Business Model Canvas [+ Template]: How-to & Examples

The Business Model Canvas is your complete business on 1 a4’s sheet…

How do you make sure you keep an overview in the chaos and also innovate in time?

In this article, I’ll show you:

What the Business Model Canvas is
How to fill in the Business Model Canvas
And I’ll show you how to innovate the Business Model Canvas

Let’s get started…

Business Model Canvas

The business model describes in concrete terms how an organization creates value, delivers it and how it makes money from this.

There are 9 blocks that the Business Model Canvas consists of:

Business Model Canvas

Here, the left part of the canvas focuses on efficiency and the right part on value:

We are now going to cover the 9 different components…

Mục Lục

1. Customer segments

An organization serves one or more customer segments.

Customer segments describe the different people or organizations that your company wants to reach and serve.

No business can survive without customers, to better connect with customers it is useful to divide the group of customers into different target groups.

A customer segment can consist of demographic characteristics:

Age
Work
Gender

Geographical characteristics:

Country
Region
City

But also from other types of characteristics:

Digital intelligence
Mileage awareness
Nightlife

Beyond the customer segment, it is also useful to consider what type of market you want to enter:

New market (blue ocean)
Existing market (red ocean)
New segment in an existing market (niche)

2. Value proposition

A company must solve a problem with a clear value proposition.

The value proposition block describes how a product creates value for a specific customer segment, or in other words shows the benefits your company delivers to the customer.

The value proposition is the reason why customers choose one company over another.

There are basically 11 types of value propositions you can offer:

Newness: something that is not possible at the moment. You create a market and push the boundaries of what is currently possible.
Performance: you are going to do something better or faster than the existing competition.
Customization: personalizing an experience.
Getting the job done: you focus on a sub-activity of the customer and you take this completely out of their hands.
Design: if you respond to the form or functionality of your product, we talk about the design.
Price: if you play on price then you focus on the segment in a market that is not willing to pay extra to your competitors. It is important that the market is large enough.
Brand/status: if people want to show that they are wearing your brand, you play on brand and status.
Cost reduction: you save the customer costs.
Risk reduction: You reduce the risk of something for the customer.
Accessibility: you provide access to something a customer previously had little to no access to.
Convenience/usability: the convenience for a user or customer.

3. Channels

Value propositions are delivered using communication, distribution and sales channels.

The channels describe the way a company communicates with the customers and how it actually delivers the value proposition. Thus, there are 3 types of channels involved:

Communication channels
Distribution channels
Sales channels

So each channel offers one or more touchpoints, you could map these in the way below:

Here, of course, you can also differentiate between direct (owned) and indirect (partner) channels.

Tip: use the Pirate Funnel Canvas to map out the customer journey figures.

4. Customer Relationships

An organization must establish and maintain relationships with each customer segment.

This section describes the type of relationship you have with the customer, these can range from personal to automated.

The motivation for having a relationship with a (potential) customer can be as follows:

Customer acquisition
Customer retention
Selling more (up-selling)

There are several types of relationships you can have with the customer:

Personal assistant: the customer can have contact with a person, this can be through call centers, email or perhaps on location.
Own personal assistant: one or more people in your company are assigned to a specific customer. This is the most in-depth customer relationship you can have and usually involves a longer period of time.
Self-service: ensuring that customers can help themselves.
Automated service: automated processes that ensure the customer is helped.
Community: an online community that shares knowledge and helps others along the way can also be a form of service.
Co-creation: helping users to strengthen the relationship by thinking or collaborating on a product or service.

5. Revenue stream

A revenue stream occurs when the value proposition is successfully delivered to the customer.

The revenue stream represents the money a company makes from a customer segment. In this, it is important to ensure that the revenue stream closely matches the value the customer receives.

There are quite a few revenue models and pricing strategies you can choose, but these are the most common:

Hourly rate: you get paid by the hour.
Transaction model: you get paid per sale.
Subscription model: you get paid on a periodic basis each time.
Advertising model: you make money selling advertising space.
Rental model: you make money from renting out something.
Consumption model: you make money from the amount a user consumes.
Mediation model: you make money from referring users or matching supply and demand.
Production model: you produce something on behalf of a party.
Donation model: you make money from donations.
Freemium model: you offer a free version first and then make money from the paid version.

6. Core Resources

The key resources needed to keep the business running.

The resources you need to create and deliver your value proposition, reach a market, maintain customer relationships and make money are your core resources. These resources can be:

Physical
Financial
Intellectual
Human
Or be rented/purchased from external partners

7. Core Activities

The main activities that the company engages in.

The most important tasks a company does to make the business model work are core activities. Core activities can consist of 3 different categories:

Manufacturing: designing making and delivering a product in specific quantities, is often used by manufacturing companies.
Problem solving: solutions to specific customer problems, is often used by service related companies.
Platform/network: networks, matchmakers, software and even brands can serve as a platform. For example, VISA is a platform for businesses, customers and banks.

