To put it simply, no matter how much you think you know your business and what drives this brilliant idea forward, you don’t really know it until you step inside it. One tried and tested way of doing this is using a business model canvas. A business model canvas is a visual tool that allows you to step into your business and see it from every important angle. It helps you communicate your business plan clearly, while potentially revealing aspects of your business’ functions that may have flown under the radar. The introduction of this tool revolutionised the business sector, and at Target Integration our team regularly uses this template with new clients. The business model canvas is insight – and insight is key.
Using the business model canvas
This tool was developed by Swiss business theorist Alexander Osterwalder, and since 2009 it has been widely adopted as the standard go-to method for developing and communicating effective business models. It’s a template that is freely available under the creative commons license for anyone to use, and it can be adapted to suit a variety of different business functions.
As you can see, the template is divided into various compartments. Each compartment represents a specific function or aspect of the business.
- Customer segments – information about your customers, such as who they are and what do they think about?
- Customer relationships – what contact do you have with your customers, and how do you build this relationship?
- Channels – how are you selling your value propositions? Through what media? How is it working?
- Value propositions – the key selling point about your business. Why should customers be interested?
- Key activities – what specific things does your company do to deliver these value propositions, and why?
- Key resources – what does the business need to function and compete?
- Key partners – this relates to your key activities. Who can you rely on and share responsibility with in order to focus more on these activities?
- Cost structure – what costs and expenditures are required for your business to function? These are both fixed, and variable.
- Revenue streams – how do you generate income for the business? Which methods do you use?
A great way to use the business model canvas is to print it out as a large sheet, and give everyone on your team – or everyone that you would like to be included in this process – some postets and markers. Together, you can add ideas to this template. It will soon become clear what the current understanding of the business model is, and also the things that need to be thought about more deeply. One important thing to remember is that this is a tool can be used continuously throughout your business’ lifespan. You can use it to check up on the model and see if it is still making sense and reflecting the business’ actions.
The good people at Strategyzer have also prepared a video about using this handy tool.
Optimising the business model canvas
The business model canvas is above all things, a strategic tool. It can be used as a way to view the business from a variety of perspectives. Take for instance the customer side of the business. For many businesses, building strong and authentic customer relationships is a key element in their strategic planning. Step into your customer’s point of view. Now, fill in the template. Even better if you have your team ready with different colour postets to represent each of the viewpoints you’re going to be applying. Your questions may be rephrased like this:
- As a customer, how do I prefer to interact with companies?
- For what reasons would I interact with a business over Twitter, or Facebook?
- What is my value proposition – what is my understanding of my value to this business?
It’s similar to creating a buyer profile. You can also fill in the template from the viewpoint of your competitors. Creating multiple canvases from a variety of perspectives is a great way to optimise this tool and get the most out of it.
How not to use the business model canvas
There are some common pitfalls that should be kept in mind when using this tool.
First of all, don’t rush to complete the template. It should be filled out at a reasonable pace, not all at once. Take the time to think about each section. Discuss these thoughts with your team, and brainstorm together.
Secondly, be specific in what you write down. It can be easy, in any kind of note taking situation, to write down a general phrase and tell yourself “I’ll know that that means tomorrow”. Other people need to be able to look at this template and understand exactly what is going on. Take the time to spell everything out.
Finally, remember to revisit your canvas. If you only use this tool once, then you’re not using it properly. In the same way that your business is constantly evolving, so too is your model, and the compartments on the canvas.
But really, why should you use one?
Stating the obvious first, but when the world provides you with a free, ready to use tool that can help you understand your business better, use it. What makes this tool great is that it is entirely adaptable and flexible. It can provide you with multiple windows of insight. It can be used as part of a group exercise. And above all else, it lets you step inside your business and see it in a new light.
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