Business Model Canvas and MVP

BUSINESS MODEL CANVAS AND MVP
• The Business Model Canvas is a strategic management template

used for developing new business models and documenting
existing ones. It offers a visual chart with elements describing a
firm's or product's value proposition, infrastructure, customers, and
finances, assisting businesses to align their activities by illustrating
potential trade-offs.
• The nine "building blocks" of the business model design template

that came to be called the Business Model Canvas were initially
proposed in 2005 by Alexander Osterwalder.
The Business Model canvas and elements
• The canvas is made up of nine different elements.
1. Value Proposition
2. Customer Segments
3. Key Partners
4. Key Activities
5. Customer Relationships
6. Key Resources
7. Channels
8. Cost Structure
9. Revenue Streams
Value Proposition
• The collection of products and services a business offers to meet the needs of its
customers. According to Osterwalder, a company's value proposition is what
distinguishes it 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

Customer Segments
• Customer segments: To build an effective business model, a company must

identify which customers it tries to serve. Various sets of customers can be
segmented based on their different needs and attributes to ensure appropriate
implementation of corporate strategy to meet the characteristics of selected
groups of clients. The different types of customer segments include:
• Mass market: There is no specific segmentation for a company that follows

the mass market element as the organization displays a wide view of potential
clients: e.g. car.
•Niche market: Customer segmentation based on specialized needs and
characteristics of its clients: e.g. Rolex.
•Segmented: A company applies additional segmentation within existing

customer segment. In the segmented situation, the business may further
distinguish its clients based on gender, age, and/or income.
•Diversify: A business serves multiple customer segments with different

needs and characteristics.
Key Partners
• Partner network: In order to optimize operations and reduce risks of

a business model, organizations usually cultivate buyer-supplier
relationships so they can focus on their core activity.
• List the key partnerships your business leverages or relies upon for
success. Include the resources or value your business gets from these
partnerships
Key Activities
• Key Activities In some ways this is one of the most obvious parts of
the canvas.
• The most important activities you need to do as a company in order
for your model to work. In other words, these are the actions you take
to maintain your customer relationships, to work with your partners.
Which departments in your enterprise are responsible for which
actions?
Customer Relationships
To ensure the survival and success of any businesses, companies
must identify the type of relationship they want to create with
their customer segments.Various forms of customer relationships
include:
• Personal assistance: Assistance in a form of employee-customer
interaction. Such assistance is performed during sales and/or
after sales.
• Dedicated personal assistance: The most intimate and hands-on
personal assistance in which a sales representative is assigned to
handle all the needs and questions of a special set of clients.
•Self service: The type of relationship that translates from the
indirect interaction between the company and the clients. Here, an
organization provides the tools needed for the customers to serve
themselves easily and effectively.
•Communities: Creating a community allows for direct
interactions among different clients and the company. The
community platform produces a scenario where knowledge can be
shared and problems are solved between different clients.
•Co-creation: A personal relationship is created through the
customer's direct input to the final outcome of the company's
products/services.
Key Resources
• Key resources: The resources that are necessary to create value for
the customer. They are considered assets to a company that are needed
to sustain and support the business.
• These resources could be :
• human
• financial
• Physical
• intellectual
Channels
• Channels In this section you should think about and summarise the
ways you will reach your Customer Segments. Word of mouth,
advertising and social media are all common Channels.
• There may also be other ways that are important to you such as
community or business networks. How will you maintain contact with
customers if an ongoing relationship is important, as it might be with
funders for instance? It’s worth capturing how you’ll approach this so
you can see the implications on Key Resources and staff costs.
Cost Structure
• This describes the most important monetary consequences
while operating under different business models.
• Classes of business structures:
• Cost-driven – This business model focuses on minimizing all costs
and having no frills: e.g. low-cost airlines.
• Value-driven – Less concerned with cost, this business model
focuses on creating value for products and services: e.g. Rolex.
•Characteristics of cost structures:
• Fixed costs – Costs are unchanged across different applications:
e.g. salary, rent.
• Variable costs – Costs vary depending on the amount of
production of goods or services: e.g. music festivals.
• Economies of scale – Costs go down as the amount of goods are
ordered or produced.
• Economies of scope – Costs go down due to incorporating other
businesses which have a direct relation to the original product.
Revenue Streams
• Revenue streams: The way a company makes income from each customer
segment. Several ways to generate a revenue stream:
• Asset sale – (the most common type) Selling ownership rights to a physical
good: e.g. retail corporations.
• Usage fee – Money generated from the use of a particular service
• Subscription fees – Revenue generated by selling access to a continuous
service: e.g. Netflix.
• Licensing – Revenue generated from charging for the use of a protected
intellectual property.
• Advertising – Revenue generated from charging fees for product
advertising

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BUSINESS MODEL CANVAS AND MVP

• The Business Model Canvas is a strategic management template

• The nine "building blocks" of the business model design template

• The value propositions may be:

• Qualitative – overall customer experience and outcome

• Customer segments: To build an effective business model, a company must

• Mass market: There is no specific segmentation for a company that follows

•Segmented: A company applies additional segmentation within existing

•Diversify: A business serves multiple customer segments with different

• Partner network: In order to optimize operations and reduce risks of

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