What is the Business Model Canvas ?

What is the Business Model Canvas ?

Every company or startup founded his value on a Business Model, which is in the logic with which organizes the creation of its value and by which it is able to monetize.

The definition of a sustainable business model is the basis of any business venture and Canvas allows you to structure it in an organic and efficient.

The creator of this model was the Swiss Alexander Osterwalder, a theorist of business models in the 2000s rationalized its method designing the Business Model Canvas, which is able to offer an excellent model to further develop the ideas of a firm or startup about the business model, to make it sustainable and able to monetize and in line with the Lean Startup methods of Eric Ries  .

What is the Lean Startup?

The Lean Startup is a methodology to develop business and products in the “light mode” based on the creation of ideas cycles, validating the model, learning on the data collected from the market and all in iterative manner trying to minimize the overall duration the entire cycle.

lean.startup

As a Business Model Canvas is structured?

The Canvas is divided into nine areas that lead by following a logical order to define the market segment with the reference customer to answer with the offer, the vision with the need definition and the proposed innovative solution, the channels used to reach that market, reports to be implanted with its customers, which generate revenue streams, key resources, key activities, strategic partners and finally the structural costs.

business-model-canvas

We analyze in detail how to work on a Canvas. A methodological level work in teams, working on a printed pattern and placed at the center of the table and with the Post-it that are gradually applied in various areas, structuring with the advance of ideas and the progressive modeling the Canvas.

It starts from the first area, the Customer Segments. The driver of any initiative is the market and especially to define what problem or need, i’m going to solve. Recall that revenues are generated by customers, if we have a beautiful idea, but does not solve any real need, our project will never produce revenue it will ever climb. Therefore the validation of our sales model to one or more market segments where we will find paying customers, and the market for which we know the potential, the size and the share that we could acquire, is the first step to be validated.

The second key element is the Value Proposition. Define what is the value that we bring to market to our customers, that we solve the problem, which we supply products or services for each market segment, who are the competitors and what we deliver innovative and with prices that we position.

The third are the channels through which we can achieve our market segments with their reference customers. We must define how we decide to reach them with that cost, with such performance, as we integrate them together.

We then go to the definition of relations and relationships that we intend to establish with our customers. What do customers expect and how we intend to meet them? We must identify the relationships already established and those to be put in place, how to integrate them with the rest of the business model and cost have.

The fifth key element are the Revenue Streams, ie the flows of revenues that we want to structure. This area is very important in the Canvas, as they are referred to the prices of our products in the market in relation to the analysis of ready-made market, to our customers’ expectations, the target of the same and shall be identified to the best to understand what will be most profitable.

The sixth element is the key resources of our value proposition. Key resources can be physical, intellectual, financial or human, and may be in the company or assets acquired abroad by strategic partners.

Then we have to analyze key business, the most important actions to be undertaken in order to sight the objectives described in the Canvas. These include software development, SCM and many other core to their business.

Let us finally to the last but one area, namely the Strategic Partners, namely the network of suppliers and partners that allow you to develop your own business model. We can distinguish between four different types: strategic alliances between non competirors partners, strategic alliances between competitors, joint ventures for the development of new joint business, ratio of subcontracting.

In closing with all the clear ideas we can structure the model of overhead costs. In this area we go to regularly define the costs that the company must incur in relation to the key and to the defined partnership agreements resources and activities.

 

What is the Value Proposition Canvas?

Generally when addressing the second area, the Value Proposition, working on a second Canvas ad hoc. It ‘s a modeling framework with which you go to validate the Value Proposition on the market.

In the diagram on the right we find the customer with the benefits obtained by purchasing the product / service offered (gains), the goals you would like to reach (jobs) and the difficulties and anything that might annoy or discourage it to the purchase (pains).

In the diagram on the left we find the offer with products and services, the generators of advantages (gain creator), and the difficulty reducers (pain relievers).

valuepropocanvas

The process involves mapping the customer, then the offer and then run the match between customer and supply (for each customer segment) to define the Canvas.

Generally the Value Proposition Canvas is performed for each competitor in order to examine the advantages and the improvement factors.

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