Business Model Canvas

Background of the Business Model Canvas

(based on Business Model Generation and follow on research, books and tools)

• Here is 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.)
• Use this in combination with the Value Proposition Canvas from the homework

An interesting variant

• Lean Canvas: Looks like a refinement of the Business Model Canvas, but very similar in concept. Worth a look. This is what’s used in the Spark/Sprout programs.

Building Blocks of a business model

Customer Segments (for whom)

• What customer or groups of customers?
• And who are the most important ones?
• A segment is distinct if you can identify 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!

Value Proposition (the offer)

• Important: Use Value Proposition Canvas to analyze this in more depth!
• 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”
  • More common is that there’s the old way, and then there’s our improvement on it
  • Examples: performance, customization, convenience, price, status, safety, etc.

Revenue Streams (or pricing model)

• Per customer segment/offer, who pays and what do they pay for?
• How do you set and adjust the price?
• Examples: simple purchase; usage fee (“pay by the drink”); subscription; licensing; in-“game”-purchases; lending or leasing;

Channels (How do I reach customers?)

• 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, social media
• Why? Major cost driver

Customer Relationships (ongoing)

• 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
• Why? Key part of the value proposition; also a major cost driver.

Resources (What do you need for success)

• 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.)

(Top) Activities (To do list)

• 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.

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

Conclusions - Business Model Canvas

• It’s purpose is to help you consider and address all the pieces of your business model
• Is it a business or a hobby? Business includes much more than just the product
• Gives you a way to partition the work, and present the results