
The Business Model Canvas is a strategic management template for developing new or documenting existing business models. It is a visual chart with elements describing a firm's value proposition, infrastructure, customers, and finances[1]. It assists firms in aligning their activities by illustrating potential trade-offs.
The Business Model Canvas was initially proposed by Alexander Osterwalder[2] based on his earlier work on Business Model Ontology.[3]
The Business Model Canvas
Formal descriptions of the business become the building blocks for its activities. Many different business conceptualizations exist; Osterwalder's work and thesis (2010[1], 2004[3]) propose a single reference model based on the similarities of a wide range of business model conceptualizations. With his business model design template, an enterprise can easily describe their business model
- Infrastructure
- Key Activities: The activities necessary to execute a company's business model.
- Key Resources: The resources that are necessary to create value for the customer.
- Partner Network: The business alliances which complement other aspects of the business model.
- Offering
- Value Proposition: The collection of products and services a business offers to meet the needs of its customers. According to Osterwalder, (2004), a company's value proposition is what distinguishes itself from its competitors. The value proposition provides value through various elements such as newness, performance, customization, "getting the job done", design, brand/status, price, cost reduction, risk reduction, accessibility, and convenience/usability.
- The value propositions may be:
- Quantitative- price and efficiency
- Qualitative- overall customer experience and outcome
- The value propositions may be:
- Value Proposition: The collection of products and services a business offers to meet the needs of its customers. According to Osterwalder, (2004), a company's value proposition is what distinguishes itself from its competitors. The value proposition provides value through various elements such as newness, performance, customization, "getting the job done", design, brand/status, price, cost reduction, risk reduction, accessibility, and convenience/usability.
- Customers
- Customer Segments: The target audience for a business' products and services.
- Channels: The means by which a company delivers products and services to customers. This includes the company's marketing and distribution strategy.
- Customer Relationship: The links a company establishes between itself and its different customer segments. The process of managing customer relationships is referred to as customer relationship management.
- Finances
- Cost Structure: The monetary consequences of the means employed in the business model. A company's DOC.
- Revenue Streams: The way a company makes money through a variety of revenue flows. A company's income.
Application
The Business Model Canvas can be printed out on a large surface so groups of people can jointly start sketching and discussing business model elements with post-it note notes or board markers. It is a hands-on tool that fosters understanding, discussion, creativity, and analysis.Vorlage:Citation needed
Criticism
Even though Osterwalder, Pigneur and Smith's business model approach can be used to innovate parts of the business model or product, Prof. Dr. Mark von Rosing[4] identified the following critique points:
- Is mostly built on the work of the other writers on competency development of the business model and balanced scorecard from Kaplan and Norton [Kaplan and Norton 2007]. This theory can't be applied to a full business model framework.
- Doesn't include corporate structure and responsibility, which a business model should include.
- Doesn't include a representation of the main business goals, e.g. strategic business objectives, critical success factors and key performance indicators, which a holistic business model approach should include.
- Doesn't include a representation of the main business issues/pain points and thereby corporate weakness, which a holistic business model approach should include for they represent the threat to the company's business model.
- Is based on the theory that between the activities that generate cost and activities that generate revenue is the value proposition. That view is too simplistic for one can't build a business model based on visible figures of cost and revenue alone, even though cost and revenue should be a part of a business model.
- The linkages among competences, measurements and results is not explicit.
- Doesn't have a clear cause and effect linkage between the competencies, desired outcomes and measurements. Thereby the business model can help with possible strategic decisions.
- Doesn't consider the issue of performance measurements, which is vital for business modelling.
- Doesn't consider the important issue of goal setting, which is critical for developing the business model.
- Doesn't place enough emphasis on business model management and is thereby missing a continuous improvement and governance approach to the business model.
- Doesn't include a representation of core differentiated and core competitive competencies [only linked to value proposition], which is a basis for building a business model as they represent some of the most important sources of uniqueness. These are the things that a company can do uniquely well, and that no one else can copy quickly enough to affect competition.
It can be concluded that while Osterwalder, Pigneur and Smith's business model approach can be used to innovate parts of the business model or product, it is not a holistic business model approach. As a matter of fact, their CANVAS model cannot be seen as a business model approach, but rather a business model innovation approach. On the other hand one could argue that the authors Osterwalder, Pigneur and Smith do not claim their approach to be more or less than that. However, a business model innovation approach that doesn't consider business model design or business model transformation, and thereby doesn't include a business model improvement and development methodology, truly limits the real possibility for business model innovation.
See also
Further reading
- 2010. Business Model Generation, A. Osterwalder, Yves Pigneur, Alan Smith, and 470 practitioners from 45 countries, self published.
- Applying Real-World BPM in an SAP Environment, Ann Rosenberg, Mark von Rosing, Greg Chase, Rukhshaan Omar, and James Taylor, SAP Press 2011.
References
External links
- ↑ a b Business Model Generation, A. Osterwalder, Yves Pigneur, Alan Smith, and 470 practitioners from 45 countries, self published, 2010
- ↑ The Business Model Canvas nonlinearthinking.typepad.com, July 05, 2008. Accessed Feb 25, 2010.
- ↑ a b Alexander Osterwalder (2004). The Business Model Ontology - A Proposition In A Design Science Approach. PhD thesis University of Lausanne. Referenzfehler: Ungültiges
<ref>
-Tag. Der Name „Osterwalder2004“ wurde mehrere Male mit einem unterschiedlichen Inhalt definiert. - ↑ Applying Real-World BPM in an SAP Environment, von Rosing & Rosenberg, Business Models, Applying Real-World BPM in an SAP Environment, SAP Press 2011