Business Model Canvas

The Business Model Canvas is a strategic management and entrepreneurial tool for the development and improvement of business models. It allows to describe, design, challenge, invent, and pivot business models.

Purpose

The BMC is used to understand, document, develop, and improve business models.

Outcome / Deliverables

A complete business model hypothesis.

Detailed description

The Business Model Canvas is a is a chart with elements describing a firm’s target customers, value proposition, infrastructure, and finances, used for developing new or documenting and improving existing business models. Originally created as an outcome of Alexander Osterwalder‘s thesis on business ontology, it has become a tool widely applied by both startups as well as corporates worldwide.

Working with the BMC
Typically the BMC is being filled (using sticky notes on an A0 printout to be able to improve the inputs while the model is being completed) as follows:

1. Describe target customer persona – use one canvas per target group!
2. Outline the value proposition catering to the customer‘s identified needs or pains
3. Specify channels to deliver the value proposition to the customer
4. Detail the customer relationship
5. Sketch the expected revenue streams
6. Describe the key resources, activities, and partnerships required to deliver the value proposition
7. Delineate the resulting cost structure

Does the result make sense overall? If not, iterate until the model seems consistent. In further steps, the implied business model hypotheses are being tested with customers, … and iteratively improved.

 

Dos & Dont’s
  • Do clarify target user Persona and Value Proposition beforehand
  • Develop/document a business model using the BMC interactively as a Team
  • Brainstorm and improve until the model seems consistent; Be granular and concrete
  • Test and improve assumptions iteratively using prototypes and MVPs
  • Don‘t mix multiple target groups on one BMC
  • Don‘t mistake the BMC for a business plan
  • Don‘t try and implement the first iteration of a business model without testing and iterating the implied hypotheses
Further Reading
  •  The original books by A. Osterwalder/Y. Pigneur et. al.: „Business Model Generation“ and „Value Proposition Design“;
  • An excellent introductory blog post: https://steveblank.com/2010/10/25/entrepreneurship-as-a-science-%E2%80%93-the- business-modelcustomer-development-stack/
  • Create your own Business Model Canvas via https://canvanizer.com/ for free
  • Business-Model-Canvas PDF