THE

ss M od el
Busi ne
Canvas
Objectives
• Understand what’s the Business Model Canvas?

• Understand the key concepts of business model thinking.

• Acquire knowledge of the 9 building blocks of the Business

Model Canvas for value creation.

• Learn how to apply the Business Model Canvas to map out

your current business model for understanding and analysis.

• Gain basic knowledge of the Business Model design process.

Business
Model
Canvas
Business
Model
“A business model describes the
rationale of how an organization
creates, delivers, and captures value”
?What is Business Model Canvas

• It is a strategic management and entrepreneurial tool. It allows

you to describe, design, challenge, invent, and pivot your
business mode.

• It is used for developing new or documenting existing business

models.

• It is a visual chart with elements describing a firm's or product's

value proposition, infrastructure, customers, and finances
?What BMC is used for
?What BMC is used for
 BUSINESS MODEL

Product / Service
Product/Service

Create
Deliver

Organization Customers

Capture

Revenues $
Revenue ($)
Getting from Business Idea to Business Model
building
blocks

9
 Key Customer
Activiti Relationship
es

Key Customer
Partners Segments
hips

Cost Revenue
Structur Streams
e Value
Key Propositio Distribution
Resources n Channels
:A Real-Time Example
Customer Segments

- Which Customers and Users are you serving?

- Which Jobs do they really want to get done?
Customer Segments

Answer 5 Questions

1.Who are our most important customers?

2.Who are our users?
3.Who’s influencing them? Who decides?
4.Which are the customers’ more important habits?
5.What type of customer segments should we address?
Customer Segments
Customer Segments
1. Segment Dimensions
• Do you have a single or multi-sided market? If you have a
multi-sided market you’ll have at least as many segments as
you have sides.

• An example of such a market is a media property like

CNN.com: they have readers on the one side and advertisers on
the other.
Customer Segments

2. Segment Composition
• If the segment dimensions are the ‘macro’ analysis of your customer
base, then looking within each segment at individual customer types
as ‘Personas’ is the ‘micro’

• You should be able to visualize these Personas- and you should

understand what they think, see, feel, and do in your product area

• Be sure to list both buyers and users of your product

Customer Segments
3. Problems, Needs, Habits & Current Alternatives
• What job are you doing for the customer? What need are you
fulfilling? There are no new behaviors

• Make sure that you can identify an existing need/problem and

identify specific alternatives that your customer uses today. If
you’re not sure, go out and observe, talk to some representative
people.
Customer Segments
Output:
• A list of Personas, organized by Customer
Segment

• If you have more than one segment. It is

recommended trying to prioritize them- Who
would you pitch first if you could only pitch
one? Who next? And so forth
:A Real-Time Example
Value Proposition

What are you offering them?

What is that getting done for them? do they care?
Value Proposition
The Value Proposition (VP) is the reason why costumers turn
to one company over another

 Some VPs may be innovative and represent a new or

disruptive offer

 Others may be similar to existing products and services but

with added features and attributes

 The key is identifying the customer’s most critical PAIN

and then finding ways to help relieve that PAIN
Value Proposition
Creating new customer
value improvements in
speed of service, pricing
innovations, adding new
features and functions.
Getting the Job Done
Price Competitiveness
Cost Reductions
Convenience
Think Wal-Mart
Creating products and
services that improve
the customer experience via
new designs and improved
emotional interface
strategies
Performance
Customization
Brand Identity
Status Enhancement
Think Apple
Creating a product or
service that will truly
disrupt an industry and
perhaps become known
as a category-killer.
Product Newness
Create New Industry
Human-Centered Innovation
Think UBER
Value Proposition

Answer 5 Questions
1.What exact problem are we trying to solve?
2.Is this a relevant (real) problem?
3.What is the solution that are developing?
4.How much value are we delivering to the client?
5.What are the main features of our value proposition ?
Value Proposition

How to answer these Questions?

&
How to Validate Assumptions?
Value Proposition

?How to validate assumptions

We can use 2 approaches:

• Interviews
• Surveys
Value Proposition
Interviews: Solving a Real Problem
Hypothesis List of problems
Test Interview 20 people and verify if there is a
match between the problems the team has
identified and the answers.

