Why the Business Model Canvas Is a Valuable, Strategic Tool for Business Growth

Whether you are an entrepreneur in the process starting a new venture, a business consultant or business executive, the Business Model Canvas can be used as a strategic tool to maximise value, reduce costs and increase business growth.  Alexander Oterwalder and Professor Yves Pigneur , co-wrote, “The Business Model Generation” and 470 strategic practitioners from 45 countries contributed to its creation. It describes a business model as, ‘…the rationale of how an organisation creates, delivers, and captures value’. Oterwalder demonstrates that a single business model canvas can provide a visual map of the elements that make up the structure (and big picture) of any type of business and makes it easier to see where value can be added.

The 9 building blocks consist of:

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

These blocks cover the 4 main aspects of business: Customers; Offer; Infrastructure; and Financial Viability.

By having a visual concept of your business model, you can look to any of the building blocks and see their relationship to each other.  For instance, if you intend to increase your customer segments, will this fit with your current channels of distribution, or might it highlight that a different strategy is required? Similarly, how do you plan to build relationships with your customers? Do you intend to interact with them face-to-face, by telephone, internet, etc. and how will this impact on your cost structure and/or your key resources?

Mapping out your intentions, or possible changes, can highlight potential risk areas as well as potential growth areas of your business, thus allowing you to take swift and appropriate action.

Understanding the business model canvas and how it works, can also help you to be more innovative and to stay ahead of your competitors. You can achieve and sustain a competitive advantage by studying your rivals’ business model(s); by illustrating their model on your canvas, you can determine where their weaknesses and strengths lie and plan your model accordingly.  You might, for example, see where measures can be taken to make improvements and add value, such as reducing distribution costs. Other business models may indeed highlight a gap in the market and allow you to introduce a new product or service.

Utilising the business model canvas could prove to be invaluable, whether in creating a new business or in restructuring an existing one.

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