The Business Model Canvas or BMC model is a graphic representation of a num-ber of variables that show the values of an organization. The BMC can be deployed as a strategy tool for the development of a new organization. Furthermore, it also analyses the (business) situation of an existing business. The Business Model Canvas was developed by the Swiss business model guru Alexander Os-terwalder and management Information Systems professor Yves Pigneur. They defined nine categories for the Business Model Canvas which they refer to as the building blocks of an organization.
The performance of an existing organization can easily be improved using the Business Model Canvas. All company aspects are made clear at a glance because of the visual aspect. By looking at the developments per category, an organization can finetune its value proposition and structurally improve its strategy. When setting up a new company, clear decisions can be made in advance using the Business Model Canvas.
Five Benefits of the BMC
Using a revolutionary new technique, you structure the business model on one page and have the bones of a business plan that previously took 30 pages and months to write. The customer value proposition says what your business will do. Customer rela-tionships, segments and channels say who you will do it with. Key partner, activi-ties and resources say how you will do the idea. And the cost structure and revenue streams show how much money the business model could deliver. Although it’s been around for a few years, the Business Model Canvas is starting to get a lot more traction in the entrepreneurship community. I rate this model for five reasons.
I. It helps structures discussions
Some entrepreneurs take Business Model Canvas sheets to meetings and use the building blocks to guide brainstorming. Grouping comments and ideas under the nine headings quickly gives ideas shape.
II. It’s fast
Forget a 40-page business plan if you’re launching a start-up venture with low fixed costs. Use the Canvas to write a one-page business model to see if the idea has legs, and take a lean entrepreneurship approach where you discover cus-tomers and the best business model in real time in the market.
III. It’s great for developing a portfolio of ideas
Under traditional business-plan thinking, you spent weeks or months writing one business plan for one idea. Using the Business Model Canvas, you can spend minutes or hours sketching business models for multiple ideas. You still have to do more research and might end up writing a long business plan to secure capital or promote the ideas, but it’s a quick way to weed out bad ideas.
IV. It intuitively makes sense
In its simplest form, the Canvass has front and back stages. The front stage shows what drives value and how you reach and make money from customers. The back stage shows what is required to make the front stage possible. Having used the Canvas many times, I find it quickly clarifies thinking on the business model and that one building block naturally leads to the next.
V. The value proposition
I like how the customer value proposition is at the heart of the Business Model Canvas. It forces you to think deeply about what your venture delivers to the customer, which problems it helps solve, and which customer needs are satisfied. Great ventures start with the customer and work backwards. Weak ventures start with the product, hope there is market for it, and put customers at the end of the product development process.
Featherstone claims even that one should “Forget a 40-page business plan if you’re launching a start-up venture with low fixed costs.” and advises companies on using BCM as an assessment tool.
How to use the BCM – 14 ways to apply the model
Via the website of Strategyzer (www.strategyzer.com) a template for the BCM can be easily downloaded and used. For those who want to be trained more on the topic the company even offers online course. 14 ways on how to use it are cate-gorized in Strategizing, Dashboard, Understanding Competition, Portfolio of Business Models, Innovation, New Idea Template, understanding customers, Alignment, Strategy Diffusion & Co-creation, Shared Language across functions, Alignment Revenues & Costs, Investing, Mergers & Acquisitions and Exit strategies.
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