Business model canvas
The business model canvas is a great tool to help you understand a business model in a straightforward, structured way. Using this canvas will lead to insights about the customers you serve, what value propositions are offered through what channels, and how your company makes money. You can use the business model canvas to understand your own business model or that of a competitor! The business model canvas was created by Alexander Osterwalder, of Strategyzer.
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.
- Get the right team of 3-5 people together
- Grab a large chunk of wall space or a war room
- 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
How to use the business model 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.
Start by mapping out the business on a high level: only the most important, vital aspects of the business model.
Connect the building blocks
Link up the building blocks: every value proposition needs a customer segment and a revenue stream!
TIP! If you have multiple customer segments it is best to pick a color for each segments 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.
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 afterwards.
Take a step back 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 does 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?
- Take a picture of your business model canvas, so you can easily share with your team/colleagues
- Ask team members to discuss the business model with others
- Trigger team members to actively look for 1-2 blind spots
- Filter out the design criteria
- Test your assumptions