This talk – plus the posters I see at my coworking space every day ;) – has started me off to the world of the Business Model Canvas and I have to admit that I fell in love with the concept.
In the meantime I have finished the book Business Model Generation by Alexander Osterwalder et al. to deepen my knowledge of this concept:
- It’s a very simple, yet powerful framework how to think about businesses and business models
- It allows you to generate a big-picture description of a business idea or established business in a matter of minutes
- It provides a common language to talk about and analyze businesses
- A “Business model” is not just the part that generates the revenue. It’s the complete picture of a business, including the cost structure, key partnerships, key activities etc.
- When reading the book, I discovered how important it is to start with either the customer segments (who exactly am I serving? Who is my customer?) and/or the value proposition (what problems do my customer segments have? How can I solve them?).
- Based on the Customer Segements/Value Proposition it’s very important to see the bridge between the two: the channels. How exactly am going to reach those customers? Do I need salespeople? Will I do pay-per-click advertising? What is my assumption regarding conversion rate? What will be my customer acquisition costs?
- From that, you can derive your needed resources (e.g. sales people), your key partners (e.g. Google AdWords freelancer or agency) etc.
- Another great angle is the key resources, key activities and key partners triangle that leads to your cost structure. Do you really need to do everything in-house? Can you use off-the-shelf components? This analysis made me realize, how strongly web-companies rely on open-source. PHP, MySQL, Apache etc. are very crucial building blocks for today’s businesses. So far I took these things for granted. But in reality they are the basis for many things.
- When I look at my former businesses/products I have to admit that I didn’t think enough about the customer segments, value proposition, and channels. Knowing your customer and providing real value is the basis for every business. That’s why Lean Startup and the concept of validation is so important. I really like the following essence offered by Eric Ries: The question is not: Can it be built? The question is: Should it be built? Very powerful question.