It is validated if There is a positive match for the top 5

problems.
Value Proposition
?Interviews: Creating a Real Solution
Hypothesis List of solutions
Test Interview 20 people and verify if there is a
match between the solutions the team has
identified and the answers.

It is validated if There is a positive match for the top 5

solutions.
Value Proposition
Surveys
• They Serve to test different hypothesis related with customer
segments, value proposition, distribution channels,
partnerships, and revenue streams.
• They are also a good source of email addresses for direct email
marketing.
• There are lot of online tools, but you can always do street
surveys as well
Value Proposition
Surveys Top 5 Best Practices
1. Don’t do more than 10 questions.
2. Ask the most important questions of the survey at the
beginning.
3. Use direct and clear phrasing.
4. Only ask 1 open question per survey.
5. Ask demographic questions at the end of the survey.
Value Proposition
Output: A prioritized list of Value Propositions and linkages from
each persona to the Value Proposition relevant to them
Value Proposition
 :A Real-Time Example
Customer Jobs
Help their sons and daughters find the jobs and careers of their dreams;
and to make the most of college education investments

Customer Pains
Worried about the common stories of young people not able to find, win
and retain good jobs after completing college

Customer Gains
Peace of mind that their sons and daughters will know how to identify and
win a highly-satisfying job in their career area
 :A Real-Time Example
Pain Relievers
Their children will have access to a high quality career planning program
that includes, upon successful completion, access to a career coach

Gain Creators
Peace of mind that qualified career planning professionals are educating
their children on how to develop a winning Career Plan

Products and Services

Provide career planning services that are affordable, mobile, and result in
an aggressive, creative, and implementable Career Plan.
 :A Real-Time Example
Value Proposition: The Career Readiness Mobile-Learning Program
Distribution Channels

How does each customer segment want to be

reached? Through which interaction points?
Distribution Channels

Answer 5 Questions

1.How are we going to communicate the value proposition?

2.How are we going to deliver the product to the customer?

3.What are the customer favorite channels?

4.Is there any integration between different channels?

Distribution Channels
Channels Stream
Marketing

Sales

Distrib
Distribution

Post-sales
Post-sales Support
 Distribution Channels
Identifying the Channels
How will we communicate with and reach our Customer Segments to deliver the
Value Proposition?

Channel Definition
Communication, distribution, and sales Channels are a company’s
interface with customers. They serve as key touch points that determine
the customer’s satisfaction.

Channel Types
Sales Force, Web Sales, Company-Owned Stores, Partner-Owned Stores,
and Wholesalers

Channel Phases
Awareness, Evaluation, Purchase, Delivery, and After Sales
Distribution Channels

Output:
• A list of important Channels linked to Personas
or Segments if they differ substantially.

• Make notes on what steps are relevant for each-

promotion, sales, service, etc.
:A Real-Time Example

Channels: The Career Readiness Program

 The channels will be direct salesforce doing group

presentations

• A web site with shopping cart capabilities

• An innovative online demos of the Career Readiness program’s

unique mobile-learning gamification platform that will
deliver practical career planning knowledge, backed by
research, proven in practice, ready to use, available 24/7
:A Real-Time Example
Customer Relationships

What relationships are you establishing with each

segment? personal? automated? acquisitive? retentive?
Customer Relationships

Answer 5 Questions

1.How are we going to get customers?

2.How are we going to retain customers?
3.How are we going to grow our customer base?
4.What kind of relationship do customers prefer?
5.Is there any integration with the rest of the business model?
Customer Relationships
Establishing Customer Relationships
What type of relationship does each Customer Segment expect us to establish and
maintain with them?

Customer Relationship Definition

Research shows that human beings are not thinking creatures that feel,
but rather feeling creatures that think. Customer relationships can range
from highly personal to automated.

