other methodologies such as:
     
    • Value Proposition Canvas
    • Buyer Persona
    • Empathy Map
    • Others

  • Value proposal:
It is the value it offers to its customer segments; In other words, how the problem is solved.
To analyze this block you can rely on methodologies such as:

    • Value Proposition Canvas
    • Jobs to be Done
    • Customer Experience Journey Maps
    • Blue ocean strategy
    • Others

  • Channels

It is the means by which you reach your customer segments. The channels can be your own or from third parties. In the case of third parties, analyze them as a segment and see what value they obtain from your product/service. In the channels consider the following moments:

    • Means you use to publicize your value proposition to customer segments.
    • The way you deliver your value proposition to customers.
    • The ways your customers evaluate and give feedback.

  • Relationships with customers
It is the way you maintain relations with your current and potential clients.


  • Revenue streams
In this block, you define HOW you will generate the income. We recommend writing down all the feasible options and then experiencing them to refine the way of payment while the willingness to pay by the client is known.

  • Analysis of the left part internal analysis of the company
Once we know how we generate, deliver, and capture value, we proceed to align the internal part of the company to perform the right part of the Canvas efficiently.


  • Key resources

They are the physical, economic, human, or intellectual assets that are required to carry out your company's activities. The more "rare" or scarce the resources, the greater the likelihood of armoring against the competition.

  • Key activities
Refer to the core activities of the company. Here, we define the fundamental activities that must be performed exceptionally to generate value. Any other activity that is not fundamental concerning the value contribution, consider subcontracting.

  • Key alliances
They are the necessary alliances to execute the business model and can enhance your value proposition.

  • Cost structure

After analyzing the key activities, key resources, and key partnerships, reflect on the costs your company has.


Tips for successfully mapping your business model using the Business Model Canvas

  • Use post-its so that the Canvas has flexibility, as it will allow you to move ideas when required.
  • Write down one idea per post-it, use words, images, or a mixture of both.
  • Define a color code: for example, if your model has two customer segments, use post-its of different colors for the ideas in the blocks that correspond to each of them, to differentiate "as is" from "to be", and to differentiate the facts (proven) from the assumptions (unproven).
  • Avoid orphan elements in the business model, each idea must be related to another idea in the other blocks.
  • Use the KIS method (Keep it simple), avoid using many different ideas in a single format as it may be confusing. If required, use different formats.

 

Topics: business models, strategy

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