14 Definition of a Business Model 16 The9 Building Blocks 44 The Business Model Canvas Template
14 Definition of a Business Model 16 The 9 Building Blocks 44 The Business Model Canvas Template bmgen_final.indd 13 6/15/10 5:31 PM
14 Def_Business Model A business model describes the rationale of how an organization creates,delivers, and captures value
14 A business model describes the rationale of how an organization creates, delivers, and captures value Def_Business Model bmgen_final.indd 14 6/15/10 5:31 PM
15 The starting point for any good discussion,meeting. This concept can become a shared language that or workshop on business model innovation should allows you to easily describe and manipulate business be a shared understanding of what a business model models to create new strategic alternatives.Without actually is.We need a business model concept that such a shared language it is difficult to systematically everybody understands:one that facilitates descrip- challenge assumptions about one's business model tion and discussion.We need to start from the same and innovate successfully. point and talk about the same thing.The challenge is that the concept must be simple,relevant and intui- We believe a business model can best be described tively understandable,while not oversimplifying the through nine basic building blocks that show the complexities of how enterprises function. logic of how a company intends to make money.The nine blocks cover the four main areas of a business: In the following pages we offer a concept that allows customers,offer,infrastructure,and financial viability you to describe and think through the business model The business model is like a blueprint for a strategy of your organization,your competitors,or any other to be implemented through organizational structures enterprise.This concept has been applied and tested processes,and systems. around the world and is already used in organizations such as IBM,Ericsson,Deloitte,the Public Works and Government Services of Canada,and many more
15 The starting point for any good discussion, meeting, or workshop on business model innovation should be a shared understanding of what a business model actually is. We need a business model concept that everybody understands: one that facilitates description and discussion. We need to start from the same point and talk about the same thing. The challenge is that the concept must be simple, relevant, and intuitively understandable, while not oversimplifying the complexities of how enterprises function. In the following pages we oΩer a concept that allows you to describe and think through the business model of your organization, your competitors, or any other enterprise. This concept has been applied and tested around the world and is already used in organizations such as IBM, Ericsson, Deloitte, the Public Works and Government Services of Canada, and many more. This concept can become a shared language that allows you to easily describe and manipulate business models to create new strategic alternatives. Without such a shared language it is diΩicult to systematically challenge assumptions about one’s business model and innovate successfully. We believe a business model can best be described through nine basic building blocks that show the logic of how a company intends to make money. The nine blocks cover the four main areas of a business: customers, oΩer, infrastructure, and financial viability. The business model is like a blueprint for a strategy to be implemented through organizational structures, processes, and systems. bmgen_final.indd 15 6/15/10 5:31 PM
The 9 Building Blocks CH CR Customer Value Channels Customer Segments Propositions Value propositions Relationships An organization serves It seeks to solve customer are delivered to customers Customer relationships one or several Customer problems and satisfy through communication, are established and Segments. customer needs with distribution,and sales maintained with each value propositions. Channels. Customer Segment
[ Customer Segments An organization serves one or several Customer Segments. Value Propositions It seeks to solve customer problems and satisfy customer needs with value propositions. Channels Value propositions are delivered to customers through communication, distribution, and sales Channels. Customer Relationships Customer relationships are established and maintained with each Customer Segment. [ The 9 Building Blocks CS VP CH Cr 1 2 3 4 bmgen_final.indd 16 6/15/10 5:31 PM
7 RS KA cs B Revenue Key Key Key ▣Cost Streams Resources Activities Partnerships Structure Revenue streams result Key resources are the ..by performing a num- Some activities are The business model from value propositions assets required to offer ber of Key Activities. outsourced and some elements result in the successfully offered to and deliver the previously resources are acquired cost structure. customers. described elements... outside the enterprise
17 Revenue Streams Revenue streams result from value propositions successfully oΩered to customers. Key Resources Key resources are the assets required to oΩer and deliver the previously described elements . . . Key Activities . . . by performing a number of Key Activities. Key Partnerships Some activities are outsourced and some resources are acquired outside the enterprise. Cost Structure The business model elements result in the cost structure. r$ Kr KA KP C$ 5 6 7 8 9 bmgen_final.indd 17 6/15/10 5:31 PM