Customer Relationship Categories

Personal Assistance, Dedicated Personal Assistance, Self-Service,
Automated Services, Communities, and Co-Creation

Customer Relationship Motivations

Customer Acquisition, Customer Retention, Increasing Sales
Customer Relationships

Output:
• A description of Customer Relationships,
with notes if they differ across Customers
(between Segments or among Personas
within a Segment) or across the customer
journey.
:A Real-Time Example
Customer Relationships: The Career Readiness Program
The Customer Relationships
Primary focus will be on the customer acquisition process where we will develop
communication strategies designed to build relationships with the parents based
on the following positive emotions:
Confident: Parents will view us as the “trusted curators” of the best career
planning information, processes, techniques and tools

Powerful: Parents will feel like they have “influential guides” helping their
children with career planning and implementation

Optimistic: Parents will be more optimistic that the investment in higher

education will pay off in their son or daughter landing a great job, consistent with
the career aspirations
:A Real-Time Example
Revenue Streams
• What are customers really willing
to pay for? how?
• Are you generating transactional
or recurring revenues?
Revenue Streams
Revenue Streams Defined
For what value is each Customer Segment truly willing to pay?
Each Revenue Stream has a pricing mechanism such as fixed list pricing,
discount pricing, market dependent pricing, or volume dependent pricing

Transactional Revenues
These revenues result from one-time customer payments. A good example an
Asset Sale where a business, like amazon.com, sells books, music, or consumer
electronics; or when Ford sells an automobile.

Recurring Revenues
These revenues result from ongoing payments to deliver a Value Proposition to
customers or provide post-purchase customer support. Examples are subscription
fees, usage fees, and licensing fees.
Revenue Streams
Answer 5 Questions
1.What are types of revenue sources? (examples)
2.What are the pricing models?
3.How much are customers willing to pay?
4.What customers value the most?
5.What it the share of each source on the total revenue?
Revenue Streams
Output:
• A list of Revenue Streams, linked
(mutually) to Personas (or Segments
if the mappings are the same within a
set of Personas) and Value
Propositions.
 :A Real-Time Example
The Revenue Streams
The revenue streams will be primarily fee-per-person transactions
resulting from parents purchasing the career readiness mobile learning
program for their college-age students.

The online, gamified program will offer 15 hours of in-depth training on

how to develop and implement an innovative, winning Career Plan. The
list price would range between $195-$395 per person

Corporate sponsorships may be a revenue source

:A Real-Time Example
Key Resources

Which resources underpin your business model?

which assets are essential?
Key Resources

Answer 5 Questions

1.What are the critical resources?

2. How can I minimize risk?
3. What are the common characteristics of critical resources?
4. How can I obtain my critical resources?
5. How can I keep my critical resources?
Key Resources

Human and Intellectual

 Every business requires human resources and they are

most crucial in knowledge intensive and creative industries

 Intellectual resources such as brands, proprietary

knowledge, patents, and customer databases are
increasingly important
Key Resources
Physical
This category includes physical assets such as:
Manufacturing facilities Retail stores
Machines Vehicles
Point-of-sale systems Warehouses
Distribution networks

Retailers like Wal-Mart and amazon.com rely heavily on

physical resources.
Key Resources

Financial

 Most business models call for significant financial resources

or financial guarantees such as: Cash, Lines of credit or
Offering stock options in order to hire key employees

 Banks, Capital markets, and venture capitalists may

provide financial support.
:A Real-Time Example
The Key Resources
The business model requires key resources that are primarily human and
intellectual in nature.

Human: We will need career planning experts, instructional designers,

digital media professionals, and certified career coaches. And we will
need the university to grant employees work release time to focus on
program development; and also invest monies in marketing, advertising,
sales support, and media relations.

Intellectual: We will need to contract with a gamification platform

company that will help us deliver the mobile-learning program using best
practices in gaming mechanics and digital social networks
:A Real-Time Example
Key Activities

Which activities do you need to perform well in

your business model? what is crucial?
Key Activities

Answer 5 Questions
1.What are the critical activities of our business?
2. How can they be optimized?
3. Which activities can we automate?
4. Which activities should we outsource?
5.Which activities should we keep doing once in a while to keep in
touch with reality?
 Key Activities

Every business model requires a significant number of key

activities
These are the most important actions a company can take to
create and deliver the Value Proposition to the key Customer
Segments while maintaining the desired Customer
Relationships needed to generate the Revenue Streams.
Key Activities are often categorized as:
Operations and Production
Marketing and Sales
Finance and Administration
Key Activities

Output:
• a list of Key Activities linked to
your business’ Value Propositions.
:A Real-Time Example

The Key Activities

Designing and building the online program and its content is

the critical activity requiring experts in online learning,
Career planning, and gamification

Once live, key activities include sales, marketing, database

management, and financial controls and reporting
:A Real-Time Example
Key Partnerships

• Which partners and suppliers leverage

your model?
• Who do you need to rely on?
Key Partnerships

Answer 5 Questions

1.Who are our critical partners?

