The Business Model Canvas18 Mar 2011
I totally forgot to post this on my own blog so here it is, the original one can be read at It-Eye
On our last IT-Eye openspace meeting we got a great explanation of The Business Model Canvas from our colleague Tim Pinchetti. I found it very interesting to see how simple The Business Model Canvas is for sketching new or existing business models. As this was not a presentation but an open discussion we soon ended up in sketching a real life business model. While we discussed our new business model it was clear to me that the only thing you needed to know to be able to fully understand what the model meant were the 9 blocks on the canvas. When you know the meaning of those 9 blocks you are capable to sketch, understand or discuss The Business Model Canvas.
Here are the 9 blocks (source):
- Key Activities: The activities necessary to execute a company’s business model.
- Key Resources: The resources that are necessary to create value for the customer.
- Partner Network: The business alliances which complement other aspects of the business model.
- Value Proposition: The products and services a business offers. Quoting Osterwalder (2004), a value proposition “is an overall view of .. products and services that together represent value for a specific customer segment. It describes the way a firm differentiates itself from its competitors and is the reason why customers buy from a certain firm and not from another.”
- Customer Segments: The target audience for a business’ products and services.
- Channels: The means by which a company delivers products and services to customers. This includes the company’s marketing and distribution strategy.
- Customer Relationship: The links a company establishes between itself and its different customer segments. The process of managing customer relationships is referred to as customer relationship management.
- Cost Structure: The monetary consequences of the means employed in the business model. A company’s DOC.
- Revenue Streams: The way a company makes money through a variety of revenue flows. A company’s income.
I found The Business Model Canvas very easy to read, easy to draw and the most important it gave me the chance to quickly understand a business. Besides understanding the business you are also able to see the relations between your customers and partners, you can maybe even figure out where your new opportunities are or where your business needs improvement. While sketching a new business you don’t loose any time in trying to create a right picture because the canvas has a small set of rules. This way you are free and have the opportunity to focus on you creativity like a true painter that is drawing on a canvas.