If You’re Not Using The Canvas – Don’t Bother

Posted on Posted in Effectiveness, Weekly Value

Why The Business Model Canvas is so powerful.ARP-20140824-00100

 

The Business Model Canvas

If you have not been using The Business Model Canvas, you should start. If you’ve never heard of it, now would be a good time to get familiar with it.

The authors have given us a tremendous tool to use to analyze a business, describe a business, design a business or pivot a business. The Canvas is licensed as creative commons so enjoy it free. Just be sure to link back to businessmodelgeneration.com after each use.

 

How To Use The Canvas To Analyze & Describe

I was working with someone recently who wanted to start a new company that he planned to grow by developing stuff in-house and, later, by acquiring other companies. At the start of our work together I needed to understand what he was up to, so I set up one of those “discovery” meetings. You know the ones. You get together and chit chat about vision, mission and goals. There’s usually a white board involved or maybe even (ugh) a bunch of slides. Well you and I both know those meetings are usually boring and unproductive. But I had a need, so we had to have the meeting. I took a different approach. No slides. No chit chat. No random discussion.

I took the lead and whipped out The Business Model Canvas. We walked through each section, and I took notes directly onto my copy. The Canvas made sure I asked direct, purposeful questions, and I recorded the information succinctly. We covered all nine sections in about an hour:

  1. Customer Segments
  2. Value Proposition
  3. Channels
  4. Customer Relationships
  5. Revenue Streams
  6. Key Resources
  7. Key Activities
  8. Key Partnerships
  9. Cost Structure

 

How To Use The Canvas To Design

Now that I had a decent understanding of what he was out to accomplish, we then set out on a journey to design the actual company itself. Up to this point it was just theory. We dug into each section, but we quickly found the need to focus on just a few sections at first. The rest were irrelevant if we couldn’t find traction for the ideas and products that would be offered. We focused on Customer Segments and Value Proposition first. We figured that if we couldn’t identify unique value for a specific person out there, we would not be able to develop an “unfair advantage” for the new company. Our priorities looked like this:

Critical:
  • Customer Segment
  • Value Proposition
  • Key Resources
Important:
  • Revenue Streams
  • Cost Structure
Good To Know:
  • Channels
  • Customer Relationships
  • Key Activities
  • Key Partnerships

Your priorities may be different for your new business design, but this worked for us. We concentrated on being as specific and complete as possible with our critical items. We applied our creativity, and we tested our ideas to make sure we were on the right track. Again, without getting this part mostly right, the rest wouldn’t matter.

The important items received the next level of our attention. We wrote down our assumptions, and we did our best to estimate revenue and cost relative to the value propositions we had created. Our thinking here was that our assumptions would be tested at every turn. We had to have credible information to start, but we also knew our numbers would change as we went.

The Good-To-Know category received a bit of discussion, and we took some notes. However, we did not try to be rigorous or complete in those areas at this point in the life of the idea.

 

How To Use The Canvas To Pivot

Remember when I used the words, “mostly right?” Well, it turns out during our testing and development of the channels, customer relationships and key partnerships we discovered we needed to make a change. We needed to pivot away from the original idea of concentrating on in-house development first and toward a focus on finding existing businesses and partners who could get the new venture off the ground quickly. It was just going to take too long to get to viable revenue. We weren’t going to be able to serve our customers well in the short term because we wouldn’t have enough value to get their attention.

So we sat down with our original canvas and looked at our critical priorities. We asked the question, “If it was a good idea then, what new information do we have that would cause us to modify our thesis?” We made the necessary changes, and then we filled in the rest of The Canvas with what we had learned from our Key Activities up to that point.

 

Conclusion

Use The Business Model Canvas any time you’re considering starting a new business, growing your business or changing direction. If you need to understand what someone else is proposing for a new business idea, go to The Canvas. If you need to assess the viability of an existing business or a business idea for investment purposes, go to The Canvas. If you need to describe and report about a company, use The Canvas as your guide. In each of these situations, start by considering what’s most important to you, when and why, so you can prioritize your effort on each section. Finish by questioning everything (getting curious), staying connected and being confident.

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