Business Model Canvas Explained

For those not familiar with the business model canvas, it is used as a strategic planning tool. It allows you to plan the ideas of how your business will operate or already does. The Business Model Canvas was created by Strategyzer and you can find more about this on their website.

A business model describes the rationale of how an organisation creates, delivers and captures value.

There are 9 sections of a business model canvas, each one representing a different part to the business model. Once you have plotted your ideas here, you could then use customer development interviews to work out if your ideas are in the right direction or whether you should pivot and change your play.

To really understand the business model canvas, you need to understand the 9 sections.

For this, I will use the popular media subscription service Netflix.

The 9 sections of the business model canvas include:

1. Customer Segment - Who are your customers and what segments can they fall into?

Netflix Customer segment: Movie and TV lovers.

2. Value Proposition - What value are you offering to those customers?

Netflix Value proposition: Watch on demand entertainment wherever you can get an internet connection.

3. Channels - What channels will connect your business and your customers?

Netflix Channels: Netflix App or Internat browser

4. Customer relationship - What relationship do you have with your customers?

Netflix Customer relationships: Self service, AI recommendations, Sign up

5. Revenues - What are the revenue streams?

Netflix revenue streams: Monthly subscriptions,

6. Key activities - What activities do we focus on?

Netflix Key activities: Media production and platform development

7. Key resources - What key resources does the business depend on?

Netflix key resources: Netflix platform and media portfolio.

8. Key Partners - What key partnerships are key to your success?

Netflix Key partners: Consumer electronics such as mobiles and smart TV's, TV Providers such as Sky and Virgin.

9. Cost structure - What costs are involved?

Netflix Cost Structure: Media production is a huge cost for Netflix.

As you can see, the business model canvas allow you to segment the different areas of the business to understand how the model will look. This can be done before starting to operate as a business and give you a sense of direction and clarity for your business. You can also run this exercise on your current operating business. This will allow you to analyse your current business model and understand is it right for your business. There is also a Lean Model canvas which has slightly different segments relatable to a lean methodology.

I would love to hear your comments below on the business model canvas. Have you used it already? Did it help you?