Business Model Canvas - a framework that puts everything on one page
The business model canvas was proposed by Alex Osterwalder as part of his Ph.D. research in 2005. It was turned into a book (Business Model Generation) when he joined forces with Yves Pigneur, his graduate supervisor and a computer scientist. The nine components of the business model can easily be drawn on a whiteboard or using software tools such as Strategyzer. Strategyzer is a consultancy firm that was co-founded by Osterwalder. It provides software tools and templates for applying the frameworks.
The business model canvas is useful for looking at trade-offs within a business by examining key building blocks. In their book entitled Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers, Alexander Osterwalder and Yves Pigneur shows how a business proposition fits together using engaging graphics. They suggest nine blocks that look at the infrastructure of a business including the offering, customers, finances, and revenue streams.
These building blocks are worthy subjects. The model covers all the key parts of a business and so makes it possible to identify strengths and weaknesses. In this way the focus can be brought on to parts of the business that need attention. Also, working through each of the nine building blocks, the final result would produce a very useful marketing plan.
Undoubtedly one of the strengths of the model is its visual representation which brings together the key activities of a business onto one page.
The business model canvas can be used with other frameworks. For example, the business model canvas does not include blocks that look at external forces such as competition or external threats and opportunities. The business model canvas can be used with a SWOT analysis or a brand positioning framework.
It has been suggested that one of the most difficult parts to get right on the business model canvas is the value proposition. The value proposition is the product or service that is on offer and is valued by the customer. Working out this link between the offer and what is valued has resulted in another tool from Alex Osterwalder - the value proposition canvas.
The value proposition canvas looks at the offer made by a supplier and how it relates to the customer. It starts with the product as it is sold by the supplier by considering three things: the attributes of the product and service on offer, what these attributes provide that enable the customer to build value and how the attributes relieve pain for the customer.
It then relates the offer to the customer that buys the product. This is the customer profile. The customer profile is made up of the jobs the customer does with the product, how the product provides positive value and thirdly how it reduces pain for the customer.