2.Who are our critical suppliers?
3.Which key resources are we buying from suppliers and partners?
4.What kind of partnerships should we seek?
5.What is the best cluster/supply-chain where I should be located?
 Key Partnerships
• Key Activities (KA) and Key Partnerships (KP) are closely related
KAs are the most important actions that a company takes to operate
successfully
In most cases the business model cannot be realized without the help
of KPs—your network of suppliers, partners, and strategic alliances.
Key Partnerships
Partnerships and strategic alliances help optimize your business model,
reduce risk, or acquire needed knowledge and resources

There are typically four different types of partnerships:

Strategic alliances between non-competitors
Strategic partnerships between competitors
Joint Ventures to develop new businesses
Buyer-Supplier Alliances to assure reliable supplies
Key Partnerships
Output:
• A list of Key Partnerships with
notes on their relationship to Key
Activities.
 :A Real-Time Example
The Key Partnerships
As with most new ventures, we will need to identify and
develop key partnerships in order to design, promote, and
deliver the program
Mobile Learning Platform: We will partner with a company that can provide
an online teaching and learning platform that uses the best practices in
gamification
Database Marketing: We will partner with marketing companies that can
help us identify and retain direct mail and email address of parents with
college-age children
Certified Career Coaches: Once a person completes the career planning
program, a 15-hour commitment, they will receive a “digital badge” that
gives them access to an certified career coach.
:A Real-Time Example
Cost Structure

• What is the resulting cost structure?

• Which key elements drive your costs?
Cost Structure

Answer 5 Questions

1.What is the resulting cost structure?

2.Which resources have the most impact on the costs?
3.What are the most expensive activities?
4.Can you cut some costs via partnerships?
5.Can you have a leaner cost structure?
Cost-Driven models focus on minimizing costs wherever possible to create a lean
Cost Structure.
Value-Driven models focus on value creation and are less concerned with the cost of
delivering the Value Proposition (Think Luxury Hotels)
Many business models are a combination of both approaches but almost all business
models have to choose a dominant approach.
Cost Structures typically include fixed costs and variable costs, with an emphasis on
taking advantage of economies of scale.
Cost Structure

Output:
• A list of Cost Structure elements
with notes on their relationship to
Key Activities.
:A Real-Time Example

The Career Readiness Program will primarily use a value-driven Cost Structure with an
emphasis on effectively managing costs, but with the goal in mind to design and deliver a
game-changing career planning tool.

Fixed Costs: We will have minimal upfront fixed costs except for the transfer of labor/time
to develop the program. We will need to pay the mobile-learning platform company a fixed
licensing fee.

Variable Costs: We will use a Revenue-Sharing Model where all partners involved in
designing and delivering the mobile-learning program (the University, the career planning
content experts, the gamification platform owners, and sales partners) will share in a
percentage of revenues.

Economies of Scale: We can achieve significant economies of scale if other universities,

who are struggling with the same career planning capacity challenge, want to have our
Career Readiness mobile learning, gamification program made available to their students.
:A Real-Time Example
 Designed for: Designed by: Date: Version:

Business Model Startup Name Name1, Name2, … DD/MM/YYYY X.Y

Canvas
Key Partners
Who are our Key Partners?
Who are our key suppliers?
Which Key Resources are
we acquiring from partners?
Which Key Activities do
partners perform?
MOTIVATIONS FOR
PARTNERSHIPS:
Optimization and economy,
Reduction of risk and
uncertainty, Acquisition of
particular resources and
activities
Key Activities
What Key Activities do our
Value Propositions require?
Our Distribution Channels?
Customer Relationships?
Revenue streams?
CATEGORIES:
Production, Problem
Solving, Platform/Network
Key Resources
What Key Resources do
our Value Propositions
require? Our Distribution
Channels? Customer
Relationships Revenue
Streams?
TYPES OF RESOURCES:
Physical, Intellectual (brand
patents, copyrights, data),
Human, Financial
Value Propositions
What value do we deliver to
the customer? Which one of
our customer’s problems
are we helping to solve?
What bundles of products
and services are we
offering to each Customer
Segment? Which customer
needs are we satisfying?
CHARACTERISTICS:
Newness, Performance,
Customization, “Getting the
Job Done”, Design,
Brand/Status, Price, Cost
Reduction, Risk Reduction,
Accessibility,
Convenience/Usability
Customer Customer Segments
Relationships
For whom are we creating
What type of relationship value? Who are our most
does each of our Customer important customers? Is our
Segments expect us to customer base a Mass
establish and maintain with Market, Niche Market,
them? Which ones have we Segmented, Diversified,
established? How are they Multi-sided Platform
integrated with the rest of
our business model? How
costly are they?
Channels
Through which Channels do
our Customer Segments
want to be reached? How
are we reaching them now?
How are our Channels
integrated? Which ones
work best? Which ones are
most cost-efficient? How
are we integrating them
with customer routines?

