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May 6, 2019

Business Model Canvas – Explained

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In 2010, Alex Osterwalder and an online community of co-creators developed, designed, and launched the book ‘Business Model Generation.’

Business Model Generation Handbook

In just under a decade, the book has revolutionized, for many, the way that we plan, forecast and roll out new businesses. The book clearly defined what a business model is:

“the rationale of how an organization creates, delivers and captures value.”

Business Model Defined

And they created a strategic, visual tool known as the business model canvas. Why?

Innovators, entrepreneurs, executives and dreamers alike needed a tool to visually map out, share, dissect, rework, and ultimately refine their ideas and innovations into a structured format.

What is the Business Model Canvas?

The 9 Building Blocks

There are 9 Building Blocks in the Business Model Canvas.

Value Proposition:

What unique value does a company’s product or service create for customers?

Customer Segments:

What group(s) of customers is a company targeting with its product or service?

Customer Relationships:

How does a company plan to build and maintain relationships with the customers it is serving?

Customer Channels:

What channels does a company use to acquire, retain and continuously develop its customers?

Revenue Streams:

How is a company pulling all of the above elements together to create a revenue stream(s) and generate cashflow?

The above 5 Building Blocks represent the right side of the canvas, and contribute to the Revenue side of the business model.

Key Resources:

What assets and knowledge does a company possess that allow it to deliver its value to customers in ways that other companies can’t?

Key Activities:

What activities does a company engage in that allow it to execute its strategy and either establish a presence in the market or gain market share?

Key Partnerships:

What strategic and cooperative partnerships does a company form to increase the scalability and efficiency of the business?

Cost Structure:

What are the key costs associated with running the business and how can key partnerships/resources be leveraged to reduce the cost structure?

The remaining 4 Building Blocks come together to form the left side of the canvas, and contribute to the Cost Structure of the business model.

DIY Canvas

Canvas Index

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