You may have heard (or are learning) how to design a Business Model Canvas, created by Alexander Osterwalder and Yves Pigneur in 2010. But the key is to start with the core of this model, the value proposition, and use the” Value Proposition Canvas “(by the same authors). Once and only once you have defined, validated, or invalidated it, you can start completing the Business Model Canvas. This tool allows you to visualize your project on a single page.
You may have heard about Lean methodology. The Business Model Canvas is a powerful tool for getting familiar with Lean concepts and for creating or listing hypotheses. Even if your product or service has been around for years, the Business Model Canvas helps you map and analyze the current state. Everyone who works with you should talk about the same thing and understand your vision. The web helps you build the story and simply explain your business. This helps you understand how to create, distribute, and generate value across 9 building blocks, which we'll cover later in this post. These blocks cover the four main areas of a business:
- Customers
- Offer
- Infrastructure
- Financial Viability
Now let's move on to building Business Model Canvas!
Customer segment
First, ask yourself who are you developing this idea for and who do you want to create value for? Sounds awfully stupid and common sense, but without customers, a business cannot survive. However, this is where many projects fail: not putting the customer at the center. Start by identifying the groups of people or organizations you want to reach and serve. Be aware of who you want to serve and who you want to ignore.
Value proposition
Most likely, you will build different customer segments. Why should they choose you over your competitors? What do you offer them to meet their needs better than others? The value proposition is essential and at the heart of your business: what customer problem are you trying to solve and what are the benefits you are offering them? Your value proposition can consist of qualitative or quantitative elements. They can have benefits for all of your customer segments and only some specific ones.
Canals
How do you reach your customer segments? Your channels should cover each stage of the consumer buying decision, including:
- Increase awareness of your product or service
- Evaluate your value proposition
- Allow customers to buy your product or service
- Distribute your value proposition
- Provide after-sales services
Customer relationship
Do you want to create a community among your customers or offer them personal assistance? It is time to ask yourself what type of customer relationships you want to build in order to acquire new ones, to retain them or to increase your sales.
Income flow
Without customers, a business cannot survive. But even more so, without income, it will be impossible to survive (and we hope not to teach you anything new here 😉!). To be clear, generating revenue does not mean being “for profit.” Someone (sponsor, donor, customer, etc.) has to pay for the product or service to be alive. This block describes how you are going to make money. Is your revenue model based on simple and unique transactions, a subscription model (recurring revenue), or another model?
Now let's move on to the infrastructure part of your business:
Key Resources
What do you need to offer and carry out all the activities and items you completed in the previous sections? Key resources are the most important assets needed for your business model to function properly. You may need multiple resources depending on your business model and they may be physical assets (machines?) , Intellectuals (patents?) , human or financial (need for capital to invest if you are a trader, for example).
Key Activities
What are you really doing to make your business work? Activities may differ from business to business, but can be classified as follows:
- Production activities
- Problem solving activities, where
- A platform/network activity.
Example: Nespresso's key activities are coffee pod production, marketing and B2C distribution.
Key partners
Are you counting on partners to support your Business Model? So identify:
- With whom you collaborate in the production/delivery of your product/service
- Who can distribute/resell your product/service
- that help you reduce business or product risks
- that helps you acquire the resources you need
Cost structure
Finally, because it would be too good to be true not to have one: what are the most important costs involved in running your business?
Identify fixed and variable costs. What activities or resources are the most expensive and could you try to minimize them?
Depending on your strategy, you can have a cost-based structure (meaning you'll optimize to make the most of a limited budget) or a value-based structure.
Once you've completed the Business Model Canvas, you should have a clear overview of your product/service and your businesses, as well as your customers.
The process is of course not over... you need to launch your project. And remember that a Business Model Canvas is not set in stone and may need to be refined, adapted, or even completely reworked (instead of going in the wrong direction).
At Coteries, we can help you throughout the process, for example to support you in creating your Business Model Canvas. Or to design, develop and market your digital product/service (web or mobile application, chatbot, etc.). So do not hesitate to contact us !
