The (Business) Model Canvas

And how to use it

In this Medium story, I’m going to first walk you through what is a Business Model Canvas, then I’ll show you how to create yours using a real project as an example. After that, we will look into two other types of model canvas. The Lean Model Canvas, and the Social Business Model Canvas.

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Index

What is a Business Model?
What is the Business Model Canvas?
What is the BMC made of?
#1 Customer Segments
#2 Value propositions
#3 Channels
#4 Customer Relationships
#5 Revenue Streams
#6 Key Resources
#7 Key Activities
#8 Key Partnerships
#9 Cost Structure
#10 Mapping the environment
How to use the Business Model Canvas
Test and iterate your Canvas
The Lean Canvas
The Social Business Model Canvas
Extra information & resources
Bibliography

What is a Business Model?

A business model is an outline of how an organization creates, delivers and captures value. At its core, a business model explains four things:

• What product or service a company will sell.
• How it intends to market that product or service.
• What kind of expenses it will face.
• How it expects to turn a profit.

Because there are so many types of businesses out there, business models are constantly changing. Also, keep in mind that there is no one-size-fits-all model that can apply to every business.

Extra tip: You can check out some types of business models in this link from Strategyzer.

What is the Business Model Canvas?

The Business Model Canvas (BMC) its a practical business tool to design, test, implement, and manage business models over their lifecycle. It allows you to describe any business model based on nine fundamental blocks.

Business Model Canvas explained by Strategyzer

Why we use the BMC?

We use the BMC to draw a picture of what the business idea entails. It allows us to understand the business, and go through the process of making connections between what the idea is and how to make it into a business. It is important to keep in mind that the BMC is not a set thing, it should be alive and in constant change.

What is the BMC made of?

A business model can be best described through nine basic blocks. Each block covers the three main areas of a business: desirability, viability and feasibility. The business model is like a blueprint for a strategy to be implemented through organizational structures, processes, and systems.

Desirability

• Customer Segments
• Value Propositions
• Channels
• Customer Relationships

Viability

• Revenue Streams
• Cost Structure

Feasibility

• Key Resources
• Key Activities
• Key Partnerships

There’s a 10th block, not included in the canvas, that should be kept in mind when designing your BMC, and that is the environment in which your business will develop and grow.

#1 Customer Segments

Customer segments represent the different groups of people or businesses that we aim to reach and serve.

To please customers better, it’s best to group them into distinct segments based on common needs, problems, or behaviours. Successful entrepreneurs and innovators are aware of which segments to serve and which segments to ignore, as not all customers are good customers (e.g., profitable customers that comprise the heart of any business model).

Customer segments fall into three categories. Mass market, where we focus on one large group of customers with broad similar needs and problems. Niche markets, where we cater the needs of a specific group with very specific needs. And then the third customer segment is segmented markets. This falls somewhere between mass and niche markets. This is where we distinguish between groups with slightly different needs.

The number of segments ranges between five and seven. These are all the people or organizations you’re creating value for. For each segment, you have a specific value proposition. However, you can start by picking one customer segment that you’ll use for your business model canvas.

Extra tip: Use a buyer persona to understand the people behind your customer segment. Here is a useful resource to do so: HubSpot #MakeMyPersona tool.

#2 Value propositions

Value propositions are the reasons why customers turn to one company over another. They are a bundle of products, services, and benefits that create value for your customers.

Value propositions fall into three categories:

• Quantitative: creating new value by improving speed of service, price for quality, or adding new features or improvements.
• Qualitative: offering products and services that improve customer experience via new designs by improved emotional interfaces.
• Game changing: where you’re creating products and services that disrupt an industry.

To determine what value you can create and offer what is most relevant to your chosen customer segment, you can use the Value Proposition Canvas.

Value Proposition Canvas

The Value Proposition Canvas (VPC) is a plug-in tool to the Business Model Canvas that allows you to describe in more detail your Value Propositions and the target Customer Segments. It also evaluates the “fit” between the value you intend to create and the expectations your customers have.

