The brilliant book Business Model Generation was written by Alexander Osterwalder. He used a few visual diagrams to show how to visualize business models. The production process and creation of the book was also innovative. Interested parties could pay to work on the book, which meant that the author's own initial investment was low.
The book has since become a staple of management literature. The follow-up book Business Value Proposition deals with the so-called value proposition, i.e. the positioning of one's own offer. Also highly recommended.
Business Model Canvas (BMC)
The canvas model is especially useful for startups because it simply shows how the entire business is structured. It is extremely helpful in the early stages of conceptualization. The business model canvas shows how the building blocks of the business interact and create value, but it does not show differentiation and competitive advantages. This is where the Market Map comes in.
The Business Model Canvas can be downloaded as a pdf from strategyzer´s site.
The individual elements of the BMC
The Value Proposition
What do I offer my clients?
Who is my customer?
What kind of relationship am I building with my customer?
What channels do I use to reach my customers?
What revenue streams can I expect?
What activities do I need to perform to achieve the value proposition?
What resources will I need to achieve the value proposition
What other companies/partners do I need?
What is my cost structure?
X-Ray the Components of the Business Model with the SWOT Analysis
The SWOT analysis should be used to critically examine each element of the BMC. How stable is the partner relationship? What is the sustainable advantage of our value proposition? How easy is it to replicate the infrastructure? Are the revenue numbers realistic or overly optimistic?
Benefits of the Business Model Canvas for Business Modeling
The Missing Element - Market + Competition
One aspect is completely missing from the canvas: the target market and its current competitive situation. Of course, it would be desirable to operate in a blue ocean, but the reality is different. In the canvas, there is a field for customers; from our point of view, the desired customer should be outlined here. What service do I offer, how and with what value proposition to best serve the desired customer? One step before this, however, is to consider the market environment in which I operate.
- Do I want to operate locally, regionally, nationally or internationally?
- How big is the market and how is it evolving?
- Is it growing, shrinking, or stagnating?
- What are the external market factors and how important are they?
- And what kind of competitive structure can I expect?
- With a few established competitors or with a large number of new competitors?
- How attractive is the market?
These considerations must be added to complete the overall picture. ACRASIO has developed a market + competition module, the MARKET MAP, which can be docked to the Canvas. This map can be requested free of charge.