LESSON NO.
BUILDING
Business Models
GEENT01X: THE ENTREPRENEURIAL MIND
LEARNING TOPICS
What is a Business Model?
Business Model Canvas
Value Proposition Canvas
The Lean Canvas: A Business Model Canvas Alternative
“Today countless innovative business models are emerging.
Entirely new industries are forming as the old ones
crumble. Upstarts are challenging the old guard, some of
whom are struggling feverishly to reinvent themselves.”
—Alexander Osterwalder and Yves Pigneur, authors
of Business Model Generation: A Handbook for
Visionaries, Game Changers, and Challengers”
What is a Business Model?
BUSINESS MODEL
A business model is a conceptual framework that describes how a company creates, delivers, and
extracts value.
It includes a network of activities and resources to create a sustainable and scalable business that
delivers value to target customers.
Business models help entrepreneurs generate value and scale.
What is the difference of Business
Model vs. Business Plan?
BUSINESS PLAN
A business plan is a formal document that provides background and financial information about
the company, outlines your goals for the business, and describes how you intend to reach them.
A business plan supports the business model and explains the steps necessary to attain the business
model’s goals.
THE FOUR PARTS OF A BUSINESS MODEL
THE OFFERING CUSTOMERS INFRASTRUCTURE FINANCIAL VIABILITY
The offering identifies what Customers The infrastructure Defines the revenue
you are offering to a include the people generally includes all the and cost structures a
particular customer segment, who populate the resources (people, business needs to meet
the value generated for those segments of a technology, products, its operating expenses
customers, and how you will market that your suppliers, partners, and financial
reach and communicate with offering is facilities, cash, etc.) that obligations.
them. serving. an entrepreneur must
have in order
The offering includes the to deliver the CVP.
customer value proposition
(CVP), which describes
exactly what products or
services your business offers
and sells to customers.
BUSINESS MODEL CANVAS
BUSINESS MODEL CANVAS
The BMC, introduced in 2008 by Swiss business theorist Alexander Osterwalder, divides the
business model’s four parts into nine components in order to provide a more thorough overview of
the logic of the business model.
Business model canvas (BMC): a one-page plan that divides the business model into nine
components in order to provide a more thorough overview.
NINE COMPONENTS OF BUSINESS MODEL CANVAS
1. Customer Value Proposition: the CVP is designed to solve a customer problem or meet a need.
2. Customer Segments: a customer segment is a part of the customer grouping of a market.
3. Channels: The value proposition is delivered through communication, distribution, and sales channels.
(example: online, store, and/or through word of mouth)
4. Customer Relationships: Customer relationships go beyond just buying and selling; they depend on
engendering positive feelings about your business, building a sense of customer identity, and motivating
customers to want to bring their friends into the relationship.
5. Key Activities: What are the most important activities that the company participates in to get the job done?
6. Key Resources: Resources are what you need to develop the business, create products and services, and deliver
on your CVP. Resources take many forms and include people, technology, information, equipment, and
finances.
7. Key Partners: Entrepreneurs are not able to do everything by themselves, so partnering with suppliers,
associates, and distributors is a logical option, not only for strategic purposes but also for efficiency.
8. Revenue Streams: Revenue is generated if a successful value proposition is delivered.
9. Cost Structure: The cost structure represents all expenses required to execute and run the business model.
EXAMPLE OF A BUSINESS MODEL CANVAS USING AN IDEA FOR A NEW RETAIL STORE THAT SELLS TRENDY T-SHIRTS
Why do you think this tool is called
the Business Model Canvas?
VALUE PROPOSITION CANVAS
WHAT IS THE VALUE PROPOSITION CANVAS?
The Value Proposition Canvas is a framework which can help ensure that a product or
service is positioned around what the customer values and needs.
The Value Proposition Canvas was initially developed by Dr Alexander Osterwalder as
a framework to ensure that there is a fit between the product and market.
It is a detailed tool for modeling the relationship between two parts of the Osterwalder’s
broader Business Model Canvas; customer segments and value propositions.
CUSTOMER PROFILE
Gains – the benefits which the customer expects and needs, what would delight customers and
the things which may increase likelihood of adopting a value proposition.
Pains – the negative experiences, emotions and risks that the customer experiences in the process
of getting the job done.
Customer jobs – the functional, social and emotional tasks customers are trying to perform,
problems they are trying to solve and needs they wish to satisfy.
A customer profile should be created for each customer segment, as each segment has distinct ‘jobs
to be done’, pains and gains.
VALUE MAP
Gain creators – how the product or service creates customer gains and how it offers
added value to the customer.
Pain relievers – a description of exactly how the product or service alleviates customer
pains.
Products and services – the products and services which create gain and relieve pain,
and which underpin the creation of value for the customer.
THE VALUE PROPOSITION CANVAS IS FORMED AROUND TWO BUILDING BLOCKS – CUSTOMER PROFILE AND A COMPANY’S VALUE PROPOSITION
THE LEAN CANVAS: A BUSINESS MODEL CANVAS ALTERNATIVE
LEAN CANVAS
Lean Canvas: an adapted version of the BMC that was created to better address the
needs of startup entrepreneurs.
Places less emphasis on customer segments but more emphasis on likely first adopters
Begins with a problem rather than value proposition
Addresses key metrics and suggests focusing on one key metric to track how your
business is doing
Addresses competitive advantage and uniqueness, called “unfair advantage”
THE LEAN CANVAS TYPICALLY CONSISTS OF NINE KEY ELEMENTS:
Problem: This section outlines the specific problem or pain point that your product or service aims
to solve.
Solution: Describe how your product or service addresses the identified problem. This is usually a
brief description of the value proposition.
Key Metrics: Identify the key performance indicators (KPIs) you will use to track your business’s
success.
Unique Value Proposition (UVP): Clearly states what makes your product or service unique and
why it’s better than existing alternatives.
Channels: Outline the marketing and distribution channels you plan to use to reach your target
customers.
Customer Segments: Defines the specific groups or types of customers your business is targeting.
Cost Structure: Lists the main costs associated with running your business.
Revenue Streams: Describes how your business will make money, including pricing strategies and
revenue sources.
Unfair Advantage: Identifies any advantages or unique factors that give your business a
competitive edge.
LEAN CANVAS EXAMPLE