The Value Proposition Canvas by Strategyzer.com

Instructions:

1. Start with customer jobs. Describe what jobs or tasks (functional, social or emotional) a specific client of yours wants to achieve, and you are willing to help them with. |Check this link for help questions when defining customer jobs|.
2. Add pains. Write down every pain your customer experiences or could experience before, during, and after getting the job done (dissatisfaction with existing solutions, challenges, frustrations, risks, or obstacles related to performing a job). |Check this link for help questions when defining pains|.
3. Add gains. Write down every gain your customer expects, desires, or would be surprised by (like concrete results, benefits, and even aspirations). |Check this link for help questions when defining gains|.
4. Describe your products and services. List all the products and services your value proposition is built on.
5. Outline how you intend to create value. Describe how your products and services are pain relievers (how they eliminate, reduce or minimize pains customers care about, making their life easier). Outline in which way they are gain creators (how they produce, increase or maximize outcomes and benefits that your customers expect, desire, or would be surprised by). |Check this link for help questions when defining your pain releavers and your gain creators|.
6. Test and iterate until you figure out what resonates with customers. You achieve fit by connecting what matters to customers and how your products and services ease pain and create gains. Buyer personas may contain countless jobs, pains and gains, but your VPC highlights which ones you intend to focus on. Great value propositions target essential customer jobs, pains, and gains extremely well.

You can apply the VPC to new and existing value propositions and customer segments, alike. In both cases it will help you structure your thinking and make your ideas more tangible.

The VPC can be used before, during, and after developing an in-depth knowledge of your customers. If you use it before, it will highlight what you need to learn about customers and test of value propositions. If you use it after, it will help you analyse and evaluate the “fit”.

#3 Channels

Channels describe how your company communicates with and reaches its customer segments to deliver its value proposition. Communication, distribution and sales channels are your company’s interface with customers, and are the points of contact with the customer, thus playing an important role in the customer experience. Your Channels serve several functions, including:

• Raising awareness among customers about a company’s products and services.
• Helping customers evaluate a company’s Value Proposition.
• Allowing customers to purchase specific products and services.
• Delivering a Value Proposition to customers.
• Providing post-purchase customer support.

Channels are broken down into types and phases.

Types of Channels

Finding the right mix of channels to meet how customers want to be reached is crucial in bringing a Value Proposition to market. You can choose between reaching your customers through your own channels, through partner channels, or through a mix of both.

• Owned Direct channels have higher margins, but can be costly to put in place and to operate with. E.g., an in-house sales force or a Website, or retail stores owned or operated by the organization.
• Partner Indirect channels lead to lower margins, but they allow an organization to expand its reach and benefit from partner strengths. E.g., wholesale distribution, retail, or partner-owned Websites.

Types of Channels Phases

• Awareness: How do we raise awareness about our company’s products and services? Advertising (Word of Mouth, Social Media, Newspaper, etc.).
• Evaluation: How do we help customers evaluate our organization’s Value Prop? Surveys, reviews.
• Purchase: How do we allow customers to buy specific products and services? Web vs. Brick and Mortar (Self Checkout).
• Delivery: How do we deliver a Value Proposition to customers? Over the counter, delivered/catered.
• After sales: How do we provide post-purchase customer support? Call centre, return policy, customer help.

#4 Customer Relationships

These are the types of relationships your company establishes with specific Customer Segments through its different Channels. Every company must define the types of relationships it will establish with customers.

Customer Relationships can aim to acquire customers, retain customers, or boost sales (upselling). The type of Customer Relationships you put in place influence the customer experience. We can distinguish between several types of relationships, which may co-exist in a company’s relationship with a particular Customer Segment:

Transactional

This means there is no real relationship between the company and the customer, they only interact on a transactional basis. E.g., a kiosk at an airport usually doesn’t establish a relationship with its customers.

Long-term

The company interacts with the customer on a recurring basis. Establishing a long-term and even deep relationship between the company and the customer.

Personal assistance

Customers can interact with a real customer representative during the sales process or after the purchase is complete. This may happen on site at the point of sale, through call centres, by e-mail, or through other means.

Dedicated personal assistance

This relationship involves dedicating a customer representative to an individual client. It represents the deepest and most intimate type of relationship and develops over a long period of time. In private banking services, for example, dedicated bankers serve high net worth individuals.

Self-service

In this type of relationship, a company maintains no direct relationship with customers. It provides all the necessary means for customers to help themselves.

Automated services

This type of relationship mixes a more sophisticated form of customer self-service with automated processes. E.g., personal online profiles give customers access to customized services. Automated services can recognize individual customers and their characteristics, and offer information related to orders or transactions.

Communities

Communities allow users to exchange knowledge and solve each other’s problems, as well as help companies better understand their customers.

