Business Model Canvas Overview

Introduction

• Developed by Alexander Osterwalder
• Visual tool for defining, describing, and developing business models
• Aids in communication of business operations

Nine Basic Building Blocks

1. Customer Segments

   • Key client groups served by the organization
   • Must identify distinct needs for different channels and relationships
   • Questions to consider:
     • Who are the ideal or most important customers?
     • Who are you creating value for?
     • What type of relationship does each segment want?
   • Sometimes may need to exclude certain customer groups for efficiency

2. Value Proposition

   • Distinguishes the organization's product/service from the competition
   • Key questions:
     • How do you create value for customers?
     • What unique experience or lower price point do you offer?
     • Are you removing a pain or providing desired products/services?

3. Channels

   • How value propositions are communicated and delivered
   • Important considerations:
     • How to raise brand awareness?
     • What routes do customers use to buy products/services?
     • How to deliver value and support after sale?

4. Customer Relationships

   • Interaction style with each customer segment
   • Range from personal interaction to self-service or automated experiences
   • Possible collaborative relationships or joint creation of offerings

5. Key Activities

   • Essential actions needed for delivering the value proposition
   • Types of activities:
     • Product/service production
     • Pain removal on behalf of customers
     • Providing a marketplace for exchange

6. Revenue Streams

   • Mechanisms for deriving fees from customer segments
   • Include:
     • Transactional sales, subscription fees, licensing fees, commissions
   • Understanding customer willingness to pay is crucial

7. Key Resources

   • Assets needed to deliver value propositions and create revenues
   • Can include physical facilities, intellectual property, and human resources
   • Some resources may require partnerships to access

8. Key Partnerships

   • Collaboration with other organizations for effective business model delivery
   • Types of partnerships:
     • Strategic alliances, cooperation with competitors, joint ventures, transactional relationships

9. Cost Structure

   • Costs associated with the business model's elements
   • Considerations:
     • Which resources and activities are most expensive?
     • Fixed costs vs. variable costs
     • Economies of scale and scope

Conclusion

• The nine building blocks provide a comprehensive overview of how a business creates and delivers value
• Encourages questioning and challenging each element to spark new ideas
• Useful for adapting to macro-environmental changes (e.g., COVID-19)
• Recommended readings:
  • "Business Model Generation" by Alexander Osterwalder and Yves Pigneur
  • Strategizer website
• Note: Optima Training is not affiliated with Strategizer but appreciates their work.