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The Business Model Canvas

The Business Model Canvas (BMC) is a strategic management and entrepreneurial tool. It was developed by Alexander Osterwalder as a doctorate submission and was popularised by him and Yves Pigneur in the book Business Model Generation. The web site is the ultimate source for supporting information.
The Business Model Canvas allows you to describe a business model on a single page. With this tool you can understand, design, challenge, discuss and optimise business models. You can explore what-if questions to modify an existing model or to invent a new one.
The Business Model Canvas is ideally suited to understanding current and future models for OurCo [[later version: include a method for substituting placeholders]] in its entirety or for individual product lines. It can be used to highlight the nuances of specific offerings. It can document the current situation or reflect changes deemed appropriate to address issues identified using the Business Model Environment Canvas (also from Osterwalder et al.)
The BMC can equally be applied to understand our customers’ business models - what revenue streams might an OEM (Own Equipment Manufacturer) have; how does the business model of a VAR (Value adding Reseller) differ from that of a wholesaler; and what the specific value propositions of our key account Acme Inc.?
The canvas can be used to document the transition from one business model to another - perhaps in line with market trends, perhaps offsetting the commodification of current core products or a disintermediation in the value chain.
The Business Model Canvas is usually documented as a single-page document, comprising nine specific building blocks, as described below.
It addresses the three key questions of desirability, feasibility and viability.
BMC Building Blocks
Building Block
Description of Building Block
Customer Segments
The Customer Segments Building Block defines the different groups of people or organisations an enterprise aims to reach and serve
Value Propositions
The Value Propositions Building Block describes the bundle of products and services that create value for a specific Customer Segment
The Channels Building Block describes how a company communicates with and reaches its Customer Segments to deliver a Value Proposition
Customer Relationships
The Customer Relationship Building Block describes the types of relationships a company establishes with specific Customer Segments
Revenue Streams
The Revenue Streams Building Block represents the cash a company generates from each Customer Segment (costs must be subtracted from revenues to create earnings)
Key Resources
The Key Resources Building Block describes the most important assets required to make a business model work
Key Activities
The Key Activities Building Block describes the most important things a company must do to make its business model work
Key Partnerships
The Key Partnerships Building Block describes the network of suppliers and partners that make the business model work
Cost Structure
The Cost Structure Building Block describes all costs incurred to operate a business model
There are no rows in this table
Tips for using
The Business Model Canvas is a subjective tool - there is never a single correct answer. The real purpose is to promote discussion and to gain insights. After a period, a common view of the business model, the particular nuances and the appropriate level of detail for the case in point will be achieved.
Feel free to “sleep on it” and to review the model one or several days after the original discussion - which is the very reason for discussing the notion of asynchronous, dynamic documents in this Capstone Project.
Input can be captured (traditionally) using Post-It Notes on a physical or a virtual whiteboard, pen and paper or even PowerPoint. After the creation of this Capstone Project, your tool of choice may well be coda!
Quality Checks
All building blocks should be completed, usually in the sequence listed above, as this helps the flow of the discussion.
Try to ensure that “like with like” is applied - using either nouns or verbs helps ensure consistency and avoid omissions.
Examine the flight level, not just for consistency across the building blocks but also for its appropiateness to the use case under discussion.
The Business Model Canvas is licensed under Creative Commons. As a result, there are many interesting and useful variations in the public domain. (plant trees while you search 🌳) will help you find a flavour to your liking. Failing that, you can adjust and modify the building blocks to suit your needs. Just make a copy of this coda doc and work away.
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