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The Business Model Canvas: The Nine Building Blocks
The Business Model Canvas is the heart of the
"Business Model Generation" methodology. It's a strategic tool that
allows a team to map out and discuss their business model on a single page,
fostering a shared understanding and facilitating rapid prototyping and
innovation. The nine building blocks are divided into four main areas of a
business: customers, offering, infrastructure, and financial viability.
1. Customer Segments
This block defines the different groups of
people or organizations an enterprise aims to reach and serve. A company may
serve one or several large or small customer segments, and each segment may
have different needs, behaviors, and attributes.
2. Value Propositions
This is the core of your business model. It
describes the bundle of products and services that create value for a specific
Customer Segment. It's the reason why customers turn to one company over
another; it solves a customer problem or satisfies a customer need.
3. Channels
Channels describe how a company communicates
with and reaches its Customer Segments to deliver its Value Proposition.
Channels can serve several functions, including raising awareness, helping
customers evaluate the value proposition, allowing them to purchase, and
providing post-purchase support.
4. Customer Relationships
This block outlines the types of relationships
a company establishes with its Customer Segments. Relationships can range from
automated and self-service to personal and dedicated, depending on what the
business model requires to acquire, retain, and grow its customer base.
5. Revenue Streams
This block represents the cash a company
generates from each Customer Segment. It answers the question, "For what
value is each Customer Segment truly willing to pay?" Revenue streams can
be one-time transaction payments or recurring revenue from ongoing payments.
6. Key Resources
Key Resources are the most important assets
required to make a business model work. They can be physical (e.g., machinery),
intellectual (e.g., patents, brand), human (e.g., people), or financial.
7. Key Activities
These are the most important actions a company
must take to operate successfully. They are necessary to create and offer a
Value Proposition, reach markets, maintain customer relationships, and earn
revenue.
8. Key Partnerships
This block describes the network of suppliers
and partners that make the business model work. Companies form partnerships to
optimize their business models, reduce risk, or acquire resources.
9. Cost Structure
This block describes the most important costs
incurred while operating under a particular business model. Creating and
delivering value, maintaining customer relationships, and generating revenue
all incur costs.
Why the Business Model Canvas is a Game-Changer
The Business Model Canvas encourages a
different way of thinking about business. It moves away from the traditional,
often rigid, business plan and promotes a more agile, visual, and collaborative
approach. By mapping out the nine building blocks on a single page, teams can
see how all the pieces fit together and quickly identify potential trade-offs
or opportunities for innovation. It's a powerful tool for startups and
established companies alike, helping them to systematically analyze, design,
and pivot their business models to stay ahead in a constantly changing market.
Exercise 1: Word Matching
Match the business term on the left with its
correct definition on the right.
|
Word |
Definition |
|
Business Model |
The rationale of how an organization
creates, delivers, and captures value. |
|
Business Model Canvas |
A visual chart that breaks down a company's business model into nine
essential building blocks. |
|
Customer Segments |
The specific groups of people or
organizations an enterprise aims to reach and serve. |
|
The bundle of products and services that create value for a specific
Customer Segment. |
|
|
Channels |
How a company communicates with and reaches
its customers to deliver its value proposition. |
|
The types of interactions a company establishes with its customer
segments. |
|
|
The cash a company generates from each
customer segment. |
|
|
Key Resources |
The most important assets required to make a business model work. |
|
The most important actions a company must
take to operate successfully. |
|
|
The network of suppliers and partners that make the business model
work. |
|
|
The most important costs incurred while
operating under a particular business model. |
Exercise 2: Fill in the Blanks
Complete the
sentences using the most appropriate word from the list below. Each term is
used only once.
Value Propositions-Cost
Structure-Revenue Streams-Key Activities-Customer Segments-Key
Partnerships-Channels-Key Resources-Customer Relationships
1.
The business model canvas is a
tool that describes how an organization creates, delivers, and captures value
by breaking it down into nine essential building blocks.
2.
The ______________ block defines
the different groups of people or organizations an enterprise aims to reach and
serve.
3.
A company's ______________
describe how it communicates with and reaches its customers to deliver its
Value Proposition.
4.
The ______________ represent the
cash a company generates from each Customer Segment.
5.
A company's ______________ are the
most important assets required to make its business model work.
6.
The ______________ are the most
important actions a company must take to operate successfully.
7.
The types of interactions a
company establishes with its customers are described in the ______________
block.
8.
The network of suppliers and
partners that make a business model work are called ______________.
9.
The ______________ outlines the
most important costs incurred while operating under a particular business
model.
10. The bundle of products and services that create value for a
specific Customer Segment are known as the ______________.
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