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The Business Model Canvas

One of the first tasks of a consultant or an entrepreneur is to understand the organization he is advising or building.

Osterwalder & Pigneur created a great framework to answer the following question: What is your business model, how will you earn money? I strongly recommend you to read the book they wrote on that topic: Business Model Generation

The framework lies on a canvas which is licensed under the Creative Commons. This canvas will help you understand the organization and draw it on paper.

bmcanvas-basic-model3

The canvas’ usage is very participative. You will first draw the canvas in big and invite key represent of the company to join in brainstorming meeting. Members of the organization will add post-it to the drawing to input business model ideas. In the end, you will summarize the ideas to develop a value-added map of the organization.

The canvas itself is divided in nine blocks describing the organization. You will need to fill all of them to fully understand the entity:

  • Customer segments: for whom do we aim to create value? Who are our most important customers?
  • Value Propositions: what do we offer to whom? What value do we deliver to a customer in a given segment? What needs do we satisfy?
  • Channels: how do we reach each customer segment? What is easiest for the customer?
  • Customer Relationships: how do we build and maintain these? How do they fit effectively in both the customer’s world and our own?
  • Revenue Streams: for what will our customers pay? How much? How would they prefer to pay?
  • Key Resources: what resources are essential to deliver our Value Propositions through the Channels and maintain our Customer Relationships?
  • Key Activities: what are the most important things you must do to make your business work?
  • Key Partnerships: who are our Key Partners and why? What Key Resources do they provide and what Key Activities do they carry out? What’s in it for them? What relationship should we have?
  • Cost Structure: what costs are implied by our Business Model? Which are largest? What is fixed and what is variable? What drives them?