Business Model Canvas – how to fill in?

One of the most popular ways of presenting a business model is the so-called Business Model Canvas, proposed by Alexander Osterwalder.

What is a business model?

The business model describes how an organization creates value and benefits from it. In other words, the business model shows how the company/project makes money. The purpose of creating such models is, among other things, to provide knowledge to the participants of the decision-making process so that they have a clear picture of the company’s activities.

Looking at the business model of a given company, everyone should clearly see where the company takes money from, what it sells, to whom it sells and how it creates profits.

Canvas Business Model

It is a visual record of the current, newly designed or rebuilt business model and can be adapted to any scenario. In Osterwalder’s view, the model puts value proposition at the centre and describes how a company should use its organisational resources to effectively propose the developed value on the market.

Business Model Canvas blocks – how to fill in?

The business model consists of different aspects of a company:

VALUE PROPOSITION

It consists of services or products that the entity provides to the distinguished customer segments. The value proposition is the reason why customers choose one company at the expense of another. The value for the customer is to satisfy their specific needs or to solve their problems. In other words, a value proposition is a set of benefits that a company offers its customers.

SEGMENTATION OF CUSTOMERS

Defines the group or target groups of customers to whom the added value created by the company is provided. Defining the right target group is crucial, because it is the customers who are the source of income. Segmentation is important because it allows to distinguish the most important features and needs of customers, thanks to which the company can better adjust its offer to them. In the business model one or more customer segments can be defined.

CHANNELS

They are an element that describes how the company communicates and reaches out to a given customer segment to provide added value. Communication, distribution and sales are the company’s meeting points with the customer, so they play an important role in creating consumer experience.

Channels have several functions:

• They provide the customer with knowledge about the company’s products and services,
• They help customers assess the added value offered to them,
• They make it possible to buy company products or services,
• They provide after-sales support.

CUSTOMER RELATIONS

It is an element that describes the type of interaction that the company establishes with separate customer segments. A relationship can range from personal, direct contact to fully automated contact. Everything depends on what a given customer segment can expect.

REVENUE STREAMS

Describes how the company generates revenue from each segment. The company must ask itself: What value does the customer segment really want to pay for? The mechanisms may be different, based on a single customer purchase or multiple purchases.

KEY ACTIVITIES

This element describes the most important activities that a company needs to perform in order to add value, establish a customer relationship and generate revenue. Key activities may include, for example, manufacturing, troubleshooting or running the platform/network.

KEY RESOURCES

This element describes the key resources needed to generate added value and reach customers through distribution channels. Key resources can be divided into physical (e.g. machines, cars, points of sale, servers), intellectual (e.g. brand, patent, copyrights, customer data), financial and human.

KEY PARTNERS

This is the element that describes the network of suppliers and contractors that enable the company to function. These can be the most important suppliers, joint ventures established to deliver a new product or service, strategic partnerships between competitors or a strategic alliance with a company from another industry.

COST STRUCTURE

Describes all costs generated by the business model. Creating and delivering added value, maintaining relations with the customer and generating revenue requires bearing relative costs. They can be defined after defining key resources, activities and partners.

Canvas Business Model

First of all, it is important to remember about the proper order of defining each of the elements. Filling in should start with a “value proposition” and end with a “cost structure”. This order makes it much easier to determine the next blocks of the scheme.

The business model presented by means of the described scheme on one sheet and in a specific structure is useful at practically every stage of the company’s operation, especially at the stage of designing and implementing new products and services. The scheme is also useful when rethinking the company’s position on the market and looking for new ways to deliver value to customers more effectively than the competition.