What is Canvas? What does this have to do with the release of the Ipod / Itunes? Maybe you know the answer to these questions, or maybe not. But regardless of your degree of knowledge about this tool and how it was used in a product that has revolutionized the market, everything will be clear to you!

To understand once and for all the Business Model Canvas, you need to first understand about business model. After all ...

 

Do you know what a business model is?

 

A business model is a great way to understand, in a simplified way, the logic behind an enterprise, trying to clarify and define the main factors that will be involved in its creation, operation, delivery and value acquisition.

This subject gained visibility in the 1990s and today it is increasingly important in the corporate world.

The big challenge of a business model is the delivery of value to the customer, since customer perception involves personal and emotional aspects, and is not clearly measurable. Every business model must meet the wishes and needs of a segment.

 

Why develop my business via a business model?

 

"When the pace of change within the company is surpassed by the pace outside it, the end is near! "

(Jack Welch)

 

Nowadays, innovation and differentiation are no longer attributes, but rather needs not to be devoured by competition. In all companies, regardless of the business segment, competitiveness is increasing, and there is no business that can escape it.

But high competition has not only disadvantages, on the contrary! It makes the companies become better and better and offer products with more quality!

That is why we need to look at competitiveness with a lot of determination and innovation in our business models. It is the simplest and quickest way to get an idea of ??the role and make it happen.  

Especially in times of uncertainty about how to innovate, using a business model helps us understand what value we must generate, for whom and how. With this, hypotheses are raised, tested and evaluated.

 

"Innovation in Business Model - A fantastic methodology to implement innovation as the main competitive differential in the 21st century."

(Michael Lenn Ceitlin)

 

Within this, we must not forget that a business model follows the following logic:

 

Value Creation -> Delivery of Value -> Value Capture

 

Therefore, this model is essential for companies that are emerging and are in the idealization of the business, because logically specifies all the complexity in which an enterprise generates business and build capital.

This methodology represents agility in the company, allowing the consolidation of ideas, analysis and validation of opportunities for improvement. All this without unnecessary formalities in its initial phase.

And all this is very well presented in the most well-known tool for business modeling in the world ...

 

Business Model Canvas

 

 

This methodology was created by Alexander Osterwalder and was introduced in the market through his book Business Model Generation. It consists of representing the business model graphically in a framework, by dividing the model into 9 blocks that represent the main points that must be taken into account when thinking about new business.

The model was created to be a dynamic framework, in contrast to the traditional linear description, the use of segregated blocks helps to understand the complex relationships between the vital points of a business model.

 

And what is Canvas?


 

Canvas is a practical and fast tool that will allow you to observe all the fundamental points of a business plan in just one sheet. Shall we study the nine blocks?

 

1 - Customer Segments

 

 

Customer segments define the different groups of people or organizations that a company seeks to reach and serve (and which it wishes to knowingly ignore). It all begins with whom we want to satisfy a need.

Customer groups represent distinct segments if:

 

  • Needs demand and justify a different supply

  • Are reached by different distribution channels

  • Require different types of relationships

  • Have substantially different profitability

  • Are willing to pay for different aspects

 

Precisely because there are distinct segments, a tip is to focus on a niche that is large enough to make a good profit, but with peculiar characteristics, allowing you to have a closer relationship with your client and his needs.

I have separated some questions that can help you in the elaboration of this block:

 

  • To whom are we creating value?

  • Who are our most important consumers?

 

2 - Value propositions

 

 

A value proposition is the aggregation or set of benefits that the company offers. That's why customers will choose your company, not your competitor's company.

The idea here is the same one I told you in explaining what Canvas is: simplicity! In this block you should understandably describe what value you are offering, how you will meet your customer's needs, or how you will solve your consumer's problem.

The important thing is that your proposal has value to your target audience! Regardless of whether it is completely radical or looks like your competitors’, its differential must be clear. The proposal needs to have something that makes it unique.

Some examples are through:

 

  • Novelty

  • Performance

  • Customization

  • "Doing what needs to be done"

  • Design

  • Brand / Status

  • Price

  • Cost reduction

  • Risk reduction

  • Accessibility

  • Convenience / Usability

 

The following questions can help you in this step:

 

  • What value do we deliver to the customer?

  • What problem are we solving?

  • What need are we satisfying?

  • What are we offering for each customer segment?

 

3 - Channels

 

 

Channels are how a company communicates, interacts and reaches its Clients Segments to deliver the Value Proposition. And that is a point of extreme importance, after all, you have already defined who your customers are and what is valuable to them, so now you need to know how to reach them;

As you know, nowadays there are many media (television, social networks), distribution (couriers and carriers) and sales (telephone, website).

Its main functions are:

 

  • To increase the knowledge of customers about products and services;

  • Help customers evaluate the Value Proposition;

  • Allow customers to purchase products and services;

  • Bring a Value Proposition to the client;

  • Providing support after purchase

 

To fill the channels of your Canvas, I suggest you ask yourself the following questions:

 

  • Through which channels do your segments want to be contacted?

  • How will the Value Proposition reach your customers?

  • How will they find out you exist?

  • How do our channels integrate?

 

4 - Customer Relationship

 

Customer relationship is the type of relationship a company establishes with specific customer segments.

This relationship can be based on human interaction, which makes contact more personal. It can also be self-service, where the company offers everything the customer needs to "serve" himself. And lastly, it can be automated, where the consumer can choose on their own using automated services.

