The Business Model Canvas was developed by Alexander Osterwalder as a tool for startups and businesses. It is a simple one page canvas that allows you to clearly see how the different components of your business interact with each other.
I use the business model canvas as a key tool in helping startups develop their strategy. It can be used in two ways.
To create clarity
By filling in the nine segments of the business model canvas you answer all the big questions about your business. So can then simply say:
- These are my customers, and
- This is what I provide to them.
- I reach them using these marketing channels, and
- Communicate with them like this.
- We do this every day to deliver on our value promise, and
- Need these resources to make it happen, and
- These key partners.
- I make money by, and
- Spend it on.
That describes your business simply and clearly. It also forms the basis of an effective pitch or business plan.
To Find Effectiveness
There are many ways of running your startup. Differences come down to either searching for a source of competitive advantage or stumbling into what seems best at the time.
In an industry many businesses will have the same patterns of organisation. This will normally be a red ocean of competition with advantage being only found in incremental improvements. In contrast disruptors will have changed key parts of the business model. Uber changed the taxi business model by disposing of fixed assets. Ford disrupted the car industry by disrupting the production process.
There is a huge benefit in looking at what your value proposition is and considering different ways to achieve it. Can we steal ideas from other industries? What do we need to do? What can we get rid of? What is cash consuming? What is revenue generating?
There are lots of different techniques for doing this and even canvases that deliver even more focused benefits to tech startups and NGOs.