3 Steps for Creating an Effective Business Model Canvas

Running a business is like running a train—there are many moving parts that need to work in tandem, and watch out if something falls out of alignment. The business model canvas seeks to simplify alignment. It breaks business management down into nine aspects that interconnect. In a post at his website, entrepreneur Alexander Cowen shares three steps for making the best use of the canvas:

  1. Go deep on linking customer segments and value propositions.
  2. Storyboard the customer journey with customer relationships and channels.
  3. Define a business type before working out infrastructure aspects.

Looks Good on Paper

To begin with, the nine aspects of the canvas are these: customer segments, value propositions, channels (through which value is delivered), customer relationships, revenue streams, key resources (required to create value), key activities (required to create value), key partnerships, and cost structure. These aspects are literally displayed together in a unified canvas within the model. View the short video below for further, quick explanation.

There is a flow between how each of the business aspects interact with each other, and Cowen first asks you to scrutinize the connection between customer segments and value propositions. When it comes to examining customers, customer segmentation means “heuristically grouping sets of customers,” but another (perhaps complementary) option is to also create personas to describe customers. A persona is a hypothetical person who reflects the real-life customers you are targeting, and the purpose is to humanize customers. Consider both options in describing customer segments.

Then funnel all of that information into better defining the value proposition, asking yourself these questions:

First, what problem scenarios are important to your personas? If it’s a business to business proposition, what jobs are you doing for them and how do those need improving? If it’s a consumer proposition, what underlying needs and desires are you fulfilling?

Second, what are the customer’s current alternatives?

In exploring connections within the business model canvas, the smaller blocks dedicated to customer relationships and channels sometimes get overlooked. Do not let this happen. Cowen recommends literally drawing out how you imagine customers go through the process of discovering and using your product, using a using a framework of “attention, interest, desire, action, onboarding, and retention.” He offers an example at his website.

Lastly, consider what type of business you really have. For instance, there are infrastructure-driven ones like telecoms, scope-driven ones like retailers, and product-driven ones like software companies. Different types will dictate different approaches to defining key activities, key resources, and key partners. When used properly, the final result of the business model canvas will be that you receive a complete picture of the business, albeit at a bird’s-eye view.

You can view the original post here: http://www.alexandercowan.com/3-steps-tips-creating-awesome-business-model-canvas/

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