2.5 – Business Model Canvas

Connor Loughlean; Karen Zavitz

2.5 – Business Model Canvas

Gone are the days of the 50-page static business plan. The Business Model Canvas is a dynamic single page document that distills the 9 pillars of any business. Learnings from the Design Thinking exercise (Stage 1) can be transferred to the Business Model Canvas to be validated and tested in this module.

By the end of this module, you will be able to:

Explain the importance of having a clear Business Model Canvas
Compare the various segments in a Business Model Canvas
Create a Business Model Canvas for your business idea

Section A: Download the Business Model Canvas

Steve Blank is a co-founder of Strategyzer and is the creator of the Business Model Canvas. You can download a Business Model Canvas from the Strategyzer website to follow along as you work through this section.

Section B: Summary of the Business Model Canvas

Watch the following video which summarizes the elements of the BMC.

Business Model Canvas Explained from Strategyzer on Vimeo.

It’s easy to think about the Business Model Canvas split in half. The right side shows the elements that are customer facing. The left side shows the elements that are internal to the business.

Business (Left Side)

Customer (Right Side)

Key Resources – What resources do you need inside the business to generate your proposed value to your customers? Store front? Website? Staff with specific skills?
Key Activities – What activities need to happen inside the business to generate the proposed value? Manufacturing? Creating content? Coding software?
Key Partners – What external partners do you need? Vendors? Distribution channels? Suppliers?
Cost Structure – What are the costs to run the business and generate your proposed value?

Customer Segments – This comes from customer profiles defined in module 2.2
Value Proposition – Value propositions would come from the Design Thinking exercise in module 1.3. There should be a value proposition for each customer segment.
Channels – These are often marketing and sales channels used to reach the customer segments (e.g. on-line such as the iTunes app store, distributors, retailers etc.)
Customer Relationships – Every business creates its own relationships with its customers, ranging from a personal approach to one that meets customer needs through automated services.
Revenue Streams – How do you charge for your product or service? Subscription? Pay-per-use? Transaction fee?

Important Tips

The Business Model Canvas is a living document. As you go through the validation process with each of these elements you will update the information.
It’s key that the Value Propositions are aligned with the Customer Segments, otherwise your customers don’t care about the value you are trying to create for them.
It’s key that the Revenue Streams are aligned with the Value Propositions, otherwise customers won’t want to pay for the value you are trying to create for them.
It’s key that the Cost Structure is aligned with the Revenue Streams, otherwise your business will not make optimal profit.