Business Model Canvas

The Business Model Canvas (BMC) is a strategic tool for developing and describing business models. The model was launched by Alexander Osterwalder in 2008, and it has since become a globally recognized tool for visualizing business models for both new and established businesses. In this video, we take a closer look at BMC and how it can be used in concept development.

BMC is used to design, describe, challenge, and adjust business ideas and present them as a coherent model. It provides the opportunity to visualize and communicate a comprehensive business model in a logical and understandable way.

The strength of BMC is that it helps you discover and understand the relationships between different parts of the business, such as customers, value propositions, channels, revenue streams, resources, and partnerships. By filling out the boxes of the BMC canvas, you can quickly sketch how a hypothetical or existing business is intended to function without going into too much detail.

We will now take a closer look at the nine elements of the model and the type of information that goes into the different boxes.

Box 1. Customer Segments.

Question. Who are our customers?

In the first box, you should describe your target market. Who are the customers you want to reach? Customer segments should be identified based on demographic, geographic, behavioral, or other relevant criteria. This helps you tailor your goods or services to customer needs and preferences.

 

Box 2. Value Proposition.

Question. What value do we offer to our customers?

In the second box, you should describe what you sell that has value for your customers. What kind of problem or challenge does your product solve for them? How can the product make their lives easier or better? Here you must describe the unique aspect of your business that sets you apart from competitors.

Note that customer segments and value proposition are so closely linked that you must work with these first two boxes in parallel to describe in a good way what you are going to sell and to whom.

 

Box 3. Customer Relationships.  

Question. What type of relationship do we have with our customers?

This element is about how you build and maintain relationships with your customers. Is it a personal relationship? Do you use digital channels? Is it self-service? Do customers need a membership? The customer relationship affects customer satisfaction and loyalty, so it is crucial to have a good plan for how customers should be served.

Box 4. Channels.

Question. Through which channels do we reach our customers?

In this box, you describe how you plan to reach your customers. This can be through sales staff, online store, apps, social media, distributors, or other channels. Choose channels that best suit your target market and value proposition. By channels, we mean both communication channels and distribution channels that allow for payment and delivery.

Box 5. Revenue Streams.

Question. What are our sources of income?

This element is about how you make money on your business. Is it from sales of goods, services, tickets, subscriptions, licenses, advertising, or other forms of income generation? Does the business sell several products or just one? Remember that it is the sources of income that are interesting at this stage - not the size of the income.

Box 6. Key Resources.

Question. What key resources does our business require?

Key resources are the most important resources required to run your business. This can be physical resources such as equipment, technology, employees, or intangible resources such as patents, brand, or knowledge. Are large financial resources needed to get the business off the ground? This element forces you to think through whether the required resources are already in your possession or whether they need to be purchased, borrowed, or rented.

Box 7. Key Activities.

Question. What must we do to execute our business plan?

Here you describe the concrete tasks that need to be performed to implement your business plan. It can be production, marketing, distribution, customer service, or other key activities. Do you have the human key resources from the previous box to carry out the key activities?

Box 8. Partners.

Question. Who are our key partners?

Who do you collaborate with? This can be suppliers, distributors, public agencies, alliances, or other actors that contribute to the success of your business. Here you need to think through the entire value chain and the entire network of possible stakeholders that may be relevant to involve in the business.

 

Box 9. Cost Structure.

Question. What are our most important costs?

In the final box, you fill in all the costs associated with the business. This includes wages, production costs, marketing, technology, rent, and other expenses. Again, it is the type of costs that should be described here - not the size.

When all the boxes in BMC are filled out, you can start exploring connections between the different elements and see how they affect each other. Will the customer segments you have described be interested in the value proposition? Do the customer segments use the channels you have described? Will the income be able to cover the costs and give a profit? It is having the overview to see such connections, reveal mismatches, and discover synergies that is the strength of this tool.

Always remember that a BMC is not static. It should evolve in line with the development of your business and changes in the business environment. You must therefore regularly go back to it to adapt to changes in the market, feedback from customers, or internal reorganizations.

If used correctly, BMC can serve as a common language for the internal team, investors, and other stakeholders and make it easier to communicate and coordinate efforts towards common goals.