Alexander Osterwalder: The Business Model Canvas

Now, what is this language about? It's about 9 building blocks, 9 building blocks that allow you to describe or design every business model you can imagine, ultimate possibilities, thousands of alternatives. So let's watch a little movie, 2 minutes, that will explain what the Business Model Canvas is. So if I explain it, it will probably take 15 minutes, so that's why we made a movie. So you can get a quick overview of the Business Model Canvas.

An organization's business model can be described with 9 basic building blocks: your customer segments, your value proposition for each segment, the channels to reach customers, customer relationships you establish, the revenue streams you generate, the key resources and key activities you require to create value, the key partners, and the cost structure of the business model. But it's not sufficient to just enumerate the 9 building blocks. What you really want to do is to map them out on a pre-structured canvas. This is what we call the Business Model Canvas, a tool that helps you map, discuss, design, and invent new business models. Let's briefly go through the 9 building blocks, starting with the customer segments. These are all the people or organizations for which you're creating value. This includes simple users and paying customers. For each segment, you have a specific value proposition. These are the bundles of products and services that create value for your customers. Channels describe through which touchpoints you're interacting with customers and delivering value. The customer relationships outline the type of relationship you're establishing with your customers. The revenue streams make clear how and through which pricing mechanisms your business model is capturing value. Then you need to describe the infrastructure to create, deliver, and capture value. The key resources show which assets are indispensable in your business model. The key activities show which things you really need to be able to perform well. The key partners show who can help you leverage your business model, since you won't own all key resources yourself, nor will you perform all key activities. And once you understand your business model's infrastructure, you'll also have an idea of its cost structure. So with the Business Model Canvas, You can map out your entire business model in one image. This works for startup entrepreneurs just as well as for the most senior executives.

So, 9 building blocks, pretty straightforward. The individual building blocks are not new, probably most of you know every piece of it, right? If you looked at business a little bit, you have an idea of what this is. But the important thing here is that we have all 9 on one slide or on one poster if we print it out, and that we understand how they all fit together, so we get the big picture understanding. Not just the product, for the engineers in the room, products, great products are becoming a commodity. It's the combination between great products and a great business model that's going to keep you ahead in competition in the coming decade.