Business Model Canvas

The Business Model Canvas tells the story of how you create and deliver value to customers, while exchanging and capturing value for your business. It describes how to effectively and sustainably build the engine that will produce the means of reaching and satisfying customers. It is a strategic tool in that it abstracts these elements, which are later defined operationally using maps such as the Service Blueprint.

At the enterprise level, the business is not to be conflated with the product. But with startups, new ventures and business units, the business model and product scope are essentially the same.

The right side of the canvas is about exchanging value with customers. Identifying the right Customer Segments and their corresponding Value Propositions are done first on the Value Proposition Canvas. Channels are the means through which you reach customers, and determine the touchpoints possible to interact with and deliver value to them. Customer Relationships are the ongoing connection and support customers expect from your products and services. And Revenue Streams itemize the means and pricing mechanisms through which value is brought back to the business; this may be supplemented with Key Objectives for mission-driven organizations (or those that measure success in ways additional to financially).

The left side is for describing the means to create & deliver value, and support the business or product. Key Resources list the assets & personnel that necessary to generate value or leverage to reach customers. Key Activities are how those resources are effectively utilized, including how the team performs. And Key Partnerships are those you work with to generate greater value, find & reach customers, or extend services to them. Finally, the Cost Structure itemizes the expense of supporting these infrastructure elements, and what investments the business needs to be sustainable.

With a business model drafted, you can test and iterate aspects of it just as you would product features. You should also examine how the model fits into the greater Business Context, for better situational awareness and informing your vision.