Co-creation

Some companies engage customers to assist with the design of new and innovative products. Going beyond the traditional customer-vendor relationship to co-create value with customers. Others, such as YouTube.com, solicit customers to create content for public consumption. Amazon.com invites customers to write reviews and thus create value for other book lovers.

Switching costs

Switching costs indicate how easy or how difficult it is for a customer to switch to a different alternative. E.g., when a customer of a data storage provider stores all his data in a proprietary format, it might be difficult for him to switch to an alternative provider.

Extra tip: It’s important to keep in mind that the strategy you use to attract and acquire customers, may be very different from the strategy you use to retain your best customers. In fact, research shows that the best path to profitability often comes more from customer retention than customer acquisition.

Extra tip: A helpful step to understand your customer segments is to create a User Journey Map of your customers. This helps clarify the points of engagement between you and your customer and the modes used to relate to your customers.

#5 Revenue Streams

Your Revenue Streams represent the ways your company generates cash from each Customer Segment. Revenues can be transactional resulting from one-time customer payments (e.g., a sales), or recurring (e.g., a subscription).

Each revenue stream may have different pricing mechanisms. It is important to understand how to price your business, taking into account the trade-off between the customer’s pain of buying and the customer’s relieve when solving the problem.

Pricing can be fixed (based on statistical variables) or dynamic (changing according to the market).

Extra tip: Here are some examples of Revenue Streams: Asset sale or Pay per product (pay per view), Usage fee, Subscription fees, Lending/Renting/Leasing, Licensing, Brokerage fees, Advertising, Freemium, Referral feeds, Dividends, Equity gain, etc.

#6 Key Resources

This block focuses on the assets we need to create and deliver our value propositions. Key resources show which assets are indispensable to your business model, so you can outline the infrastructure you need to create, deliver and capture value.

Key resources fall into four categories:

1. Physical: Buildings, vehicles, machines, point of sale systems, raw goods, etc.
2. Intellectual: Brand, proprietary knowledge, patents, partnerships, customer database, etc.
3. Human: Creativity, experience, staff, etc.
4. Financial: Cash, credit, stock, etc.

#7 Key Activities

Are the most important things a company must do to make its business model work. Key activities are needed to create and deliver the value propositions, as well as develop and maintain customer relationships. The most common types are:

• Production: Designing, manufacturing, and delivering a product.
• Problem-solving: Coming up with new solutions to individual customer problems. E.g., consultancies, hospitals, and other service organizations.
• Platform/network: When the key resource of a business model is a platform/network, most of its key activities are related to the platform/network.

#8 Key Partnerships

Key Partnerships describe the network of suppliers and partners that make the business model work. This moves in the area of “if my company cannot achieve its value proposition on its own, who else do I have to rely on to do it?”.

We can differentiate between four different types of partnerships:

• Strategic alliances between non-competitors.
• Coopetition, strategic partnerships between competitors.
• Joint ventures to develop new businesses.
• Buyer-supplier relationships to assure reliable supplies.

This block is very important, as partnerships in many ways have become the cornerstone of most business models. Key partners show who can help you leverage your business model, because you will not own all the key resources, nor perform all the key activities. However, key partners can also be a reason for your business model to fail, by depending too much on one partner.

#9 Cost Structure

Cost structure defines all costs and expenses (fixed and variable) that a company will have in its business model. Once you know the infrastructure of the business model (resources, activities, and partnerships), you’ll have an idea of its cost structure.

Although there are two main cost structures, many business models are a combination of both approaches. Still, they all have to choose a dominant approach.

• Value-driven structures create more value in the product itself, not necessarily producing the product at the lowest possible cost.
• Cost-driven structures focus on minimizing the costs of the product or service as much as possible.

As well as categories, Cost Structures can have the following attributes:

• Economies of scale: Where a business enjoys cost advantages as its output expands.
• Economies of scope: Cost advantages that a business enjoys due to a larger scope of operations (e.g., the same marketing activities or Distribution Channels may support multiple products).

#10 Mapping the environment

By doing the BMC, you have managed to control some of the chaos your idea faced, mapping out the elements that are mostly up to you. However, the outside world is full of threats, constraints, and opportunities beyond your control, which create the environment in which you will design and build your business model.

Just because you cannot control these factors does not mean that you cannot and should not take them into account in your model. By doing so, you will be able to prepare your model for threats, changes in legal constraints and to take advantage of innovations.