Cost Structure Revenue Streams

What are the most important costs inherent in our business model? Which Key
Resources are most expensive? Which Key Activities are most expensive?
IS YOUR BUSINESS MORE: Cost Driven (leanest cost structure, low
price value proposition, maximum automation, extensive outsourcing), Value
Driven (focused on value creation, premium value proposition).
SAMPLE CHARACTERISTICS: Fixed Costs (salaries, rents, utilities), Variable
costs, Economies of scale, Economies of scope
For what value are our customers really willing to pay? For what do they
currently pay? How are they currently paying? How would they prefer to pay?
How much does each Revenue Stream contribute to overall revenues?
TYPES: Asset sale, Usage fee, Subscription Fees, Lending/Renting/Leasing,
Licensing, Brokerage fees, Advertising
FIXED PRICING: List Price, Product feature dependent, Customer segment
dependent, Volume dependent
DYNAMIC PRICING: Negotiation (bargaining), Yield Management, Real-time-
Market

Designed by: The Business Model Foundry (www.businessmodelgeneration.com/canvas). PowerPoint implementation by: Neos Chronos Limited (https://neoschronos.com). License: CC BY-SA 3.0
Judging Criteria

Execution & Business

Validation
Design Model

• Did your team get out and talk to customers?

• Are you actually solving a problem?
• What’s your clear value proposition to that customer?
Judging Criteria

Execution Business
Validation
& Design Model

• Did you work well as a team?

• Do you have a Demo to present?
• Do you have a prototype ?
Judging Criteria

Execution Business
Validation
& Design Model

• Does your solution solve a core need?

• Why is it unique?
• How will you differentiate yourself from your competition
(did you identify competition)?
 Your Business Model Canvas
KEY KEY VALUE RELATIONSHIPS CUSTOMER
PARTNERS ACTIVITIES PROPOSITION SEGMENT

KEY
ESOURCES
R CHANNELS

COST STRUCTURE REVENUE STREAMS

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EXAMPLES
Example 1 Example 2

Refreshing lemonade Affordable VOIP calls

to joggers at public
parks
Kelly’s Lemonade Stand: Refreshing Lemonade
KEY Key VALUE CUSTOMER
PARTNERS PROPOSITION RELATIONSHIPS SEGMENT
Activities

KEY
ESOURCES
R CHANNELS

COST STRUCTURE REVENUE STREAMS

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 Skype
KEY Key VALUE RELATIONSHIPS CUSTOMER
PARTNERS Activities PROPOSITION SEGMENT

KEY
ESOURCES CHANNELS

Cost Structure REVENUE STREAMS

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Example 3 Example 4

Photo sharing online Smooth shave for men

& women
 Flickr: Photo Sharing
KEY Key VALUE
RELATIONSHIPS CUSTOMER
PARTNERS Activities PROPOSITION
SEGMENT

KEY
RESOURCES CHANNELS

COST STRUCTURE REVENUE STREAMS

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 Gillette: Razors & Blades
KEY Key VALUE CUSTOMER
PARTNERS PROPOSITION RELATIONSHIPS SEGMENT
Activities

KEY
CHANNELS
RESOURCES

COST STRUCTURE REVENUE STREAMS

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WORKSHOP

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 WORKSHOP
1. Assemble in teams
2. Create canvas
3. Write key words on sticky notes
4. Place sticky notes on the canvas
5. Present your canvas

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you need to validate your model
assumptions with the customers
until you get it right!

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www.BusinessModelGeneration.com

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THANK

YOU!
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