Choosing the ideal relationship is extremely important to the success of your business plan, as it will directly impact the experience of each client with your company, and can have positive and negative effects.

 

 

So when it comes to making that decision you should think carefully, analyze the profile of your potential customers, and ask yourself the following questions:

 

  • What kind of relationship do each of your customer segments expect you to have with them?

  • What is the cost of each?

  • How does it integrate with the rest of your business model?

 

5 - Revenue streams

 

 

Revenue streams are simply the money generated from each Customer Segment and how they will pay. According to your business model you can have more than one source of revenue.

Some examples of how to generate revenue sources are rent, subscription fees, brokerage, product sales, service, etc. Innovation at these times is always valid, it is only up to evaluate whether it is feasible for your business model.

To fill the revenue sources of your Canvas I suggest the following questions:

 

  • What values ??are our customers willing to pay?

  • How will the customer pay for the product / service?

  • What are the sources of revenue?

 

6 - Key Resources

 

 

These are the most important Features required to make the business model work. Some examples of resources are:

 

  • Physical: Factories, buildings, vehicles, machines, shops.

  • Intellectual Property: Trademarks, patents and registrations.

  • Human: Creativity, Technical Expertise.

  • Financial: Money or lines of credit.

 

The main features present on your Canvas can vary according to your business plan. In the industrial sector, the main resource is physical, which are the machines, and in the field of service provision are people, that is, human resource.

Ask the following questions in preparing this block:

 

  • What core features does our value proposition need?

  • What resources and infrastructures will be needed to create, deliver and capture value for your customer?

  • What do you need for business to work?

 

7 - Key activities

 

 

Key activities describe the most important actions a company must take to maintain its business model. Like the blocks above, these activities also depend on your business model.

Some examples of key activities that may be part of your business are:

 

  • Production: Manufacturing;

  • Problem solving: Knowledge management; Continuous training;

  • Platform / network: Platform management; services; Promotion of Platforms.

 

The following questions can assist you in filling out this block of your Canvas:

  • What constant activities will be required in order for your model and certain key features to function correctly with high performance?

  • In operational terms, what will be vital to the business?

 

8 - Key Partners

 

 

Describes the network of necessary and highly desirable suppliers and partners for the business.

Major partnerships are extremely important to a business plan, especially if one of the partners is responsible for one of the key activities, such as a supplier of raw materials.

These partnerships also have a strategic character, as they arise from the need to optimize processes, economies of scale, reduce risks and uncertainties, acquire particular resources and activities, gain more market knowledge, and other factors.

You must be thinking: but what if my company has many partnerships? Should I put them all in my Canvas? The answer is no. Only the most important partnerships for your business model should join this block.

Some examples of partnerships are strategic alliances between non-competitors, strategic partnerships between competitors (taking the example of Apple and Samsung, who sometimes share information and technology for mutual development), and relationship between buyer and supplier.

Ask the following questions when filling in this block of your Canvas:

 

  • Who (person or company) will be needed or will add value to your product or service?

  • Which partnerships can assist in obtaining Key Resources, performing Key Activities, minimizing or eliminating Costs?

  • What major resources are you getting from partners?

  • What key activities are implemented by partners?

 

9 - Cost Structure

 

 

In this part, we describe all costs involved in the operation to make the business model happen. The organization can be directed by Cost, which is to minimize costs whenever possible or directed by the Value, being less concerned with cost and more with the value generated to the client.

The main costs are:

 

  • Fixed costs;

  • Variable costs;

  • Economics of scale;

  • Economics of scope.

 

The following questions can help you fill this block of your Canvas:

 

  • What values ??are our customers willing to pay?

  • How will the customer pay for the product / service?

  • What are the sources of revenue?

 

Did you learn what Canvas is?

 

I'm sure yes! This tool is very simple, but has a much greater power than you can imagine. With a Canvas you can make it easier to understand your business model.

But how is it in practice? You have seen how the nine blocks of a Canvas are, but we know that seeing the theory and applying it are two different things, right? So let’s go...

 

How to create a Canvas?

 

In a poster or on a white board, the important thing is to provide a way to make your Canvas very visual, i.e. it needs to be in an easy-to-view place.

Another cool tip is to never write directly on the board. Since Canvas is heavily used for innovative ideas, it wouldn’t be nice to keep typing and erasing all the time.

It is much more practical to use post-its, since you can change whenever you have a new idea or you is not satisfied with what is on the board.

In which block should I start? Many people have this doubt, and the answer is: anyone! You can start with the block you want, but we recommend you start with the value proposition and the customer segment, because these blocks are the soul of your company.

Another important point is not to be afraid to make a mistake. And one of Canvas's goals is that, after all, making a visual idea of your business is the easiest way to perceive what can be improved, what strengths and weaknesses there is, and whether it's worth going forward or not.

In order to obtain a successful Canvas, it is good that it is done with a team. Exploring everyone's opinion helps you identify ideas that you alone might not have.

 

The secret to success!

 

Now you already know what a business model is, learned what Canvas is, its nine blocks and discovered how simple it is to create yours. What is missing? An example of success, right?

As I told you up there, this incredible tool was used by Apple, one of the biggest companies of today, in launching a product that has revolutionized the market!

For many, the idea of ??having music on the cell phone is extremely natural and simple, but it wasn’t always this way! Before, people had to carry cases with several CDs to listen to their music and there were no personalized playlists.  

It was on October 23, 2001 that Steve Jobs boosted the digital music market by launching the first Ipod. And to launch a device of such great impact, Apple used this amazing tool!