These are the main areas that you need to map:

• Market Forces: customer issues in your sector, such as growing or shrinking segments; customer switching costs; changing jobs, pains, and gains; and more.
• Key Trends: trends shaping your sector, such as technology innovations; regulatory constraints; social trends; and more.
• Industry Forces: actors in your sector, such as competitors; rising value chain actors; new or fading technology providers; and more.
• Macroeconomic Forces: macro trends, such as global market conditions; access to resources; high or low commodities prices; and more.

How To Scan Your Business Model Environment For Disruptive Threats And Opportunities

Extra tip: You might want to look deeper into mapping the environment using this Strategyzer tool.

How to use the Business Model Canvas

Now that we have seen what a BMC is made of, let’s look at the steps that will help us build one. As an example, I am going to redesign the BMC of a website specialized in holiday rentals for golfers.

First, it is important to keep the following rules in mind while building the canvas:

Rules to keep in mind when creating your BMC

Before we start

This is the BMC designed by the members of the Golf project. As you can see, it is not a very clear BMC, it has too much information, there’s too much “blah blah blah”, too many detailed things, bullet points, etc.

Link to the Google Drawing

Let’s get to work:

Step 1: Identify the Challenge

Innovation and great ideas flow from a passion. Without passion for innovating, we often lack the motivation and drive to persevere. What are you most passionate about? What challenge or problem do you want to solve?

• “Help golfers discover new golf courses and lodging around them without having to take the time to search for them or organize the trip. And help lodging and course owners reach new customers”

Step 2: Write the Challenge Statement

Write a one-sentence challenge statement to guide you as you develop the business model for your idea. Start the sentence with an action verb, such as “Create”, “Define” or “Adapt”. You can also write the challenge sentence as a question.

• “How can we help 270,000 Spanish golfers/tourists organize golf trips throughout the country?”

Step 3: Select your Idea or Prototype Solution

Now, select a preliminary answer to your previous question. You will then use the Business Model Canvas tool to test your solution, and communicate your business model to others.

• “By developing a lodging marketplace around golf. Where people can organize golf trips, with golf courses and nearby lodging for them to travel to and enjoy.”

Step 4: Identify the Customer Segments

Identify all possible customer segments. Each segment represents a separate group of customers. Each group may need a different offering; or you might have to reach them through different channels; or they may need different types of relationships; or they may have different profitability.

1. Young golfers that like to go on short golfing trips.
2. Business people that go on working trips and also enjoy golfing.
3. Older golfers that are retired from work and like to take medium/long golfing trips.
4. Groups of friends that enjoy golfing and travelling together.
5. Couples that enjoy golfing and travelling together.
6. Company boards/teams that are interested in golf as a team building experience.
7. Business people that use golf as a networking tool.
8. Tourists that want to make a golfing trip to Spain.
9. People who want to take intensive golf courses to learn and/or lower their handicap in a weekend or a week with full-time golf programmes.

Step 5: Select your most important Segment

Now, it’s important to make a conscious decision about which segments to serve and which segments to ignore. Select one or two segments, perhaps the segment that has the best potential to generate profitable customers.

• #4. Groups of friends that enjoy golfing and travelling together.
• #8. Tourists that want to make a golfing trip to Spain.

Step 6: Customer Jobs, Pains, Gains

Identify your key customer segment’s primary jobs, pains, and gains

Customer Jobs:

• Playing golf.
• Searching for new golf courses.
• Booking lodging when golf travelling.
• Renting/transporting golf equipment.

Pains:

• Discovering new golf courses.
• Searching for lodging that fits their needs and is close to golfing courses.
• Having to travel with their golf equipment.
• Spending too many hours when planning trips.

Gains:

• Picked and filtered lodging close to golf courses.
• Saving time when organizing trips.
• Golf equipment available for renting.
• Discounts in golf courses.
• Prepare your personalized travel package.

Step 7: Products/Services, Pain Relievers, Gain Creators

Describe how your products and services will ease your customers’ pain, speed up their gains and help them complete their jobs/tasks.

Product/Services

• Lodging marketplace around golf.
• Custom-made golf trips.
• Golf equipment rental service.

Pain Relievers

• Reviewed lodging opportunities close to golf courses.
• Reviewed golf courses.
• Easily rent golf equipment.

Gain Creators

• Discounts for lodging, golfing, and renting equipment.
• Easily booked golf trips.
• Personalize your trip in 3 clicks.

