Business Model Canvas Elements: Explained
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Business Model Canvas Elements: Explained

Business Model Canvas Elements: Explained

When it comes to the business plan for a new service offering, start with The Business Model Canvas

When it comes to the business plan for a new service offering, start with The Business Model Canvas

Your board has been developing a new service offering for months and now you need a simple and straightforward business plan for it. Where do you start? Enter The Business Model Canvas, a one-page tool that was developed by Alexander Osterwalder in 2008.

The tool allows any organization to quickly define a business model by filling in nine boxes of information. And, in doing so, the organization can show how it will create value through the offering for itself—and for its customers or members. The tool also helps define what an organization plans to accomplish with the offering, and is great for boards that are considering new initiatives or revisiting existing ones. Filling in the boxes creates an opportunity to have conversations around management and strategy.

Customer Segments

This part describes your consumer by answering questions such as who are your consumers? What do they think, feel, see, or do? This part allows you to learn if the business targets one or multiple market segments, the persona for each segment, and the service provided for consumers. The expected output is a persona for each consumer segment.

Value Propositions

What is the value delivered to the consumer? Which consumer’s problem does the product target? How do we satisfy our consumers? After setting up the persona based on the customer segment section, this part focuses on the value provided for each segment and improves the competitive position of the product or service. These facts help us to build a priority list of the value propositions and link it with the consumer personas.

Channels

Where will the product be sold or promoted? Why choose these channels, and why are they efficient? This part focuses on where communication between the business segments and value propositions takes place. For example, a kitchen product that solves a heating problem while cooking (value proposition) can be purchased by housewives (target segment) through their online store, Amazon, and local distributors (marketing channels).

Customer Relationships

How does the company interact with its consumers? How does the company manage this relation between the product or service and costumers? In this part, you determine how you plan to communicate with the consumer during or after the product’s sale. This leads to questions regarding the best method to communicate with consumers in order to deliver the value proposition.

Revenue Streams

Where will the revenue come from? This part links the segment, proposition, and channel elements. For example, revenues (a) will come from segment (b) by providing proposition (c), through channel (d). In the previous example, the revenues will come from selling the kitchen product to housewives through Amazon.

Key Activities

What are the activities required to deliver the value proposition, distribute the products through channels, build a customer relation, or have a revenue stream? This section includes working with partners, improving the product, or collecting feedback from consumers. All the activities related to delivering the value proposition should be included in this section.

Key Resources

What resources should be present in order to deliver the value proposition and compete in the market? This also includes the resources involved in other aspects, such as customer relations, distribution channels, and achieving the revenue stream. The resources vary from one product to another based on the nature of the production process. It can be infrastructure, human resources… etc.

Key Partnerships

Who are the business partners and suppliers involved in the sales process? Those partners may be involved in delivering the value proposition to consumers by acting as a sales channel or customer support agents.

Cost Structure

What is the business model cost? Which elements are the most expensive? This section includes both direct and indirect costs involved in the business model. It should describe the cost of each of the above elements.

Download Business Model Canvas

After your board learns of all the 9 elements, the Business Model Canvas can easily be re-created on flip charts or on dry-erase boards so organizations can start sketching and discussing elements with markers or even Post-it notes. There is a PDF version of Business model Canvas available for download

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Sim Kwan Choo

<p>I am Administrator of atdsolution.com</p>

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