Create a Solid Business Model
A business model is vital to any company. It describes how the business creates and delivers value. It also serves as the foundation of future product ideas and initiatives before they even take flight. A good product idea isn’t enough to kick start a business or a new product line. You must assess whether the new idea aligns with your overall business model and if it’s worth pursuing from a business bottom line perspective. The Business Model Canvas (BMC) is your all-in-one business modeling tool that encapsulates the nine building blocks of a business model as explained in the book Business Model Generation by Alexander Osterwalder & Yves Pigneur.
The Nine Building Blocks of a Business Model
You are sure to capture all the nine building blocks of a business model when using the Business Model Canvas. We have created a board template for this in Kanban Zone so you and your team can start your business model workshop with ease.
The nine building blocks of a business model is as follows:
- Key Partners – External parties that you can’t do business without. These can be strategic alliances from non-competitors or competitors, joint ventures, or buyer-supplier relationships.
- Key Activities – These are the important things that your company must do to make the business model work.
- Key Resources – These are the most important assets that are required to run the business model.
- Value Propositions – These describe the products and what value they bring to your Customer Segments.
- Customer Relationships – These describe the types of relationships the company engages with its Customer Segments.
- Channels – These are the ways the company communicates with its Customer Segments to deliver its Value Proposition.
- Customer Segments – These define the different groups of people that the business aims to reach and serve.
- Cost Structure – This describes all the costs associated with running the business model.
- Revenue Streams – These represent the ways that the company generates profit for each of the Customer Segments it engages with.
The Business Model Canvas
The Business Model Canvas was made to visually represent and build a business model using its nine building blocks.
You will see a container for each of the main building blocks of a business model as well as placeholder cards within them that you can reuse. For Cost Structure, we have also listed some of the most common cost categories in an organization and assigned specific containers for them. Because Kanban Zone’s boards are fully customizable, you can do the same for the other blocks and create separate containers for each. This will be useful if you have broader categories within each block. For example, if you want to categorize your Key Partners into Joint Ventures, Coopetition, Strategic Alliances, and Suppliers, you can create separate containers for each of them under its main block.
To create your Business Model Canvas, start with identifying your Key Partners, Key Activities, Key Resources, and Value Proposition. Once that’s clearly defined, go ahead and determine your Customer Segments and Customer Relationships. Define how you’ll reach them through your Channels. Lastly, enumerate your costs and revenue streams.
There are explicit agreements or notes for each building block so you can follow them to know what should be in those sections.
Business Modelling Made Easier
Business models shouldn’t be lengthy documents that are hard to understand. If you want to align everyone in your organization on what your company does and what value it needs to create, you need a straightforward but effective way to represent your business model. A Business Model Canvas allows you to share a holistic representation of your business. It focuses on the key components of any organization, especially on value proposition. Your Business Model Canvas provides an easy to follow structure to your business ideation, so your team can focus on generating creative and innovative ideas for your organization.