Business Model Canvas
My Business Model Generation book is starting to look a little tattered. It is a frequent reference when thinking through new business or product ideas. At a Strategy conference, I first ran into the Strategyzer tools when Nestle shared their strategic planning method. I used it soon after to evaluate options for improving a process. It was well received and became a part of our approach to assessing future ideas.
The best part of the book is the business model canvas, a one-pager containing nine elements that, together, explain how a business will make a profit. The elements are,
- Customer Segments (CS) – One or more customer segments the organization serves
- Value Proposition (VP) – How the organization will solve customer problems and satisfy customer needs
- Channels (CH)– Values Propositions are delivered to customers through communication, distribution, and sales channels
- Customer Relationships (CR) – Customer relationships are established and maintained with each customer segment
- Revenue Streams (RS) – Revenue streams result from value propositions successfully offered to customers
- Key Resources (KR) – Key resources are the assets required to offer and deliver the value
- Key Activities (KA) – The activities required to offer and deliver the value
- Key Partnerships (KP) – Some activities are outsourced and some resources are acquired outside the enterprise
- Cost Structure (C$) – The business model elements result in the cost structure
Back to the process improvement. We were carrying out a process that was essential to our customers but arguably, not part of our core expertise. The opportunity was to become more efficient while also improving the customer experience. We identified four viable solutions and filled out a canvas for each one. The options were,
- Outsource the process completely
- Insource the process and make it a core part of our business
- Partnerships (with a couple of arrangements)
By doing so, we clarified the impact of each option on our customers, employees, and financials. It gave confidence in the decision-making process that we covered all the bases. Then, once we decided on option three, establishing a partnership, it was especially useful in pitching the idea to others. It was an excellent outcome for our company and I was proud to bring innovation to our business.
The Dog Collar Business
OK, now for the less corporate and more traditional entrepreneurial approach to building a business. I am teaching my kids entrepreneurship by getting them to start their own businesses over the school holidays. One of the businesses is making and selling dog collars and leashes on Etsy. So, here is what that business model canvas looks like,