Step 6 & 7: Result

The Value Proposition Canvas by Strategyzer.com made for the Golf project

If you are not 100% sure of your value proposition, ad-libs are a great way to quickly shape alternative directions. They force you to pinpoint exactly how you are going to create value. You can prototype different directions in the form of “pitchable” sentences by filling out the blanks in the ad-lib below:

For example, this how the ad-libs for the chosen customer segments in the Golf project:

• “Our website help(s) groups of friends who want to travel and golf by avoiding having to search for appropriate lodging and offering personalized travel packages.
• “Our website help(s) tourists who want to golf in Spain by avoiding travelling with their golf equipments and offering rental services on demand.

Step 8: The Channels

Identify and describe the channels needed to deliver your Value Propositions to your most important Customer Segments. Separate the channels for different customer segments if you are targeting more than one.

For the segment: “Groups of friends that enjoy golfing and travelling together.”

• Webpage and social media
• Partnerships with golf courses
• Word of mouth

For the segment: “Tourists that want to make a golfing trip to Spain.”

• Webpage and social media
• Partnerships with golf courses

Step 9: The Customer Relationships

Determine and describe the type of relationships you will need to develop authentic connections with your most important customer segments. Provide examples that relate to both the customer acquisition process and the customer retention process.

Customer acquisition:

1. Automated services / Self-service
2. Communities

Customer retention:

1. Personal Assistance
2. Automated Services / Self-service
3. Communities

Step 10: The Revenue Streams

Identify and describe the Revenue Streams needed to deliver your Value Propositions to your most important Customer Segments.

For the segment: “Groups of friends that enjoy golfing and travelling together.”

• % fee from users when booking lodging and/or golf courses
• % fee from golf courses when users book
• Advertising on the web

For the segment: “Tourists that want to make a golfing trip to Spain.”

• % fee from users when booking lodging and/or golf courses
• % fee from golf courses when users book
• % fee from rented equipment
• Advertising on the web

Step 11: The Key Resources

Determine and describe the Key Resources you will need to deliver the Value Propositions. Provide specific examples.

• Inventory of properties that have passed our filter
• Inventory of golf courses
• Golf equipment for renting
• Webpage

Step 12: The Key Activities

Identify and describe the Key Activities required to deliver your Value Propositions to your most important Customer Segments.

• Negotiating with golf courses
• Finding new and properties
• Filtering properties to show in our marketplace
• Putting in contact users and golf equipment renters
• Maintaining webpage

Step 13: The Key Partners

Determine and describe the Key Partnerships you will need to deliver the Value Propositions. Provide specific examples.

• Golf courses
• Property owners
• Golf equipment renting companies

Step 14: The Cost Structure

Determine and describe the Cost Structure involved in delivering the Value Propositions to your key Customer Segments. Provide specific examples.

• Webpage
• Customer service
• Sales team focused on partnering with golf courses
• Sales team focused on “recruiting” properties

Step 15: Fill in the Canvas

Add everything you’ve been working on in the Business Model Canvas, re-read everything to make sure that it all makes sense together. Once you have done that, you should have your Canvas looking like this:

Link to the Google Drawing

Test and iterate your Canvas

Now that you have your BMC, it’s important to test it. As a first step you iterate your model from your own desk by asking some questions and changing things around your business model, you will be able to explore and even approach new ideas. Let’s look at an example:

What if we identify the most expensive elements of the infrastructure and see what happens if we remove/reduce them?

As managing accommodations and making sure that they pass our requirements can be very complex and expensive, let’s see what would happen if we removed the whole “lodging” part of the business:

Link to the Google Drawing

We can see that by removing that, we have simplified a lot our business model, resulting in a “Universal Golf Club” like business model, that allows golfers to play anywhere they go to.

Other questions you can use to iterate your business model

• Of the variables with high competition in the sector, which ones can you eliminate?
• Which variables should be increased well above the sector norm?
• Which variables should be reduced well below the sector norm?
• Which variables, that have never been offered in the sector before, should be created?

Extra tip: If you want to test your BMC “in the streets” you migh want to take a look at this Strategyzer tool.

The Lean Canvas

Usually a BMC can be used for an already well established company, as well as it can be for a new idea you plan on turning into a project. However, if you want to follow a more “Lean Startup” approach, this is the canvas that you should be using.

