The business model canvas is a powerful strategic management tool. It allows you to design, challenge your ideas, deliver, and capture or event pivots your current business model. Moreover, it describes how you will make money and create wealth for your enterprise and for its shareholders.
- WHAT IS A BUSINESS MODEL?
A business model describes how the enterprise creates, delivers and captures value for its customers and its shareholders. It is a “blue-print” of the enterprise’s strategy.
The canvas is a simple and visual way to present how an enterprise makes money. Furthermore, it is a simplified tool for analyzing the business strategy and the value creation process.
The business model differs from the business plan, the latter being much more complete (description of the enterprise and its shareholders, its market, its products / service, along with sales and marketing, human resources, operations and finance plans).
- WHY USE SUCH A TOOL?
SME managers are often faced with strategic planning, and for some of them, it is a heavy and complex process.
The business model canvas is a simple to use tool that reduces the effort devoted to strategic planning. In addition, for the entrepreneur in the making, this tool helps in validating certain parameters or first fruits of the ecosystem, which will benefit him/her in the creation of his enterprise.
The canvas amongst other things:
- Explain the business model to stakeholders in a simple, clear and concise way; e.g. bankers, investors, employees, family, etc.;
- Identify the skills needed to implement the business plan (those that you own or those to be acquired);
- Delineate the market research and / or validate sales and marketing strategies;
- Identify the necessary resources (material, human, financial and technological);
- Prioritize objectives, monitor and, analyze progress.
- OBJECTIVES OF THE BUSINESS MODEL CANVAS
- Describe, analyze and design 4 main dimensions of a business, i.e. customer, offer, infrastructure and financial viability. These dimensions are peeled into 9 economic aspects (building blocks) presented in a matrix.
- Allow better analysis, and above all, to have a global vision of the enterprise’s main issues.
- Facilitate dialogue and generate new ideas using creative thinking techniques.
- Identify interdependencies that connect each of the blocks and discover the strengths and weaknesses of the business.
- Develop a business model that’s makes financial sense.
- HOW IT WORKS
The business model canvas is a visual matrix divided in 9 building blocks describing:
- Customer Segments: serving one or several customer segments (e.g. Mass or niche market, segmented, diversified, multi-sided platforms, etc.)
- Value Proposition – the offer – seeks to solve customers’ problems and satisfy needs
- Channels – delivering the value proposition (communication, sales, marketing, web technologies, etc.)
- Customer Relationships (customer acquisition, retention, boosting sales, upselling, etc.)
- Revenue Streams (cash generated from each customer segment)
- Key Resources (physical, intellectual, human, financial)
- Key Activities (most important activities to generate a strong economic model)
- Key Partners (acquired or outsourced)
- Cost Structure (identification of all costs required to capture value)
NOTES
The Business Model Canvas is distributed under a Creative Commons License:
http://creativecommons.org/licenses/by-sa/3.0/
About the authors of the Business Model Generations:
https://strategyzer.com/
You can obtain a copy of the Canvas at the following: http://www.businessmodelgeneration.com/downloads/business_model_canvas_poster.pdf
CONCLUSION
The first version of the Business Model Canvas appeared around 2002. It is now a recognized international tool and its concept has been applied and tested with large organizations such as Desjardins, as well as government entities such as the Government Services Canada.
As per the authors of this blog, it is an innovative way of communicating and formulating the business model as well as a facilitating tool to merge ideas. With this Canvas, you can create high performance enterprise.
ABOUT THE AUTHORS
Christiane Constantineau has a DESS in corporate finance as well as an Executive MBA. She is a member of the Ordre des administrateurs agréés du Québec. She is a financial management expert. She participated in the financing of many SMEs and participated in the creation of startups.
Jean-François Thibault holds an Executive MBA in addition to the PMP and ITIL Foundation v3 / ISO 2000 certifications. He is an expert in the field of IT Management with over 18 years’ experience in well-known organizations.
They are both associates of the Turbulence Consulting Group (www.6degrees-turbulence.com), a strategic partner who provides strategic, financial and IT expertise.
6DT Consulting 