February 1, 2016

BABOK v3 Techniques: Business Model Canvas

OK. I’m going to be totally honest. Before version 3 of the BABOK®, I had never seen or heard of the Business Model Canvas. After reading through the technique, and searching for real-life examples online, I was quite delighted. If you are like me, and were not aware of this technique, let me shed some light on it for you.

What is a Business Model Canvas?

It is a visual representation that depicts the important aspects and relationships of an organization to show how it creates, delivers and captures value.

How is a Business Model Canvas Used?

This model can be used in countless ways. However, here are some of the primary ways it can be used:

  • Strategy Implementation – this model serves as “a blueprint for implementing a strategy”
  • Diagnostic – allows the organization to view its current state to identify where it is allocating resources across the various segments of the business model
  • Planning/Monitoring – the model can serve as a framework for understanding inter-dependencies and priorities among groups and initiatives
  • Mapping to Strategy – aids in mapping initiatives, programs, and projects to the organization’s strategy

What Are the Components of a Business Model Canvas?

The canvas itself is laid out in a pre-defined format, with the following elements:

  • Key Partnerships – who are the partners who will help you achieve your strategic goals?
  • Key Activities – what are the key activities that need to happen?
  • Key Resources – what are the key resources that will be used?
  • Value Proposition – what product or service is being offered?
  • Customer Relationships – what type of relationships will you have with customers?
  • Channels – in what ways will the organization interact with and deliver value to the customers?
  • Customer Segments – which customer segments are you targeting?
  • Cost Structure – what are the costs of doing business?
  • Revenue Streams – what are the types of revenue streams for the business?

Note: you can download this model template for free at http://www.businessmodelgeneration.com.

What Are the Advantages of Using this Model?

It is well-understood, and allows an organization to very quickly analyze the business and make adjustments to any area where problems or opportunities are identified.

Are There Any Drawbacks of Using this Model?

While very useful, this model does have a few drawbacks. The model itself does not show the organization’s strategy, and the primary focus on value does not allow for a holistic view of the strategy.

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