If you are not already familiar with the Business Model Canvas (BMC), I strongly recommend you print off a few copies of the free PDF and familiarise yourself with how it works. Originally created by Alexander Osterwalder, the BMC is a framework to help quickly distill a business’s value proposition, how it operates and ultimately generate profit. Being able to identify and understand the nine business model components, you’ll better understand your business and your customers needs.
A perfect starting point is to run your own business (or employer’s business) through the framework. You’ll be asking yourself such questions as, “Who are my key partners? What are my essential resources? Which key resources are most expensive” And so on. This only takes five minutes. A full list of questions is available here.
For further insight, run your clients, partners or competitors through the BMC and see what they look like. You’ll start seeing consistent patterns and gaping holes in how other companies are structured and operate.
Ultimately, you want to develop the ability to visualise the BMC in your head when you meet a new prospect or customer. You’ll be able to ask some great questions about their business, assemble a picture of how they operate, validate the viability of their commercial model and identify cash flow challenges.
There is a number of apps, websites and PDF versions to assist with creating your own BMCs. However, I find the best way is using good old scrap paper or a whiteboard. Post-it notes help too, especially when workshopping it with a team.
The Business Model Canvas is by no means perfect. As George E. P. Box said, “All models are wrong, but some are useful”. Ash Maurya even published his own tweaked version and renamed it the Lean Canvas. Aimed at startups, it emphasises the high risk and actionable components of a fast-growing new business. Ash mixes up the format and adds the following buckets: Problem, Solution, Key Metrics and Unfair Advantage.
You may find the Lean Canvas works better for your own business and the BMC for analysing other companies. Either way, you now have a rapid method to sketch out business plans.
Shout outs (tl;dr)
- Run your customers, partners and competitors through the Business Model Canvas framework to develop your understanding of how they work.
- Learn to visualise the Business Model Canvas in your mind. When talking with a customer or prospect, this visualisation will assist your rapid understanding of their key objectives and challenges.
- Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers. The original BMC handbook by Alexander Osterwalder and Yves Pigneur.
- Business Model Canvas website
- Two-minute video overview
- Ash Maurya’s Lean Canvas