The Business Model Canvas (BMC) gives you the structure of a business plan without the overhead and the improvisation of a ‘back of the napkin’ sketch without  the fuzziness (and coffee rings).

The Canvas has nine elements:
Business-Model-Canvas-Annoted-760

Key Partners Key Activities Key Resources Value Propositions Customer Segments Customer Relationships Channels Revenue Streams Cost Structure

Together these elements provide a pretty coherent view of a business’ key drivers–

  1. Customer Segments: Who are the customers? What do they think? See? Feel? Do?
  2. Value Propositions: What’s compelling about the proposition? Why do customers buy, use?
  3. Channels: How are these propositions promoted, sold and delivered? Why? Is it working?
  4. Customer Relationships: How do you interact with the customer through their ‘journey’?
  5. Revenue Streams: How does the business earn revenue from the value propositions?
  6. Key Activities: What uniquely strategic things does the business do to deliver its proposition?
  7. Key Resources: What unique strategic assets must the business have to compete?
  8. Key Partnerships: What can the company not do so it can focus on its Key Activities?
  9. Cost Structure: What are the business’ major cost drivers? How are they linked to revenue?

The Canvas is popular with entrepreneurs and intrapreneurs for business model innovation. Fundamentally, I find it delivers three things:

  1. Focus: Stripping away the 40+ pages of ‘stuff’ in a traditional business plan, I’ve seen users of the BMC improve their clarify and focus on what’s driving the business (and what’s non-core and getting in the way).
  2. Flexibility: It’s alot easier to tweak the model and try things (from a planning perspective) with something that’s sitting on a single page.
  3. Transparency: Your team will have a much easier time understanding your business model and be much more likely to buy in to your vision when it’s laid out on a single page.