8. Key Partners

Partners who provide key activities or resources.

The network of suppliers and partners that help realize your business model are your key partners.

It is important to have partners because they allow your company to optimize its business model, reduce risk, and help you get additional resources.

There are 4 types of partnerships:

Strategic partnership between non-competitors.
Coopetition, strategic partnership with a competitor.
Joint venture to attract new business.
Buyer-supplier to maintain reliable inventory.

There are three types of motivations you may have for entering into a partnership:

Optimization and economy of scale: a partnership to reduce costs, because a company simply cannot produce all the resources itself.
Reduction of risk and uncertainty: to reduce risk in a highly competitive market.
Acquisition of specific resources and activities: attract more opportunities to you by partnering with different companies, this may be in terms of knowledge, licenses or access to customers.

9. Cost Structure

Different components in the Business Model Canvas will create costs.

All costs in a business model that are necessary to keep the business running fall into the cost structure.

There are two types of cost structures:

Cost-driven: business models that focus on reducing costs whenever possible. Often the cost-driven cost structure comes in combination with a value proposition where a company claims to be the cheapest, this may include a lot of automation and/or a lot of outsourcing.
Value-driven: these companies are less concerned with cost and focus on creating value. This cost structure is often used with premium value propositions and/or when a lot of personalization is involved.

A cost structure has 4 different characteristics:

Fixed costs: costs that are always the same regardless of the volume of products or services.
Variable costs: costs that are related to the volume in which products or services are delivered.
Economies of scale: cost advantages that a firm gets when it produces or purchases more volume.
Economies of scope: cost advantages a company gains from having a large scope of activities. For example, think of offering multiple products because you already have the marketing or distribution channels in place.

Business Model Canvas examples

Business Model Canvas Tesla Tesla
Business Model Canvas Netflix Netflix
Business Model Canvas McDonalds McDonalds

How to manage the Business Model Canvas

First, download the Business Model Canvas:

Business Model Canvas gustdebacker.com
Download

Goede keus! Check je mail voor de resources…

Mobilise a team
Make sure the company understands the value of the Business Model Canvas and establish a team to work with it.
Understand the organisation
Immerse yourself and your team in the market and the organisation so you have enough knowledge to fill in the Business Model Canvas.
Design the Business Model Canvas
Complete several Business Model Canvases and test your assumptions where possible.
Implement the Business Model Canvas
Implement the Business Model Canvas you have chosen.
Manage the Business Model Canvas
Continuously evaluate if your Business Model Canvas is up-to-date, adjust where possible and try to innovate in time.

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Business Model Canvas innovation

Innovate in your Business Model Canvas in the following ways:

Unmet demand in a market: find a market in which you can fulfill an unmet demand.
Bring something new to the market: bring a new technology, product or service to the market or leverage existing intellectual property.
Improve the market: improve or disrupt an existing market.
Create a market: create a new market.

There are several challenges involved here:

Finding the right model.
Testing the model before launching on a large scale.
Getting the market to adopt the new model.
Continuously adjusting the model in response to feedback from the market.
Dealing with uncertainty.

In this you can distinguish between:

ExploreExploitFocusSearch and breakthrough.Efficiency and growth.UncertaintyHigh.Low.Financial philosophyVenture-capital style risk-taking, expecting few winners.Safe haven with steady returns and dividends.Culture & processesIterative experimentation, embracing speed, failure, learning and rapid adaption.Linear execution, embracing planning, predictability and minimal failure.People & skillsExploreres who excel in uncertainty, are strong at pattern recognition, and can navigate between big picture and details.Managers who are strong at organizing and planning and can design efficient processes to deliver on time and budget.

The exploit’s part it’s biggest risk is not innovating in time and in the explore part uncertainty is the biggest risk. In addition, it is important to pursue the right culture, think for example of ‘The Culture Map’.

And now you…

Now I’m curious, how far along are you with your business?

Are you at the point of innovating the Business Model Canvas (BMC) or have you yet to draft your first BMC?

Let me know in a comment.

P.S. if you would like additional help let me know at [email protected]

Frequently Asked Questions

What is the Business Model Canvas?

The Business Model Canvas describes in concrete terms how an organisation creates value, delivers it and how it makes money from it.

What do you use the Business Model Canvas for?

You use the Business Model Canvas to map out your entire business, it is also easier to talk to stakeholders about your business if you can present it on 1 a4’s.

What are core business activities Business Model Canvas?

Core activities are the activities that keep your business running.

How do you describe a Business Model?

You can describe a Business Model in a Business Model Canvas, using 9 blocks to map out your complete business.

Why fill out the BMC?

The BMC helps companies to understand their business, using 9 blocks you have concrete insight in the most important parts in your business. The BMC helps stakeholders to understand your business in an easy way.

How do you read a Business Model Canvas?

You start with the customer segments, then you move to the value proposition, then you move to the channels, customer relationships, revenue stream, core resources, core activities, key partners, and conclude at the cost structure.