Wednesday, January 4, 2017

15. BUSINESS MODEL CANVAS

OBJECTIVE

Analyze our own business model or competitors’ business models.[1]


DESCRIPTION

This tool, invented by Alexander Osterwalder et al.,[2] can be used to analyze how an organization is creating and delivering value to its customers. Even though its original purpose was to help in creating a new product or business, in this book the business model canvas is presented as an analytical tool, since those kinds of models are not covered. This model can also be useful for understanding whether a company is a competitor or not, since it analyzes the value proposition, which responds to customers’ needs. In fact, companies compete not on products but on the needs that they satisfy or the problems that they solve for their customers.


Business Model Canvas

The study includes the analysis of nine building blocks of the business and how they are related to each other. First we define our customer segments and then the value propositions that we are offering to them. The value proposition is a need that we satisfy or a problem that we solve for a specific customer segment. It is possible that we are offering different value propositions to different customers; for example, a search engine is providing search results to web users and advertising spaces to companies. Then we identify how to deliver this value to our customers (channels) and how we manage our relationships with them (customer relationships). At this point we are able to describe our revenue model (revenue streams). However, to understand how to create our value propositions, we need to identify our key activities, key resources, and key partners. These three blocks allow us to identify our cost structure. For more information about this model, visit the official website[3] or sign up for the free online course “How to Build a Startup.”[4]


TEMPLATE






[1] This is a tool that was used originally for the definition of new products or businesses, but, since the purpose of this book is to provide analytical tools, we use the business model canvas as a model to analyze business strategies.

[2] Alexander Osterwalder, Yves Pigneur, Tim Clark, and Alan Smith, Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers (John Wiley and Sons, 2010).


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