Business Design Tools

Business Model Canvas

The business model canvas was developed by Alexander Osterwalder and is licensed to Strategyzer.com​

Key Partners

Who are your key partners?

Key Activities

What are the activities you perform every day to deliver your value proposition?

Value Proposition

What is the value you deliver to your customer? What is the customer need that your value proposition addresses?

Customer Relationships

What relationship does each customer segment expect you to establish and maintain?

Customer Segments

Who are your customers?

Key Resourcess

What are the resources you need to deliver your value proposition?

Channels

How do your customer segments want to be reached?

Cost Structure

What are the important costs you make to deiliver the value proposition?

Revenue Streams

How do customers reward you for the value you provide them?

Effective ways to use the tool

Understanding your current state

The business model canvas is great for mapping out the current state of your enterprise, business unit or team. It helps you to look at the mechanics of how you create, deliver, and capture value. It can really help to flush out your understanding of strengths and weaknesses. This can lead to insights and a general consensus of where you might need to invest time or money to improve how you operate. At the very least, you can build strong team alignment by understanding your current state, which will also serve you well as the foundational starting point for any future strategy design work.

As an innovation tool

Got a great idea? Let’s get the business model canvas out and get to grips with how the idea will work in the real world. Using multiple canvases, make use of the tool to map out as many options as you think makes sense to push the thinking from the boring to the extreme. This allows you to quickly run with an idea, nipping it in the bud if there are too many weaknesses or deciding to run with it if the business model has promise. Remember that value proposition design starts with DESIRABILITY. Do you have something that your target customer wants or needs? Back end business model innovation is around FEASIBILITY to deliver the desired product/service at scale. With commercial innovation, we need to analyze if the business model is VIABLE. Can you create and deliver value in a way that makes money and is sustainable?

As a storytelling tool

What better way to get across an idea to a potential investor (internal or external) than to show them the robustness of your thinking in a way that grabs their attention and tugs at the emotions? The business model canvas can be used to demonstrate real business rigor and to show that you’ve covered the fundamentals. Let’s paint a clear picture of the path to success.

As a resource planning tool

It’s easy to forget about the “back end” of your business. Map it out to make sure you have thought of everything that is necessary to get your business or innovation opportunity off the ground. It’s good to get really specific here and get into the guts of what resources you need, partners you need to work with  and what you need to invest money into. Think about what is really KEY to the business when it comes to resources (people, systems, IP, data, products, culture, funds, etc) and what activities drive the use of the resource. Where does the time get spent?

As a "making it real" tool

Let’s get specific and let’s see some numbers. The tool can show the reality of the business at a deeper level when you show numbers. Adding data into the equation keeps things grounded in reality, and it highlights the key aspects of the business case. This can help you to assess where you should be focusing your resources to improve the overall model and where you are wasting your time and money. Think about actualizing your main revenue streams. What are your average transaction values? What is the reality behind your cost structure? What is your number one channel? What proportion (%) of time is spent across your key activities? There are lots of ways to make use of numbers, percentages, and rankings to bring the business model canvas to life.

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Be generous with terminology

Remember that these tools are fundamentally a way of facilitating complex conversations. The terms within the tool should ideally be concrete and specific, but at the very least they should be consistent. Your “customers” aren’t always the people buying your product. They could include the people running the franchise for your product, distributors, or caregiver to the ‘end user’. Sometimes, you can put the same people in both “customers” and “partners”. The “revenue streams” don’t have to just be money. They  can be anything that represents captured value for your business, like technical expertise or even improved employee wellbeing. Explore the possibilities that work for you.

Really nail the market facing side

The right hand side of the canvas is what the world sees. This is the most vital part of the canvas as far as obtaining and retaining customers. Make sure you take your time with these sections so you don’t miss any key information or angle. Value proposition design is obviously at the heart of this.

Keep the model in mind for general business discussions

We call this “on-the-fly” mode. Having conversations about a business or a business proposal can often be intimidating or daunting. If you keep the 9 building blocks of the business model canvas in mind you can be sure you discuss the key building blocks of any venture.You really don’t need to wait and always use this tool within workshop settings. Push yourself to see where you can bring its value to use.

Challenge the use of vague terms

There are certain words that get banded about at every business development meeting. Words like “channels” and “marketing” are not specific enough to put on a sticky note and populate your canvas. What exactly do we mean by these? Don’t shy away from getting really detailed with what you put down on the canvas. It’s easy to brush over certain topics with generalizations, but getting specific will give you a much more robust model that leaves little to interpretation. You should encourage your team to really get messy on the first pas; then you have an opportunity to sense make and work on a clean and more specific version.

Create a gallery of options

The great thing about using sticky notes on these canvases is that you can quickly move or replace ideas to switch up the story you’re telling. With this in mind, it’s always a great idea to come up with a load of different options for each so that you can test out different scenarios or business options. At the more macro level, when using the business model canvas as an innovation tool, consider creating a gallery of business model options. This can allow for a strong mixture of extreme thinking and practical versions.

Use it as a team, build common language

Although this canvas is great for building out visualizations as a solo exercise, it’s far more powerful when used as a team. Include people from different departments or with different expertise to provide as many perspectives as possible. The team element will drive powerful ideas, bring together groups in a rapid way, and help with better decision making on what to focus on.

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