Business Model Canvas Explained

An organization's business model can be described with nine basic building 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 nine 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 nine 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. The channels describe through which touch points 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.