Before reading this article, I VERY strongly recommend first going through . Indeed, the business model canvas is the of a long and fruitful process, which will ultimately inform a company’s entire strategy. As with many things in life, the journey matters more than the destination; the same can be said of disruptive business models. the principles of business model innovation CONCLUSION With that said, the business model canvas is an incredibly powerful tool, as it brings together many elements to give a snapshot of the company’s business model at a specific moment in time (more on the recurrence of the process a bit later). As you can imagine, the exercise is a lot more complex than just filling in the boxes during a 15-minute brainstorming workshop… A (empty) looks something like this: typical business canvas Let’s go through each sub-category before going into my favourite part (tearing this model apart): Partners Let’s start off with a bit of a curve-ball: ? Go on, take a minute to think about it. what’s a partner I generally like to offer the following list for brainstorming:​ Suppliers Distributors Solution providers Researchers Consultants Associations ... Filling the “partners” box means digging deep to not only answer the question “ ”, but also to find an answer to “ ”. Beyond this thought process is yet another level of introspection: “ ” If these competencies can be developed internally, might be a good idea. Other actions are worthy of consideration: , , , , … Each partner calls for a specific strategy. Who are our most important partners? What is their relation to our business and what do they bring us? What essential competencies do key partners have ? supply chain integration Open innovation M&A franchising collaboration coopetition This box squarely ( ) fits in the “ ” part of the . get it? WHO business model quadrant Activities It’s always bothered me that activities had such a small box in the typical examples of a Business Model Canvas. As it answers to the “ ” of it all, it’s always seemed to be paramount to spend as much time on it as possible. Put simply, the sum of all activities amounts to a company’s value chain, which can be altered to offer a strong value proposition to customers. That can mean a LOT of different things (millions!), but below are a few select examples : HOW Crowdsourcing IP monopoly Supply chain optimisation Dynamic pricing Standardisation Flexible manufacturing … Remember to take into account all aspect of the business. . Amazon is incredibly successful not because of its great platform, but because of its punitively complex supply chain and accounting processes ​Resources What do we have at our disposal, right now? What can be acquired in the near future? Intellectual property, for example, is a great resource. As are loyal customers. If you don’t see a clear connection between the two… same. The business model canvas is imperfect, and your scepticism is healthy. Below is a very short list of resources to be aware of: Physical resources Labour Financial resources Intellectual property IT Integration … Two things are very important to keep in mind here: what is the company’s resource velocity ( ), and what resources are essential to the value proposition? Improving the former and protecting/optimising the latter is key to a successful company. Take , for example: their key resource is other people’s homes. By creating a stickiness between them and these assets, they’re able to create a moat that few competitors can cross. profit mechanism AirBnB Value Proposition This is the heart of any model/company: ? If I oversimplify the theory, a company has 4 jobs: , , , . If one of those 4 does not work out, the company itself does not work out (save for a few exceptions). The first 3 are pretty self-explanatory, but the latter requires an explanation. what are we selling Create value Communicate value Deliver value Extract value When we talk about extracting value, we highlight that . A simple example: tool companies may sell drills, but their customers buy holes. Value has 3 dimensions : the customer may not necessarily buy what you think you’re selling : the value of the product or service itself. Is it safe, easy to use, environmentally friendly, stylish, superior in quality…? Core : this includes the physical and intangible packaging such as the brand. Packaging : delivery, warranty, repairs, installation, add-ons, bundles… Support In order to optimise a value proposition for the targeted customers, one must understand exactly what mix of those three components they’re buying. It’s also important (and obvious) to remember that the value proposition . needs to differ from that of a competitor Customer Relationship Fairly straightforward once a customer is well understood ( ) (see below), and we understand what they buy ( ) (above). Working on the relationship is an opportunity for easy differentiation from competitors, even if the offering is similar. To optimise this part of a business model, it’s important to remember what relationship customers expect AND how those relationships are maintained: different segments call for different relationships! WHO WHAT The customer relationship can be created in a plethora of ways: Try-before-you buy Self-service Loyalty program Personalised services… The list goes on. Channels do you communicate and sell to various customer segments? What are their expectations? ​Are these channels integrated into the company’s other activities? Those are all key questions that need to be answered very quickly, as we see the rise of digital channels multiply selling and messaging possibilities. HOW Here are a few staples of the channel box:​ Direct to consumer Online sales Multi-level marketing Indirect distribution Diversification Supermarket model Specialised stores … You may have the greatest product in the world. You may have the greatest customers in the world. If you can’t link the two, it will all be worth nothing. Customer Segments This is what we’re asking through this key box. Who are we targeting? Which group/segment? Which group is the most important to the business? How can we best understand these people? Who is behind them pulling the strings? Will they still be here/the same in 10 years? Personas are key here: what are each group’s pain points? How does the offering answer it? WHO? Customers (obviously), come in very different shape and forms: Potential customers New customers Impulsive Customers Discount customers Loyal customers Opportunistic customers Unexpected customers… Planning for each of these is key to success. It’s important to remember that we’re discussing real people here: experience, quality, autonomy, community, recognition are all keywords to keep in mind. Costs & Revenues (Profit model) One of the key issues with the business model canvas is its obsession with costs and revenues, and the omission of profits. Let’s make one thing clear: ( ). the current philosophy of the corporation is that it exists to rewards shareholders with profits I know, I hate it too There are few costs in the wild (fixed, variable and indirect), and only 3 ways to increase revenues (more customers, higher price, customers buy more often). Not much we can do with this. A reminder: (higher profits = less variable costs = lower production = lower revenues). It is by finding the right profit formula ( a company does business in a specific way) that success happens.​ it is mathematically impossible to optimise both revenues and profits WHY ​There is enough to be said here to fill an entire book, so the best thing to do is to to understand how each creates a unique profit mechanism. have a look at all the business model out there At the end of the exercise, a business model should be filled with all of the information offered above, as shown below. . It is an imperfect framework. This is why it’s important to seek the support of experts with experience in business transformation, to ensure that no aspects of a company’s strategy are missed. It is not an easy exercise But wait, there’s more! Read the next chapter: . Everything wrong with the Business Model Canvas was originally posted on my blog, . This article The Pourquoi Pas Come say hi!

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Create a Business Model Canvas for Your Business

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