The Lean Canvas follows Ash Maurya’s book Running Lean and prioritizes getting your customer-problem-solution foundation in order first, making it ideal for early-stage innovation projects and startups. A “Lean Canvas” is a much more useful tool if we talk about achieving a product/market fit.

One of the main differences with the BMC, is that the Lean Canvas uses product-centric terms to help innovators more easily describe their business model using familiar language. Whereas the BMC uses business terms better suited for established products than new innovative products that are in the business of creating something out of nothing.

Let’s take a look at how to fill a Lean Canvas, using again the Golf project:

Lean Canvas from canvasgeneration.com

#1 Problem

Without a problem to solve, you don’t have a product/service to offer, try listing the one to three high-priority problems that your CS has.

1. Not having time to organize golf trips
2. Finding lodging that meets all their requirements (quality and distance)
3. Having to travel around with their golf equipment

Existing Alternatives

These are how customers are currently solving these:

1. Travel agencies
2. Comparing different properties and how close they are to the different golf courses (DIY Airbnb + Google Maps)
3. Renting their equipments at specialized companies that already do that

#2 Customer Segments

Problem and Customer Segments are intrinsically connected, without a CS in mind you can’t think of their problems, and visa-versa.

• #4. Groups of friends that enjoy golfing and travelling together.

In the BMC, we also have:

• #8. Tourists that want to make a golfing trip to Spain.

But for the first iterations of the project, it might be easier to just focus on local customers.

Early Adopters

An early adopter is an early customer of a given company, product, or technology. They are usually your ideal customers, list their characteristics.

• Technology friendly
• Weekend travellers
• Don’t worry about spending

#3 Unique Value Proposition

In the middle of the canvas is the UVP, the primary reason a prospect should buy from you. “Why are you different and why should your CS buy/invest time in you?”

• “A lodging marketplace around golf. Where golfers can easily discover new golf courses and lodging around the courses without having to take the time to search for them or organize the trip. And where lodging and course owners can have a new channel to reach new customers”.

High-Level Concept

This is a “you X for Y” analogy (e.g., YouTube = Flickr for videos)

• Golf project = Airbnb for golfers

#4 Solution

Finding a solution to the problem (or problems) is key. But you’re not going to get this right off the first bat, and that’s okay, that’s what Lean is all about. The solution to your problem is not in your office, it’s out there in the streets. So go interview your customer segment, ask them questions, and take those learnings in (take a look at Ash Maurya’s book Running Lean, it might help with this process).

• A lodging marketplace around golf, that rents golfing equipment

#5 Channels

In the initial stages, it’s important not to think about scaling, but to focus on learning. With that in mind, try to think which channels will give you enough access to your CS and enough learning.

• Webpage and social media
• Partnerships with golf courses

#6 Revenue Streams

Pricing your business depends on its type of model. But it is quite common for startups to lower their price or even offer their products for free to gain traction. And that actually delays/avoids validation, getting people to sign up for something for free is a lot different from asking them to pay. Keeping that in mind, what are your revenue streams?

• % fee from users when booking lodging and/or golf courses
• % fee from golf courses when users book

In the BMC, we also have:

• % fee from rented equipment
• Advertising on the web

But focusing on those things might affect the speed at which we could validate the project.

#7 Cost Structure

Here you should list all the operational costs for taking this business to market. Use these costs and potential revenue streams to calculate a rough break-even point.

External cost:

• Webpage

In-house cost (done by the team in the beginning):

• Customer service
• Sales team focused on partnering with golf courses
• Sales team focused on “recruiting” properties

#8 Key Metrics

Every business, no matter what industry or size, needs some key metrics to track performance. By knowing the kind of business you are, and the stage you’re at, you can track and optimize the One Metric That Matters to your startup right now (see more in Lean Analytics).

As the project is currently in the Stickiness phase:

• Users that book lodging or golf courses through our website / Users that visit our page

#9 Unfair Advantage

“The only real competitive advantage is that which cannot be copied and cannot be bought.” — Jason Cohen. This can be insider information, a dream team, getting expert endorsements, existing customers etc. Think about what you have that no one else can buy.

• The filtering process the project follows to offer premium lodging in premium golf locations.

