Business-Model-Canvas-Explained

BUSINESSMODELCANVASSpeaker:hebaEldalyTHE9BULDINGBLOCKSCustomerSegmentsValuePropositionsChannelsCustomerRelationshipsRevenueStreamskeyresourceskeyactivitieskeypartnershipscoststructure1)THECUSTOMERSEGMENTTheCustomerSegmentsBuildingBlockdefinesthedifferentgroupsofpeopleororganizationsanenterpriseaimstoreachandserve.Customerscomprisetheheartofanybusinessmodel.Without(profitable)customers,nocompanycansurviveforlong.Inordertobettersatisfycustomers,acompanymaygroupthemintodistinctsegmentswithcommonneeds,commonbehaviors,orotherattributes.AbusinessmodelmaydefineoneorseverallargeorsmallCustomerSegments.Anorganizationmustmakeaconsciousdecisionaboutwhichsegmentstoserveandwhichsegmentstoignore.Oncethisdecisionismade,abusinessmodelcanbecarefullydesignedaroundastrongunderstandingofspecificcustomerneeds.Customergroupsrepresentseparatesegmentsif:•Theirneedsrequireandjustifyadistinctoffer.•TheyarereachedthroughdifferentDistributionChannels.•Theyrequiredifferenttypesofrelationships.•Theyhavesubstantiallydifferentprofitabilities.•Theyarewillingtopayfordifferentaspectsoftheoffer.FORWHOMAREWECREATINGVALUE?WHOAREOURMOSTIMPORTANTCUSTOMERS?TherearedifferenttypesofCustomerSegments.Herearesomeexamples:massmarketnichemarketsegmentedDiversifiedMulti-sidedplatforms(ormulti-sidedmarkets)MassmarketBusinessmodelsfocusedonmassmarketsdon’tdistinguishbetweendifferentCustomerSegments.TheValuePropositions,DistributionChannels,andcustomerRelationshipsallfocusononelargegroupofcustomerswithbroadlysimilarneedsandproblems.Thistypeofbusinessmodelisoftenfoundintheconsumerelectronicssector.NichemarketBusinessmodelstargetingnichemarketscatertospecific,specializedCustomerSegments.TheValuePropositions,DistributionChannels,andCustomerRelationshipsarealltailoredtothespecificrequirementsofanichemarket.Suchbusinessmodelsareoftenfoundinsupplier-buyerrelationships.Forexample,manycarpartmanufacturersdependheavilyonpurchasesfrommajorautomobilemanufacturers.SegmentedSomebusinessmodelsdistinguishbetweenmarketsegmentswithslightlydifferentneedsandproblems.TheretailarmofabanklikeCreditSuisse,forexample,maydistinguishbetweenalargegroupofcustomers,eachpossessingassetsofuptoU.S.$100,000,andasmallergroupofaffluentclients,eachofwhosenetworthexceedsU.S.$500,000.Bothsegmentshavesimilarbutvaryingneedsandproblems.ThishasimplicationsfortheotherbuildingblocksofCreditSuisse’sbusinessmodel,suchastheValueProposition,DistributionChannels,CustomerRelationships,andRevenuestreams.ConsiderMicroPrecisionSystems,whichspecializesinprovidingoutsourcedmicromechanicaldesignandmanufacturingsolutions.ItservesthreedifferentCustomerSegments—thewatchindustry,themedicalindustry,andtheindustrialautomationsector—andofferseachslightlydifferentValuePropositions.DiversifiedAnorganizationwithadiversifiedcustomerbusinessmodelservestwounrelatedCustomerSegmentswithverydifferentneedsandproblems.Forexample,in2006Amazon.comdecidedtodiversifyitsretailbusinessbyselling“cloudcomputing”services:onlinestoragespaceandon-demandserverusage.ThusitstartedcateringtoatotallydifferentCustomerSegment—Webcompanies—withatotallydifferentValueProposition.ThestrategicrationalebehindthisdiversificationcanbefoundinAmazon.com’spowerfulITinfrastructure,whichcanbesharedthroughitsretailsalesoperationsandthenewcloudcomputingserviceunit.Multi-sidedplatforms(ormulti-sidedmarkets)SomeorganizationsservetwoormoreinterdependentCustomerSegments.Acreditcardcompany,forexample,needsalargebaseofcreditcardholdersandalargebaseofmerchantswhoacceptthosecreditcards.Similarly,anenterpriseofferingafreenewspaperneedsalargereaderbasetoattractadvertisers.Ontheotherhand,italsoneedsadvertiserstofinanceproductionanddistribution.Bothsegmentsarerequiredtomakethebusinessmodelwork(readmoreaboutmulti-sidedplatformsonp.76).2)VALUEPROPOSITIONSTheValuePropositionsBuildingBlockdescribesthebundleofproductsandservicesthatcreatevalueforaspecificCustomerSegment-Whatvaluedowedelivertothecustomer?-Whichoneofourcustomer’sproblemsarewehelpingtosolve?-Whichcustomerneedsarewesatisfying?WhatbundlesofproductsandservicesareweofferingtoeachCustomerSegment?AValuePropositioncreatesvalueforaCustomerSegmentthroughadistinctmixofelementscateringtothatsegment’sneeds.Valuesmaybequantitative(e.g.price,speedofservice)orqualitative(e.g.design,customerexperience).Elementsfromthefollowingnon-exhaustivelistcancontributetocustomervaluecreation.newnessperformancecustomizationgettingthejobdonedesignbrand/statuspricecostreductionriskreductionAccessibilityConvenienceUseability3)CHANNELSTheChannelsBuildingBlockdescribeshowacompanycommunicateswithandreachesitsCustomerSegmentstodeliveraValuePropositionThroughwhichChannelsdoourCustomerSegmentswanttobereached?Howarewereachingthemnow?HowareourChannelsintegrated?Whichonesworkbest?Whichonesaremostcost-efficient?Howareweintegratingthemwithcustomerroutines?4)CUSTOMERRELATIONSHIPTheCustomerRelationshipsBuildingBlockdescribesthetypesofrelationshipsacompanyestablisheswithspecificCustomerSegmentsAcompanyshouldclarifythetypeofrel