The Business Model Canvas (BMC) is a valuable tool for businesses of all sizes, and I found it particularly relevant to startups and small businesses. It is based on the Business Model Generation book by Osterwalder and Pigneur, published in 2010. I have reviewed a thousand Business Model Canvases (BMC), and every conversation has reminded me of the simplicity and depth of the tool.
As you are working in a startup environment, the BMC can help you by
- Providing a structured framework for thinking about and planning the business.
- Encouraging a deep understanding of the target market and customer needs.
- Highlighting potential risks and allowing for proactive mitigation.
- Promoting collaboration and alignment among team members and getting buy-in from different stakeholders
This seemingly simple tool provides a holistic view of the business. It ensures that the team will consider all critical aspects of your business (beyond the product or service ideas) and their interconnectedness. This helps break down silos and encourages the team to proactively discuss and get alignment on critical aspects of the business (that left unaddressed are likely to create challenges later), as well as share that vision with internal and external stakeholders.
What is a BMC?
The Business Model Canvas (BMC) is a visual tool that allows businesses to understand and share their business models. It consists of nine boxes representing different aspects of the business, including customer segments, value propositions, channels, customer relationships, key activities, essential resources, key partners, cost structure, and revenue streams. While seemingly simple, the BMC provides insights into the interconnectedness of different elements of a business.
The nine areas of focus are:
- Customer Segments: This area focuses on understanding the customers and their “jobs to be done” (as defined by Tony Ulwick). Going beyond a simple label (i.e., “small coffee shops”) and understanding the jobs to be done, needs, and wants (for example, “small coffee businesses that need to serve high-quality fancy coffee drinks quickly”) will make a difference in how you can then provide value propositions that address those jobs.
- Value Propositions: Those represent the unique value or benefits a product/service or experience offers each customer segment. This goes beyond simply listing features and instead focuses on what problems the business solves for its customers and how it makes their lives better (for example, for a coffee shop owner, it could be “customized drinks in 20 seconds” or “make getting a coffee drink feel like a luxury experience”).
- Channels: This section outlines how a business reaches and communicates with its customer segments to deliver its value propositions. This includes marketing and distribution channels, as well as communication methods.
- Customer Relationships: These describe the relationships a business establishes with its customer segments. These can range from personal and direct interactions to automated, platform-based, or self-service models.
- Key Activities: Lists the most important activities a business must do to make its business model work. This includes what the team or organization needs to do to create, deliver, and support its value propositions.
- Key Resources: Identifies the most critical assets that support the business, including physical, intellectual, human, and financial resources.
- Key Partnerships: This section lists the network of suppliers and partners that contribute to the business model. This may include strategic alliances, joint ventures, and outsourcing arrangements.
- Cost Structure: Describes all the costs incurred to operate the business model.
- Revenue Streams: Outlines how a business generates income from each customer segment, product, or service type.
Free Online Skills Training: Better Finances, Better Cash Flow
Benefits of Using the BMC
Creating, discussing, and updating your BMC regularly when internal or external changes happen provides an essential roadmap for your business.
The BMC Clarifies and Aligns
The BMC brings clarification and alignment around a business. As teams work through the canvas, they have to think about the interconnectivity of all elements of the business. It provides team members with an understanding of different areas of the company in which they are not directly involved. For example, a product manager may need more complete information about marketing or finance. Ideally, a multi-functional team will co-create the BMC, working together to fill out the various sections and discuss their perspectives. This shared business vision then helps teams work more cohesively and effectively. Similarly, sharing the canvas with outside stakeholders, financial partners, or vendors can help get buy-in and better understand your business and needs.
The BMC is a Flexible Tool
The canvas can represent the business at different levels, from a single product/service or a specific segment to a portfolio of products/services or the whole organization. Like a picture, you can zoom in or out or focus on particular areas. The level of detail included can also be adjusted, including more information at the team level and a broader view for management or outside stakeholders. You can also create a series of canvases representing different ways to view your business. This flexibility makes the BMC adaptable to various situations.
We earn a commission if you make a purchase, at no additional cost to you.
The BMC is an Excellent Innovation Tool
Using the BMC to consider different scenarios or innovation possibilities provides an understanding of the impact of changing a specific canvas area on the whole business. For instance, adding a new segment of customers may affect your value propositions, channels, and partners or require a different financial model. This helps anticipate the ripple effects of changes and make more informed decisions. For example, in a rapidly changing technological landscape, such as the rise of AI, teams can use the BMC to consider how AI might impact different aspects of the business. They might consider whether AI could bring certain outsourced activities in-house, how it might impact revenue streams and cost structure, and how it could be used to improve customer segmentation or provide greater customization. It’s important to remember that innovation can occur in any business area, not just the value proposition areas. For instance, innovation can be in the pricing structure, channels, and partnerships. As a startup, you may benefit from innovating in regions beyond your product or services, and the canvas can help you envision these possibilities.
We suggest experimenting with the Business Model Canvas with your team. If you use whiteboards, both Mural and Muro provide BMC templates. Spending an hour or two co-creating one (or more) canvases with key team members is likely to bring to the forefront some critical issues, help the team understand aspects of the business they may not be familiar with, create a new appreciation for the different aspects of the industry and a better understanding how all functions and parts of the business are interconnected. In an environment evolving quickly, revisiting the BMC regularly (including creating BMCs for your main competitors) will bring issues that may need new answers and support a shared vision and alignment.
I hope you can try the BMC and add it to your 2025 toolbox.
Helene Cahen is the author of “Fire Up Innovation: Sparking and Sustaining Innovation Teams.”
Image by FatCamera from Getty Images Signature via Canva.com
The post originally appeared on following source : Source link
