What is a Business Model Canvas
and Why you shall create one.
Tuesday, 29 April 2020
What is a Business Model Canvas
TLDR: Business Model Canvas, or just BMC is a Canvas used to map the main points related to any Business Model, clarifying its subjects and serving as a tool to improve and evolve the business strategy.
A Business Model Canvas is a tool, initially proposed in 2005 by Alexander Osterwalder, used to map the Business Model of a product, or company in 9 specific subjects (described below). It is commonly used to describe the strategy of a company with a team and shall be reviewed often.
The Canvas has the following structure:
- Value Propositions: The collection of products and services a business offers to meet the needs of its customers.
- Customer Segments: To build an effective business model, a company must identify which customers it tries to serve.
- Channels: A company can deliver its value proposition to its targeted customers through different channels.
- Customer Relationships: To ensure the survival and success of any businesses, companies must identify the type of relationship they want to create with their customer segments.
- Key Activities: The most important activities in executing a company's value proposition.
- Key Resources: The resources that are necessary to create value for the customer.
- Partner Network: In order to optimize operations and reduce risks of a business model, organizations usually cultivate buyer-supplier relationships so they can focus on their core activity.
- Cost Structure: This describes all the costs (fixed, variable, economies of scale) for the proposed product or service described in the Business Model.
- Revenue Streams: The way a company makes income from each customer segment, like Asset Sale, Usage Fee, Subscription Fees, Lending/Leasing/Renting, Licensing, Brokerage Fees, Advertising
Top 6 use cases for the Canvas
It is most commonly used for:
- Innovate: After mapping the current scenario for any product or process using the canvas, you may perform brainstorming sessions to improve your model or resolve specific problems.
- Find the Market fit: Identify your true customer segments and how you may achieve it and deliver the best solutions focusing on that.
- Internal communications: Using the Canvas to clarify to a team, section or the entire company the Business Model of it.
- Pivoting: After identifying some specific blocker, your true Customer Segments or changing how you deliver some product, revenue structure, etc, you may use the Canvas to map the new scenario with potential solutions and problems you may find on it.
- Create a new Product: It's perfect to look into all necessary subjects to create a new product, from Cost Structure, the customers you plan to focus on and the cost structure you need to support the key activities. With this, you will launch the new product with a more concrete strategy.
- Teaching: Existent Business Models, their strengths and weakness can be explained better using the Canvas.
Whatever your objective, the Canvas is a great tool to clarify your ideas and map the main points you have to work on and MILEO.IO is the best online tool to control your Canvas.