Welcome to an introduction to Business Model Canvas. We decided to use the Business Model Canvas to illustrate and demonstrate business models for each of the four Stride demonstrator apps. In order to help everyone understand this here is a short guide to how the Business Model Canvas works. 1
In front of you now is a diagrammatic form of the Business Model Canvas. It has been growing in popularity as a way to produce a business model since the production of the book Business Model Generation by Alex Osterwalder and Yves Pigneur. You can Google Business Model Generation or look the book up on Amazon. Business Model Canvas is a diagrammatic form that allows you to design, challenge, innovate, and describe business models for business start-ups. 2
The following deck takes you through each of the elements of the Business Model Canvas. 3
The first part of Business Model Canvas is the value propositions. This is the bundles of value or services that create value to customers. For example, if this was a Business Model Canvas for Sky TV, then, in this column, we would have the family pack, the movie subscriptions, and the sports subscriptions indicating things that are valuable to some of my customers. 4
The customer segments section is where you describe all of the people, organisations, or groups that you want to create value for and generate revenue from. You need to link the customer segments to the values propositions indicating which values propositions you expect to be able to sell to which customer segments. 5
The link between customer segments and value propositions is via the channels that you use to sell your products. The channels describe which touch points you want your customers to interact with. 6
The final box in this section is customer relationships. This answers the question, what kind of relationships are you trying to establish with your customers? Do you want them to be emotionally loyal to you? Proud to wear your product? A fan of your football team? 7
Having described the customer segments and the value propositions, you would then typically go on to describe the revenue streams you expect to generate from those customer segments using those value prepositions. These revenue streams can be in several forms. The easiest form is just an indication of what the revenue streams are; but as your business model becomes more detailed you can include a financial view what you expect to make from each of those revenue areas. 8
So on the right-hand side we ve seen the value and the customer segments and the revenue streams. Now you can look at what s under the line to help you create this business. So, let s move to the left-hand side and start with the key resources. 9
Key resources are the people you need and the systems, and which assets you feel are indispensable to your core business model. For example, if you re an app developer you might think one of the key resources is your own skill; but, you would also need to write all the devices you need to test on. The development systems. The software copycats, for example. This shouldn t include every resource, just the critical resources that are essential to the success of your business model and production of your value propositions to you customer segments. 10
Following that, you need to list the key activities. These are the activities you need to be able to perform well in order to sell your propositions. For example, if you re an app developer, that s how well you code, and how well you can market your app. 11
You can t do it all yourself. So, in this section, you would normally describe what partners or suppliers you need. 12
Once you have all these things on your left and right you can then understand the cost structure. 13
Of course in the end, you re costs need to be lower than your revenue streams. 14
It s important that you then map the relationship between all of these elements of the Business Model Canvas and that they interact with each other; and this mapping of relationships is actually the key to this being successful. 15
This is what a final Business Model Canvas can look like. It enables people to understand how this app or service will make money and how the business model for this app is generated. 16
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