Today, the business ecosystem evolves fast. Judge for yourself: in the 1930s the average lifetime of a single company from the S&P 500 rating was 90 years, while by 2018 the number of years has reduced to 18. Pretty every month new market leaders and outsiders occur, so if an organization attempts long-term functioning, it must learn how to adapt. The problem is that almost 70% of business transformational efforts fail, mainly due to employee’s resistance. People are afraid of obscurity, so to succeed with changes, managers need to communicate the vision. The business model canvas is what’ll help executives to plot and scope development points within thorough and reasonable mind maps.
What is a business model canvas?
A business model canvas is a high-grade strategic planning tool. Regardless of the market type or niche, an organization is described within 9 dimensions:
- Customers — clients the company operates for. These may include individual segments’ descriptions, buyer personas, or key accounts.
- Value — goods and/or services the company produces to satisfy customers’ needs.
The value isn’t a product itself — it’s the list of features and competitive advantages that meet distinct customers’ pains. Compare the two statements: “We offer data-migration services” and “We transfer enterprise data from any cloud-based system to AWS and prevent data-breaches”. The first is just a value description, while the second — shows how the client may benefit.
Manufacturing companies can mention their own or partnering distribution networks, while services or intangible goods providers can map out processes they use to deliver clients’ projects.
This section may include communication strategy, messages, loyalty policy, as well as lead generation tactics, funnels, and pipelines.
- Cost structure — fixed and variable costs that are required to produce the value
- Revenue — cash flow and profit generation processes.
You can design great products and experience the ever-best lead generation, but without the capital, expenditures, and money flows management the payback will last decades. A lean business model canvas is, therefore, the one that obligatorily includes production P&Ls insights.
Answering “ What are key activities in a business model canvas “ starts with understanding what the company requires — to sustain goods’ or services’ quality. For example, a turnkey software developer’s key activities may include preventing in-house programmers’ overload through hiring freelance coders and launching internship programs for graduates.
Resources are all that allow your company to generate revenue in the present and continue doing this — in the future.
All nine dimensions are mapped on a single worksheet, so that the company’s essence is displayed at a glance. Keep in mind that a canvas isn’t a report. Its advantage is simplicity, therefore it shall be brief yet remarkably meaningful.
“An example of the company’s 9 functional dimensions”,
And we got inspired with this example and created a business model canvas template on our Weje board 💙. We’ll try to share the interactive template later on.
Knowing what is a business model canvas and what are the components is not all. To create a truly aiding tool, one shall clearly understand the purpose and the final readers.
What is the purpose of a business model canvas?
The company needs to map its operational canvas in 4 major cases:
Business model canvas allows determining growth-enhancing points because it summarily displays all relevant operational processes. Therefore, the map can be used during brainstorming or strategic sessions — to come up with remodeling ideas.
Economies or niches fall into crisis, from time to time. In these circumstances, a company needs to ride out the recession with minimal losses. A business model canvas will show what activities or costs can be adjusted — to preserve revenue streams and maintain customers’ relations.
Expanding business, either horizontally or vertically, is a huge money opportunity yet a big operational threat. Imagine you bought three new businesses and turned into a conglomerate, like LVMH or Samsung. Every subsidiary used to have its C-level executives. But a new company doesn’t require several global CEOs, CFOs, and CMOs, agree. To rescope responsibilities, it’s important to map business processes and understand their origin. Otherwise, the transformation will be expensive, painful, and last for years.
If the company decides to become agile, business model canvas may assist in rearranging cross-team collaborations and developing product roadmaps.
How to make a business model canvas report?
You can use this simple 5-steps guide to come up with a business model canvas paper that will work:
To fill in the canvas on your own is a tempting yet bad idea. Whatever fabulous manager you are, you can’t delve into specific processes as deep, as can colleagues who work with these daily. To produce a consistent business description, list experts who might assist you. These are typically from Sales, Marketing, Procurement, and Finances.
Don’t reinvent the wheel — google for a blank template or some business model canvas examples. Think of writing style — this neither should be storytelling nor too fact-based. Overwhelming bulleted points with numbers or jargon make them useless, to be honest.
The best way to collect information is to gather co-workers in a single workspace. If your team is fully remote, you can use online whiteboards, as well. Specify the purpose and ask everyone to fill in the canvas. You can presuppose some discussion, but don’t turn the meeting into a session. Time limits are what forces participants to concentrate on the basics and omit irrelevant details.
Assume who will use the report and for what purpose helps — to choose the right detailing level. If a business model canvas will be presented to investors, you’ll probably need to pay more attention to cost and revenue points and choose common vocabulary.
The canvas isn’t a business plan. It isn’t a concept or report, either. After your team has developed a report, grasp how to read business model canvas. It can be used during regular outlining meetings — to give participants insights on the development ideas. You can also share the canvas with new and existing team members — to either enhance onboarding or improve operations’ knowledge.
The clearer the plan — the better the work is performed. You can combine a business model canvas with other strategic planning tools, like SWOT, BCG matrix, or PEST, to gain superior operating results.
Originally published at https://weje.io on June 7, 2021.
