Business Model Canvas

Background of the Business Model Canvas

• One way to sructure strategic planning, analysis
• Checklist helps cover all the bases when designing a business model
• Handy if have one of several possibilities that you are examining
• Note that a single business might operate based on two different models (but it’s more complex to do that and usually not the right way to go.)

Building Blocks of a business model

(From book: Business Model Generation)

• Value Proposition (the offer)
  • What problem do we solve for the customer?
  • What product/service do we deliver to the customer?
  • How do we do that compared to what they do today?
  • There’s more than “solving a totally new problem/needs”
  • Examples: performance, customization, convenience, price, etc.
• Customer Segments
  • What customer or groups of customers?
  • And who are the most important ones?
  • What makes a distinct segment?
    • If a set of customers require: A different offer, different channels, different types of relationships, different payment models, etc
  • Examples: Mass market? Niche market? Segment of larger market? Two sided market?
  • Note that you might be going after more than one!
• Revenue Streams (or pricing model)
  • Per customer segment/offer, who pays and what do they pay for?
  • Examples: simple purchase; usage fee (“pay by the drink”); subscription; licensing; in-“game”-purchases
• Channels
  • How do you reach a customer? How do they want to be reached?
  • Are you able to reach them in that way?
  • You need to figure out how to: generate awareness, allow evaluation, enable purchase, deliver the product, provide after sales follow up
  • Examples: Web site, Direct Sales, Reseller web site (e.g. Amazon), Stores, Wholesaler.
• Customer Relationships
  • What kind of ongoing relationship does your customer want with you?
  • Examples: personal email; self-service support site; face-to-face; online community; co-creation
• (Key) Resources
  • Go a level deeper than just “money”. Identify all the things you will need
  • For example: expertise (we need a bigdata person), IP (we need to license music), physical (we will need a shop floor to do assembly.)
• (Key) Activities
  • This might seem obvious but it’s worth calling out, because it’s so ‘obvious’
  • Examples: software development; packaging and shipping; manufacturing; support; marketing; manufacturing; licensing; etc.
• (Key) Partnerships
  • What outside entities do you have to establish trust with for your model to work?
  • Suppliers? Resellers? Distributors? Maybe a web distributor like Amazon? Maybe Apple, because they have to approve your app. Are you licensing something from a partner?
• Cost Structure
  • ‘Simply’ all the costs needed to run the businss model
  • Fixed costs, per-unit variable costs, per-employee variable costs
  • Based on Key resources, key activities and key partnerships