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Business Model Design

The document discusses the Business Model Canvas, a tool used to analyze business models. It has 9 sections that can be used to segment a business or product: key partners, key activities, key resources, value propositions, customer relationships, channels, customer segments, revenue streams, and cost structure. The Business Model Canvas allows users to visually break down all aspects of a business model on a single page. It is a flexible tool that can be applied to an entire business, a specific strategic plan, or individual product.

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Aashi Gupta
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25 views

Business Model Design

The document discusses the Business Model Canvas, a tool used to analyze business models. It has 9 sections that can be used to segment a business or product: key partners, key activities, key resources, value propositions, customer relationships, channels, customer segments, revenue streams, and cost structure. The Business Model Canvas allows users to visually break down all aspects of a business model on a single page. It is a flexible tool that can be applied to an entire business, a specific strategic plan, or individual product.

Uploaded by

Aashi Gupta
Copyright
© © All Rights Reserved
Available Formats
Download as TXT, PDF, TXT or read online on Scribd
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We're now going to really start unpacking design strategy by looking at the Design

Strategy Framework, and the principles of design thinking on which it is built.


While we've already looked at the basic principles of design thinking and we'll go
into these in further lessons; in this lesson, we're going to spend some time
talking about the Business Model Canvas, particularly how it is used to segment an
organization, how it can be used to identify gaps in a corporate strategy and how
it can be used to generate a design strategy framework. The Business Model Canvas
is a globally recognized tool for developing new business models at segmenting and
understanding existing business models. It's a visual tool that allows you to
segment all of a firm's inputs, outputs and stakeholders. It takes those really
long and boring business plans and distills them into a one page overview. So, it's
a really effective visual tool to explore key elements of a business. The Business
Model Canvas was originally proposed by Alexander Osterwalder, in his 2004 book,
"Business Model Ontology". Since Osterwalder published his book in 2004, many
different versions of the Business Model Canvas have been produced and many are
freely accessible on the internet. Throughout this course, we will be using the
Business Model Canvas developed by Strategyzer AG, and a blank Business Model
Canvas has been made available in the course resources. You may find it helpful to
print out a copy, as this will allow you to follow along as you watch this video.
The Business Model Canvas is comprised of nine sections or boxes. In a clockwise
direction, starting from the top left of the page, the sections are: key partners,
key activities, key resources, value propositions, customer relationships,
channels, customer segments, revenue streams, cost structure. The Business Model
Canvas can be completed for a business as a whole or on a business' strategic plan
or even a specific product that a firm is trying to sell. So, it's quite flexible
in that regard. You should methodically fill in the boxes as they are relevant to
the strategic plan or product you are wanting to segment. Let's review each of the
sections of the Business Model Canvas in more detail. Key partners are the third
parties that you will need to draw on, in order to deliver value to your customers.
Think about who do you need to work with to be able to deliver your solution. So,
in completing this section of the Business Model Canvas, you should answer the
following questions: Who are the key partners for your business? Who are the key
suppliers to your business? What are the resources that you are requiring from
those partners? And what are the activities that your key partners perform? Key
activities are the actions that you must take in order to deliver value to your
customers. In completing this section of the Business Model Canvas, you should
consider: What activities do you need to undertake to deliver value? Do you need to
develop new products or services? Do you need to undertake any research and
development? Do you need to develop any new distribution relationships or marketing
activities? Key resources are the things that your organization needs in order to
deliver value to your customers. You may find it helpful to go back and look at the
key activities of the business, to identify the key resources needed to conduct
these activities. In completing this section of the Business Model Canvas, you
should consider: What physical resources do you need to deliver value? Equipment,
infrastructure, tools materials etc. What nonphysical resources do you need to
deliver value? Such as technology, people customer relationships or distribution
channels.

Value proposition is the benefit that you are going to deliver to your customers,
and the pain-point that you are going to resolve. The benefit may be either
qualitative, such as an improved customer experience or quantitative (price
optimizations and time savings for example). So, when completing this section of
the business model, ask yourself: What is the value you are delivering to the
customer? And what is the pain-point you are eliminating for the customer?

Customer relationships vary from large amounts of face time and constant
interaction, to hands off and perhaps even complete automation. So, in completing
this section of the canvas, answer the following questions: What type of
relationship do you want to have with your customers? What do your customers expect
of you? What are the costs, marketing, distribution etc if any, associated with the
relationship? In the design strategy context, the customer may actually be internal
within your organization. So, for example, if you were using the canvas to analyze
your company's strategy, you may find that your customer or effectively your user
maybe your employees. So, just be aware of the nuances there, depending on the
context in which you use it.

Channels is the term used to describe the ways in which you will interact with your
customers, and the ways that you will deliver your products or services to your
customers. You may have different channels for different customer segments, and you
should map each channel to the appropriate customer segment. In completing this
section of the Business Model Canvas, you should attempt to answer the following
questions: Is the way that you interact with your customers the same as the way you
deliver the products and services to them? What is the most cost-effective way of
interacting with your customers? What is the most cost-effective way of delivering
products and services to your customers.

Your customer segments are the customer personas that you have a relationship with
and delivering value to. Different products and services appeal to different
customers. In order to run your business effectively, you must intimately
understand the customer segment or segments that your products and services appeal
to. In completing this section of the Business Model Canvas ask yourself the
following: To what customer personas are you delivering value? What are the
attributes of each of these personas? What are the products and services that you
are delivering to each customer segment? We're going to spend a lot more time
talking about customer personas throughout the course, so, don't worry if they're
not familiar to you at this stage.

There are many different ways in which organizations can generate revenue, for
instance, you could charge a one-off fee for a product or service, monthly or
annual subscriptions or commissions just to name a few. The way in which your
business chooses to generate revenue will largely depend on the customer segments
that you are servicing and the behavioral characteristics linked to those segments.
So, it's essential to really know your customer segments, because their needs and
preferences impact on many areas of the business. For example, a millennial is much
more likely to sign up for monthly subscription service than an aged pensioner. So,
in completing this section of the Business Model Canvas, you should attempt to
answer the following questions: How much a customer is prepared to pay for the
value that you are delivering? How will those customers pay you? And how frequently
will those customers pay you? All businesses incur costs in pursuit of delivering
value. In order for a business to be profitable, it must charge customers more than
it costs to generate value. Businesses can be either cost-driven or value-driven.
Cost-driven firms are focused on reducing costs as much as possible while
maximizing the amount that they charge for the value that they are selling. Value-
driven firms are more focused on delivering value, and may actually be prepared to
incur greater costs in order to do so. So, in completing this section of the
Business Model Canvas, you should look at the following questions: What is the cost
structure of your organization? What are the most expensive activities that your
business performs? Are you a cost-driven business? Are you a value-driven business?
You should now have an in-depth understanding of each of the sections of the
Business Model Canvas, as well as an understanding of the questions that you should
attempt to answer when completing each section. So, now would be a great time to
pause, and start to populate a canvas based on a company. It could be one that you
work for, or used to work for, or one that maybe you're thinking of starting up
yourself. Alternatively, you could use the canvas to assess the various elements of
a product, service or strategy that an organization may have. That will allow you
to specifically see how that product or service functions within the organization.
If you get stuck on a section, move on to one that you are more confident with. And
you can always reach out to your peers for help.

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