End result

Link to the Google Drawing

The Social Business Model Canvas

Social Businesses focus on the impact they create for beneficiaries rather than creating profits. Thus, they need a tool that takes extra aspects into account. In comparison to the Business Model Canvas, it takes the following aspects into account:

• “Customer Segments” is divided into “beneficiary” and “customer”. This supports the aspect that beneficiaries often do not pay anything, but are crucial for the business model.
• “Value Proposition” consists of the elements “Beneficiary Proposition”, “Customer Value Proposition” and “Impact Measures”, which define how you control your social impact.
• “Type of intervention” describes the type of product/service that will deliver the value.
• Besides partners, the canvas includes the key stakeholders that are/should be involved in your program.
• The component “Surplus”, that describes where you plan to invest your profits.

The Social BMC by Tandemic

The Social Business Model Canvas is divided into 13 building blocks, let’s fill them up using the Golf project, but this time we’ll add to the project a social impact part. In this case it will be dedicating a percentage of the benefits to NGOs that promote golf, something like The Golf Foundation.

#1 Segments — Beneficiary

Identify who benefits from your intervention, as you would with customer segments, but with beneficiaries.

• NGOs that help communities by promoting golf

#2 Type of Intervention

What is the format of your intervention? Is it a workshop? A service? A product?

• Financing 1 hour of golfing to NGOs

#3 Value Proposition — Beneficiary Value Proposition

• NGOs will receive money to finance people to play golf when they can’t afford it

#4 Value Proposition — Impact Measures

How will you show that you are creating social impact?

• Amount of hours and people that golf thanks to the Golf Project

#5 Segments — Customer

Who are the people or organizations who will pay to address this issue? Your customers from your BMC.

• #4. Groups of friends that enjoy golfing and travelling together.
• #8. Tourists that want to make a golfing trip to Spain.

#6 Value Proposition — Customer Value Proposition

Apart from your BMC’s Value Proposition, what do your customers want to get out of this initiative?

• Track how many hours people have golfed thanks to your trips and share it with F&F

#7 Channels

How are you reaching your beneficiaries and customers?

Customers

• Webpage and social media
• Partnerships with golf courses
• Word of mouth

Beneficiaries

• Personal emails for the NGOs
• Through NGOs to the golfers

#8 Revenue

• % fee from users when booking lodging and/or golf courses
• % fee from golf courses when users book
• % fee from rented equipment
• Advertising on the web

#9 Key Resources

• Webpage
• Inventory of properties that have passed our filter
• Inventory of golf courses
• Golf equipment for renting
• Partner NGOs

#10 Key Activities

• Negotiating with golf courses
• Finding new and properties
• Filtering properties to show in our marketplace
• Webpage
• Putting in contact users and golf equipment renters
• Tracking social impact of activities
• Sending money to NGOs

#11 Partners + Key Stakeholders

Who are the essential groups you will need to involve?

• Golf courses
• Property owners
• Golf equipment renting companies
• Local golf NGOs
• Banks or transfer money companies

#12 Cost Structure

What are your biggest expenditure areas?

• Webpage
• Customer service
• Sales team focused on partnering with golf courses
• Sales team focused on “recruiting” properties
• Donating to NGOs & transfer fee

#13 Surplus

Where do you plan to invest your profits?

• Reinvest in the Golf project so it can grow

End result

Link to the Google Drawing

As you can see, the Social BMC has much more information than the BMC, but that is because it’s almost like showing 2 business models in the same canvas.

Extra tip: If you want to work on a much more detailed Social Business Model Canvas, check this link from The Social Innovation Lab @ Lang Center in Swarthmore College.

If you liked this story, remember to:

Extra information & resources

Here are the templates I adapted to develop the different Canvas:

• Business Model Canvas
• Lean Model Canvas template
• Social Business Model Canvas template

And here are a few resources from Strategyzer, in case you want to look more into developing your own BMC:

Strategyzer: From Idea to Business — Animated Series

Strategyzer Free Training Videos

And here’s a quick example of how a built BMC looks like:

Thank you so much for your time, and don’t forget to send me your thoughts and/or feedback!

Bibliography

• The Value Proposition Canva — Template
• The Value Proposition Canvas — Instruction Manual
• Business Model Generation
• Business Model Canvas — A Tool for Entrepreneurs and Innovators
• El golf en España — Datos estadísticos
• How To: Business Model Canvas Explained
• Strategyzer
• bmcintroduction.wordpress.com
• nerdwallet.com
• BMC vs. Lean Canvas — Which do you pick?
• An Introduction to Lean Canvas
• Business Model Toolbox — Social Business Model Canvas