A Holistic Strategic Management Tool: the Business Model Canvas
The Business Model Canvas (BMC) is a great tool to describe or design your business model in a simple and comprehensive way. If like me you went to a business school and learned how to write overly detailed business plans, you will be astonished by the effectiveness of the Canvas. BMC, initially developed by Alexander Osterwalder, proposes 9 blocks to summarize a business’ activities (see below the visual chart). But let me get this straight: we are not talking about writing your 50-page plan and 10 pages of spreadsheets that explain how you are going to execute your business and reach your targets. Instead, you will spend time laying out critical hypotheses (in a couple of slides) and testing them to gather feedback. It’s a much better way to get return on your invested time.
Instead of trying to understand your business model from one specific angle, which is often the case, since every collaborator as more affinities with his/her own department and/or background, the Business Model Canvas forces you to adopt a holistic approach. You will be describing your business from a bird’s eye view and map the fundamental mechanisms of a business (in one page!). Put simply, for organizations that have been around for a while and want to innovate, the BMC is a framework that can assist your people in their thinking process to get the most of them.
Next time you are in a meeting with your colleagues, keep those 9 building blocks in mind and formulate your concerns around them. In a recent experience, a client asked me to assist them in a merger & acquisition. After some confusing discussions, I told them that if they knew their business model, mapping the blocks would take them 30 minutes top and ease the discussions afterward, since we would have a clear visual chart and talk about the same thing. As a result, we ended up with a 3 hour discussion. Once the basics were set, the real added value of the BMC showed up, fostering analysis and creativity around the operations of the firm. How to leverage our current key resources to deliver the same customer segment? What would be the impact on the PnL? Can we reduce our dependency to our current key partners by acquiring the new company? Etc.
Here is one small step for your organization: download the Canvas below, print it and hang it in your meeting rooms. It will generate some interesting discussions, for sure!
To go further:
- Download (free) the fully detailed Canvas
- Buy the book Business Model Generation
- Watch the 2-min video that explains the Business Model Canvas
- Buy the webapp
- Buy the iPad app on the Appstore
— David Verbustel www.davidverbustel.com/about