This is the base to develop a strategy that will make you successful.
The Business Model Canvas tool is the perfect starting point for any situation where you are challenging your strategic approach or your business purpose. Let us share with you why this tool is so powerful.
Whether you are starting a new business or are part of a running one, all of your actions should fit into the strategic plan of the business. To develop a solid strategic plan you need to carefully look into all the areas of the business and there is no tool like the Business Model Canvas (BMC) to make sure you are not missing anything.
But it’s easy to get caught up in the details of the day-to-day, or by the enthusiasm of your great product idea and lose the overall vision of the business.
Again the BMC is the most effective tool to make sure your strategy is the best approach to what you are trying to accomplish.
At WeCanvas, our primary step for almost all our business consultancy projects is the Business Model Canvas.
We have used this tool for many different clients, projects and of course for ourselves. It is useful for:
New
Businesses
who want to prototype their business model
Small and medium businesses
who are struggling to identify the opportunity and develop a strategy
Medium
Businesses
who are opening a new business unit within the organization;
Teams within large organizations
who are looking at developing or expanding their services.
Every time we start a new project, we find an extra benefit to this powerful tool. This is why we want to explain what the Business Model Canvas actually is and how it can help you draw your future with confidence.
What is a Business Model Canvas and what is its purpose?
Originally created by Strategyzer’s Cofounder Alex Osterwalder, the Business Model Canvas is a strategic management tool that helps visualize and lay out the foundations of a company’s strategy on one single sheet. It provides an overview of the Business model which can be updated as the company evolves.
Because it is a visual, straightforward and intuitive tool, it allows you to document and share the essential building blocks of a business with employees, managers, founders, investors and other stakeholders. It draws the bigger picture and defines how each section interacts with the others. It is a common source of knowledge and reference that each department of a company can understand, work and build from.
The canvas is built out of 9 critical elements which can be grouped into 3 main parts. IDEO calls them Lenses of Innovation because they are a way of examining one aspect of your business. For a successful outcome, none of these 3 parts can be ignored. They are all interlaced and essential.B
Desirability (The right side of the Canvas) is about being desirable to your Customer. More importantly, it is about knowing and understanding the customers, what makes them connect with your company and ultimately make the decision to use your product or service.
Feasibility (The left side of the Canvas) is about everything that makes it possible to run the Business. Setting up the right processes, structure, team and resources that will allow the company to deliver the value to their customers
Viability (the bottom part of the Canvas) is about the money and how much is spent and earned. At the end of the day, companies need a process that makes financial sense if they want to succeed.
This is how the 3 lenses fit within the Business Model Canvas.
The 9 elements in more detail
What are the 9 elements and what are the right questions to ask ourselves when filling them in?
The best practice is to start with the right side of the canvas with boxes 1 to 5.
1. Value proposition. This is the starting point. It sits in the middle of the canvas because the value proposition is the core of the Business.
What key problems do your products or services solve for your customer?
2. Customer segments. Who are you creating value for?
3. Customer relationships. What do your customer segments expect from you? How do you communicate with your Customer? What kind of relationship do you have with them?
4. Channels. How does your value proposition reach your customers?
5. Revenue streams. How do customers reward you for the value you provide?
Boxes 6 to 9 allow to define how and with which means the company is able to deliver the value proposition to their customers.
6. Key activities. What activities drive the most value?
7. Key resources. What resources are needed to create value?
8. Key partners. Who are the most important people involved?
9. Cost structure. What are the essential costs within your business?
The magic about the Business Model canvas is that once you have laid the foundations out, it will allow you to develop and adapt. It’s a way of finding the strengths, vulnerabilities and possibilities that lie beneath the surface of your idea.
When to use the Business Model Canvas tool?
Starting up a new business
If you are a startup or setting up your own business as a freelancer, we highly recommend starting with the Business Model Canvas. It will help you think of all the critical elements of the Business from who your customer is to your costs and the needed resources. Once filled in, print it out or keep it close for you to reiterate as the project is taking shape.
Developing a new business unit
If you are thinking of developing a new business unit within your organization, other than having an overview, it will help you compare different approaches as well as understand how this new unit interacts with your existing business model.
Clarify your strategy to communicate it effectively
If you are part of the leadership management team, going through this exercise can help you clarify your strategy, then communicate your goals and objectives effectively to the rest of the employees.
Align on strategy across departments and bring accountability to teams.
If you are part of a complex running business, the Business Model canvas can help different departments to align on strategy, short- and long-term targets. This will make employees feel accountable and part of the bigger picture.
Adapt your business to change
If you are part of a running business that needs to adapt to a changing environment, the Business Model Canvas can help you determine the changes to be made and the areas of focus to concentrate on.
Understand your competitors to get ahead of them
It can also help you acquire business intelligence on a competitor’s business. Running the Business Model Canvas on your competitors’ businesses will help you identify their strengths, weaknesses, their limitations and the elements of the business in detail. This information can allow you to design your own model to disrupt the market and get ahead of the competition.
Review internal performance and perceptions.
Other than being used on a higher level, it can also be used internally for teams to review their own performance and perceptions.
For a better understanding of your customers
As consultants, facilitating this workshop helps us to dive into our customer’s world. Whether we are more or less familiar with their industry, this tool always brings us strong insights about the areas to work on. If you are a consultant, whether your expertise is finance, branding, business or project management, we highly recommend using the tool to have an overall understanding of the business.
Why should you use the Business Model Canvas?
It’s easier than a Business Plan
Business plans take a long time to write and are often only referred to once. The detail of a Business plan isn’t always necessary and that is when the Business Model Canvas comes in. It is a one pager and highlights the most important and essential elements of the Business model.
It’s easy to edit and reiterate.
The idea isn’t to fill this canvas once and let it aside. It is an easy tool to revisit, edit, iterate and adapt to change. We highly recommend to do this exercise periodically.
It helps to clarify the state of your business and focus on the right things.
It helps to visualize the state of your business today and identify the strengths, vulnerabilities and possibilities that hide behind the day-to-day of running a business. It, therefore, helps businesses evolve with time.
It makes you and your team accountable.
All elements are included and laid out in this blueprint which makes all departments and teams involved and visible. It is a common reference that enables all team members, no matter their level or expertise, to work from.
The list of the benefits is endless. You can refer to our first article on the “5 benefits of starting any strategic project with the Business Model Canvas” on the Stories section of our website.
Tips and Ressources
You can access the Strategyzer site to download templates and tutorials of the business model canvas and then adapt them to your own goals and needs.
The creator of the Business Model Canvas says: “Keep your first canvases ‘rough and dirty’ when you use the Business Model Canvas to sketch out business models for new ideas or ventures. Then immediately test your early canvases in terms of desirability (will customers want it?), feasibility (can I build it?), and viability (will it be profitable?). Adapt your canvases rapidly based on what you learn from your tests. Iterate and refine your canvas with this so-called Lean Startup approach until you have sufficient evidence that your idea can succeed.”
Sources:
Isaac Jeffries – BMC Part one how to use the Business Model Canvas?
Nader Sabry – Growth thinking vs. Business Model Canvas
Paul Crosby – How to Apply a Business Model Canvas to Your Company
Aryo Shokohiazar – How To Plan Your Business On One Page (Hint: Business Model Canvas)
Dale Hart – The 9-Step Business Model Canvas Explained (2022 Update)
This is Service Design Doing – Prototyping ecosystems and business value. Business Model Canvas
Paul Hersztowski – What is a Business Model Canvas?
Jibran Qureshi – The Business Model Canvas
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