Business Model Canvas: Origin, Benefits, How To?

The business model canvas is the tool to analyze and create business models in a simplified way. It is viewed globally on a canvas divided into the main aspects that involve the business and revolves around the value proposition that is offered.

The business model canvas is used to go from idea to project and translate our idea into a business model. It is a “living” model, that is, we are modifying as it develops, we are validating clients, new ideas arise… that is why post-its are used to complete it.

Origin of the business model canvas

The business model canvas was created and designed by Dr. Alexander Osterwalder and more information can be found in his book “Generation of business models”. This model is integrated into the lean-startup methodology that is based on finding and promoting new ways of creating, delivering and capturing value for the client through validated learning.

Benefits of using the business model canvas

1.       Improve understanding: Use visual tools. This methodology encourages the creative thinking of the workers who create the canvas.

2.       Broad focus points: This model maintains a constant vision of the business model from different perspectives: commercial, market, distribution channels ...

3.       Strategic analysis: In just one sheet you can view all the elements of the canvas. A simple way to get the most out of this tool.

How to generate a business model canvas?

It logically shows the interconnection between the 9 basic aspects of a business model. Next, we show how a business model canvas should be completed, in what order and what each section of the canvas means.

1. Customer segment

Detect the needs of the market, of the client. Our focus is always the customer and we must orient the product to their needs and desires.

In order to identify our client, we must put ourselves in their shoes and analyze what they think, feel, see, listen to, what their problems are and the benefits that our product / service can bring them.

We must respond to:

  • Who are we creating value for?
  • Who are our most important clients?

2. Value proposition

It is the linchpin of the entire business model. The value proposition or competitive advantage is the reason why the customer is going to buy from us and not from someone else. This includes what makes our product / service different and innovative.

You can innovate in different aspects such as the income model, business alliances, production processes, product / service delivery, brand ...

We must respond to:

  • What value are we delivering to our clients?
  • What problem do we solve?
  • What is the need we satisfy?
  • What kind of product do we offer?

3. Channels

Once our clients and the value proposition we offer them have been defined, we have to reach them. If they don’t know us, they won’t buy from us. Here we are going to define the distribution channels of the product or service.

We must respond to:

  • With what channels can we reach our customers?
  • What channels work best?
  • Which of these channels are the most profitable?

4. Relationship with customers

We must communicate correctly with our clients and be aware of them. They are our central axis, so knowing how to define the relationship that we are going to have with each customer segment is essential for the success of a business.

We must respond to:

  • What is the relationship we have with each of our customer segments?
  • What kind of relationship do you expect?
  • How much does it cost?

5. Income stream

For a business to be profitable and we can survive in the market, we have to think how to monetize it? In other words, where are we going to get the billing?

We must respond to:

  • What is our main line of income? 
  • How will our clients pay?
  • Why are our clients willing to pay?

6. Key resources

Knowing what resources we have and which we must have to carry out our business activity is key when establishing the business plan. We must be cautious and prudent when defining these resources. We must always think about how to optimize them, that is, try to achieve the maximum possible productivity at the minimum cost.

We must respond to:

  • What essential resources does our value proposition require?

7. Key activities

To carry out the value proposition that we want to offer to our customers, certain activities are necessary to prepare the product before it reaches the market. That is, here we think about the core of our business, what we will do in our day to day.

We must respond to:

  • What basic activity does our value proposition require?
  • What are our channels?
  • What are our sources of income?

8. Key allies

To run a business, it is essential to have allies. These allies can be;

A series of partners / collaborators: a good network of partners can help us to reach the customer faster, to be backed by their reputation and experience.

Suppliers: those who provide us with the key resources to be able to offer the services / final product.

We must respond to:

  • Who are our key partners in the market?
  • Who are our suppliers?

9. Cost structure

Obviously, all this infrastructure has costs that we must pay and optimize. We must define what our priorities are and the fundamental expenses in the business of those that are not.

Having this structure very clear will help us not to deviate from budgets and that the business fails due to financing problems.

We must respond to:

  • What are the most important costs within our business model?
  • What key resources are the most expensive?
  • What key activities are the most expensive?

With these guidelines, you may already be able to start translating your idea into a business project.

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