Business Model Canvas

Ever since I watched the talk by Alexander Osterwalder at Stanford Entrepreneurship Corner website, I’ve been using the Business Model Canvas tool combined with Steve Blank’s customer development process and Eric Reis Lean startup model.

Here is why I recommend this tool and process for any Startup, Enterprise or someone working on a idea/project.

  • First, it helps you to get the thing (idea/problem/project) that’s in your mind to the surface so that you can see the bloody thing with your eyes.
  • As you can see it, now you can ask the questions like why it need to exist and who uses it? in other words who is your customers and why they’ll use it. I know there will be few more questions in your head by now, so don’t hesitate to ask 🙂
  • Now you can ShowOff, I mean it in a good way. You have the idea in your hand and know your customers. Get out of the building and talk with the customers and listen to them.
  • Hey, talk with few more of them and listen.
  • At this point you got the picture whether you need to tweak (pivot) the idea or start developing it or work on other.

This process will save you lot of time and also understand the customer.

Here is the intro video explaining Business Model Canvas framework…

You can get the canvas from the following links

Once you downloaded the canvas fill the nine blocks in the following order

As an example, I’m using the fashion app TrendArY that I developed. TrendArY is a location based fashion app helps you to discover fashion trend around you.

  1. Customer Segments: Who is the customer? Customer types? Needs & Wants?
    E.g: For TrendArY customer segments block would be Customers: Females aged from 14 years ; retail stores. Customer types: teens, working women, mom’s ; fashion boutiques, retail stores. Needs: users: Discover fashion trends, savings ;  stores: marketing, in-store traffic.
  2. Value Proposition: What is the product or service you’re offering to the customers?
    E.g: Mobile app through which users can discover fashion trends by browsing the styles from retail stores around them right from the palm of their hands.
  3. Channels: How is the value proposition delivered to the customers?
    E.g: iPhone: AppStore, Android: Google Play.
  4. Customer Relationship: How does business interact/engage the customers?
    E.g: Fresh Styles everyday, recommendations from fashion bloggers, promotions from stores.
  5. Revenue Streams: How does business generate revenue from the value proposition?
    E.g: Through services offered for retail stores: coupons, location based alerts, promotions.
  6. Key Resources: What resources & infrastructure is needed to execute the business?
    E.g:  Servers, iOS, Android, web & database developers, Business development people.
  7. Key Activities: What are the things business need to do to deliver the value proposition?
    E.g: get stores onboard, get daily styles from the stores, acquire users, recommendations from fashion bloggers.
  8. Key Partnerships: What activities are outsourced?
    E.g: Partner with fashion bloggers to recommend styles & stores.
  9. Cost Structure: What are the cost associated with the business?
    E.g: Servers, Developers, Business development, computers, advertising, traveling to stores etc..

Answering these blocks gives you complete picture of the business and if Revenue (step 5) is greater than Cost Structure (step 9), its a viable business (not always).

Let me know your thoughts on this process and next time I’ll post how you can apply lean methodologies in product development.

Cheers!

UPDATE:

If you’re just starting up, you no need to worry about filling all the 9 blocks. Fill what you know today and spend most of your time & resources on customer development. Talk with the customers and see if they’re willing to take money out of their wallet and pay for your product or service. Find how your value proposition fit with your customer needs.

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2 comments

  1. […] wanted to do this post ever since I wrote about Business Model Canvas because I think Business Model Canvas is not complete without the Value Proposition […]

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