So whats the business model ? – The Business Model Canvas

So whats the business model? – Its a big question and probably the first one that should be asked in any project inception. Without clear answers its difficult to create great services and software that supports this model. Using the Business Model Canvas is a way rapidly of exposing all the moving parts of the business, and bring focus to exposing both the “As is” business and “To be” future states.

http://www.businessmodelhub.com/page/business-model-canvas 

I gave the business model canvas a run during a few times within inception workshops.I think it works brilliantly, and made the subsequent development of the elevator pitch and other business driver activities in inception much easier.

I have struggled a bit in the past when trying to run an inception workshop  “business vision” session. The canvas gives this activity clear structure and ensures a broad understanding of all the moving parts of the entire business, and how these in the end map to the revenue and cost structures. 

Because it demands a high level view of things, it was very easy to keep away from product features, and focus on defining value proposition, customer segments, customer relationships, delivery channels, etc

How did it start?

  • It was the first activities in a day dedicated to “understanding the business drivers” of the project. Basically i think if a business is going to invest a bucket of money in changing the way the business works, then its a good idea to understand what this change is going to be. The business model canvas helps drive out understanding of this expected change.
  • This is perhaps a massive oversimplification – but i think a website should simply and clearly embody the business model that its supporting – clearly communicate its value, be a channel for delivering this value, clearly and simply describe the pricing model for purchasing, etc.

How did I work? 

  1. I started by drawing up a blank canvas structure and talking about the individual components and how they related
  2. We then began by modeled the existing business model using yellow post-it notes
  3. We started with customer segments, and got participants to brainstorm on post-it notes and then placed them in the zone (focusing on structuring them into a coherent set is the hard bit)
  4. Then moved on to Value Proposition – then tried to understand how this value is delivered via channels, and how this changes or informs the kind of relationships they have with their customers
  5. from there it was easy to move onto resources, activities and partners supporting delivery of value
  6. lastly tried to model the revenue and cost structures – the project was looking to change these aspects so it was hard, but very valuable as a conversation starter.
  7. we then identified areas that will change as a result of this project (using a different coloured post-it note. Changes to the pricing and product models was one of the primary changes the project was introducing
  8. We lastly prioritized these new initiatives, identifying those that would have the greatest impact on achieving the future state goals
  9. the output was used to then provide a framework for developing other more detailed business driver activities – Elevator pitch, Objective Statements, etc
Things to watch out for
i tried the canvas again for another small project, and it didn’t work as well. The mistakes i made were…
  • Not being strict with the post-it not colours. The first time i used one colour for existing, one colour for change, one colour for priority. The second time i was lazy and the thing was a mess.
  • Not taking time to synthesize the flow of post-its into each section – i was in a rush and started just putting them on the board. again it got messy fairly quickly and the channels section started to be a catch all for features (not the point)
  • Not moving on when unknowns where identified – i tried to draw out what the revenue streams for this new product and no one could tell me. At that point i started getting a bit of ‘your just here to build a website, not look at business strategy…’ . I think i should have just highlighted that at present how this product generates revenue streams is unknown and left it at that. Then again, what sort of business case is that ?

Conclusion

I suggest anyone who facilitates workshop focused on kicking off software projects should give this a go! Or, if you have a better, more structured way to facilitate a workshop on business vision then let me know.

More information at http://www.businessmodelhub.com/page/business-model-canvas

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About Jason Furnell

design thinker . experience designer . lo-fi sketcher . workshop facilitator . visual thinker . diagrammer . agile believer . multidisciplinary collaborator . build sequencer . incrementing and iterating . architecting information . presenting and pitching . master of design (its a degree, not a self assigned title) . dyslexic . misspell-er of many many many things....
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7 Responses to So whats the business model ? – The Business Model Canvas

  1. jason says:

    I bought this book…it emphasizes collaboration with all groups- specific to SME’s. I worked with a big company and the sme’s there did not want to collaborate at all. In fact they would only give an hour and they all wanted to be in the meeting for 1 hour – can you imagine trying to understand requirements in 1 hour from 5 people. I wanted to segment the people – break it down. A lot of sme feel this whole collaboration is a waste of time – I was full time there – maybe if I was a consultant things would be different.D

    • Jindou says:

      I’m a big fan of the BMC. (Can’t believe I’m giving it an acronym).

      And you are right, it’s very frustrating when you know that if a SME had the time and went through this process thoroughly they would come up with something amazing… or at least highlight areas in their business model they could improve on.. but they don’t see the value in it.

      Or are we the ones who are delusional? 😀

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