Today I’m going to talk about the Business Model Canvas which is a tool that allows people to create or adapt any type of company or business through the work and understanding of the logic that this company has to generate revenues, all with an integrated point of view. This handbook was invented by Alex Osterwalder who says that the best way to describe a business model is to divide it in to 9 components which cover the 4 main areas of a business (customer, offers, infrastructures, economic viability).
The best way to explain this handbook is through the description of its components. But, before starting, We need to clarify that the canvas requires a reflection about the strategic approach of each of its elements before working with them.
The canvas requires a reflection about the strategic approach of each of its elements before working them.
You should focus on this element. It’s more important than the Value Propositions, because if there isn’t a customer, there isn’t a business. You have to identify who is your customer, a normal person doing your business is a B2C (Business to Consumer) or if your customer is a company B2B (Business to Business). Who are your target customer, if it’s a niche market.
What makes your business special, different or unique?. In this element, we have to consider that the really important topic is whether the customer is willing to pay for your Value Propositions.
The key in this element is how will you connect with your customers?. If you believe you will connect to them through a web page, social networks, sales force, phone calls, etc.
Do you have a dedicated personal to interact with the customers?. What do we want to inspire in our clients based on our relationship with them?. How does the customer interact with you through the sales and product lifecycle?
These elements are the consequences of the other topics. If you have or find a real value propositions, this point will be Self-evident. For the revenue streams, you can use several common patterns of revenues and pricing strategies like freemium, premium…
It should analyze the amount of financial, intellectual and technological resources among others, that you need for development and improving of your value proposition. These resources will be related with your key activities.
Which ones are the key activities to execute your value propositions?. Development Software, Supply Change Management, Production. Regardless of all of the above, the Marketing always is a key activity, remember this.
What alliances will you work with?. In this element the alliances are defined as necessary to execute our business model, these alliances complement the value proposition, optimizing the resources and activities.
It is about modeling the cost structure of the business model, leveraged in the resources and activities described in other elements. With this you can know and optimize fixed and variable costs.
Honestly I recommend the book “Business Model Generation”, because in addition to all the information about the 9 components, you can find examples, advantages and disadvantages to using several common patterns and revenues or pricing strategies (freemium, premium…).
In futures entries, I will be writing about each element with more detail and I’ll give you examples of the Business Model Canvas.
Have you used the business Model Canvas? What’s your opinion?