In today’s blog post, I will share one of the great design thinking tools, the business model canvas.
I will show you how to use this tool to create great results!
If you take a meta view on your company´s products and services, it will provoke new insights and will result in a clearer perspective on what you´ll need to change. These new insights and perspectives will lead to more clarity.
More clarity will help you to make better informed decisions that in turn lead to better outcomes and even more success.
Let´s explore the benefits of this tool for your company.
- ⇒ What is a business model canvas?
- ⇒ Who created this tool?
- ⇒ What is a better way to think about a business model?
- ⇒ What are the advantages?
- ⇒ How can you to test your business model´s performance?
- ⇒ Summary
What is a business model canvas?
- A business model canvas describes, visualizes, assesses and changes business models.
- A company’s business model determines how it makes a profit and operates successfully in a competitive market.
- You will need to understand your company’s business model to solve problems effectively.
It is a great tool to understand…
- A business model in a structured way
- Get insights about your clients/customers
- Shows the value propositions your company offers through products, services and channels
- Clarifies how your company makes money
- Support the understanding of your business model or that of your competitor
Who created this tool?
Alexander Osterwalder1 and Yves Pigneur developed the Business Model Canvas in 2005. It is a strategic management tool that helps businesses to systematically analyze, design, explain and challenge their business models. The template has nine basic building blocks that form a blueprint. I will share this blueprint in my next blog post.
What is a better way to think about a business model?
- If you use the business model canvas, it will help your company to conduct structured and strategic conversations around new and existing business models and to manage strategy better or create new growth in your company.
- The canvas’s main objective is to help companies move beyond product-thinking and towards business model thinking.
What are the advantages of analyzing business models?
Advantage #1: Analyzing business models determines whether a venture is viable and valuable, or will be in the future
Ask and answer the following questions:
- What value is delivered to which markets?
- What costs are involved in delivering that value?
- Where is the revenue coming from?
- If we change the business model in a specific way, what are the effects?
Advantage #2: Gives insights into several elements of the business model
- Analyzing the nine elements of the blueprint will provide the foundation for business model change and innovation in your company.
- Use the blueprint to analyze a business model from different perspectives.
Advantage #3: Provides a structure
- The Business Model Canvas is extremely useful in structuring your business model visually.
Advantage #4: Focuses on value proposition
- The value proposition is at the heart of the entire Business Model Canvas.
- Focus on the reason why your business exists.
Advantage #5: Fast to complete
- The business model canvas can be completed quickly and helps you generate new business ideas.
- This allows for quicker feedback, quicker ideation, and faster iteration.
Advantage #6: Provides a holistic view
- With the Business Model Canvas, you can see how all of the elements of your business are interrelated and inform or affect each other.
- This provides you with a better understanding of how your business operates as a system or ecosystem.
How can you test your business model´s performance?
Use the following questions to test your business model’s performance (1:low, 10:high):
- How much does switching costs prevent your customers from moving away?
- How scalable is your business model?
- Does your business model produce recurring revenues?
- How much of the work can be done by others?
- Does your business model provide built-in protection from competition?
- On what cost structure is your business model based?
What is your test score?
If the score is below 30, you should consider a business model change.
- Key Point #1: A business model canvas describes, visualizes, assesses and changes business models.
- Key Point #2: The business model canvas has at least six advantages.
- Key Point #3: The canvas’s main objective is to help companies move beyond product-thinking and towards business model thinking.
I´m available to support you through this difficult time by re-imagine your business. The Business Model Canvas will help you to analyze your current business model.
Contact me for a complimentary 30-minute strategy session:
Coming up next month
In my next blog post, I´ll share the business model canvas blueprint.
1 Alexander Osterwalder co-founded strategyzer.com, he is a Swiss business theorist, author, speaker, consultant.
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