Uses and applications of the Business Model Canvas
When starting a business or when a company wants to enter a new stage of growth, it is essential to have strategies and tools that allow it to face challenges with perspective. In such situations, the Business Model Canvas comes into play, a formula increasingly used in large companies and by innovative entrepreneurs that enables them to take a step forward with greater confidence. Below, we explain the main uses and applications of the so-called ‘Business Model Canvas’.
An expert who revolutionized the way business creation and management processes are approached is Alexander Osterwalder. This Swiss researcher is credited with creating one of the most important and insightful innovation methods of recent decades: the Business Model Canvas. What exactly does the Canvas Method consist of? What are its strengths? How can professionals and managers apply it in their companies and businesses?
What is the Business Model Canvas?
What is the Business Model Canvas and what is it used for? This is the first question readers may have. The Business Model Canvas is a business intelligence tool that provides a clear and simple overview of a project that is being developed or of changes that a company plans to implement. Through a structured framework, it creates a map of the key elements needed to achieve the objective.
Elements of the Business Model Canvas (BMC)
The structure of the Business Model Canvas is based on the following elements:
- Customer segments
Who are we targeting? What is their profile? What competition exists in this sector?
- Competitive advantages
What are the differentiating values of your product/service? What does your value proposition bring to the market? It may be based on unique features, price, payment methods, etc.
- Revenue streams
Define the company’s business lines, product/service pricing, shipping costs if applicable, and other additional sources that may contribute to revenue.
- Channels to reach the target audience
Online, physical stores, or a mix of both. Consider user experience, delivery times, and other key aspects that may also become competitive advantages.
- Customer service
The company’s identity in terms of how it communicates with users, communication channels, and pre- and post-sales service.
- Human and material resources
A key element, as it involves balancing income and costs to ensure a positive final result for the company.
- Strategic partnerships
In a globalized world, collaboration and synergies between companies play an important role. This should be considered when designing a Business Model Canvas.
What is the Business Model Canvas used for?
This tool offers several key advantages for professionals and organizations that use it:
- Better definition of products and services
- Identification of key business aspects: competitive advantages, differentiators, sales channels, etc.
- Strategic planning including revenue and cost forecasts to achieve profitability
- Reduction of risks that could lead to business failure
- Assessment of the future potential of a business idea
Real examples of the Business Model Canvas
Many leading companies, through their CEOs and general managers, use the Business Model Canvas to guide growth strategies and product launches. A clear example is Netflix, which ended 2023 with 260.2 million subscribers. Its Canvas model could be structured as follows:
- Customer segments: Digital entertainment consumers across a broad audience profile, with personalized recommendations based on viewing preferences.
- Value proposition: Exclusive content, original productions, and competitive pricing compared to similar platforms.
- Channels: Website, smartphone apps, smart TVs, and tablets.
- Revenue streams: Monthly subscriptions with different plans, as well as participation in film and series production.
- Resources: In-house production, content distribution networks, partnerships with audiovisual companies, and continuous innovation based on market trends.
- Strategic partners: Film studios, production companies, communication agencies, and internet service providers.
This is a simplified example of how a company like Netflix might structure its Business Model Canvas to position itself in the market and reach its target audience.
Difference between Canvas and Lean Canvas
The Lean Canvas is also a strategic planning tool used by companies and startups. Due to its similarity in name, many wonder: what is the difference between Canvas and Lean Canvas?
- Lean Canvas is recommended for startups, as it focuses on risks and potential obstacles.
- Business Model Canvas focuses on growth, consolidation, and strategic business development.
Both tools are essential for entrepreneurs and business leaders. They are taught in specialized programs such as the Master’s in Entrepreneurship and the Executive MBA at EAE Barcelona. Both Canvas and Lean Canvas are essential tools for professionals aiming to grow brands and organizations.
