In this article I will briefly explain the business model canvas, a great tool which results in the business model on one single page. However let’s start with a description of the business model canvas:
“The business model canvas is a strategic management and entrepreneurial tool, which allows you to describe, design, challenge, invent, and pivot your business model.”
In the article “What is a business model” I’ve shared Alexander Osterwalder’s definition of a business model: “A business model describes the rational of how an organization creates, delivers and captures value.“
If you mathematically combine both definitions the business model canvas is simply a tool that let’s you sketch or visualize a business model. The canvas helps you systematically understand, design or reinvent ways to create, deliver and capture value, or in other words innovate a business model.
Building blocks business model canvas
The business model canvas consists of 9 logically ordered building blocks that describe a business model.
- Customer Segments
- Value Propositions
- Customer Relationships
- Revenue Streams
- Key Partners
- Key Activities
- Key Resources
- Cost Structure
The YouTube video Business Model Canvas Explained provides a 2 minute overview of the Business Model Canvas an its building blocks. Alexander Osterwalder uses the business model canvas to analyze Nespresso in the Harvard Business Review article Sketch Out Your Hypothesis. This real life example provides you an idea of how to use the business model canvas in a more detailed way.
The business model canvas has its roots in academic research. Alexander Osterwalder wrote his PhD thesis with the title: “The Business Model Ontology – A Proposition in a Design Science Approach” back in 2004.
Professor Yves Pigneur, Ph.D., Alexander Osterwalder Ph.D and Creative Director & Designer Alan Smith from The Movement, Producer Patrick Van der Pijl of Business Models Inc. and Editor Tim Clark of Hitotsubashi University Graduate School of International Corporate Strategy wrote, designed and produced the book Business Model Generation back in 2009. The cornerstone in this book is -of course- the business model canvas.
Concluding thoughts and wrap-up
The business model canvas is a great tool that helps me to analyze a companies and its underlying business models. Furthermore it helped me during some personal development coaching sessions, where I was challenged to sketch my own personal business model.
Simply try it your self and experience the powerful approach of sketching business models in a systematic way. 🙂