Alexander Osterwalder’s business model canvas should ring a bell or two. As one of the most popular business model methods of today, It has been downloaded more than 5 million times, and over 1 million books about it have been sold. That’s because it’s practical, intuitive and visual. Plus, it’s so easy that even business rookies could understand it. However, despite its success, the model does not always deliver what is expected.
That’s why I want to share some tips & tricks to make the canvas model work its magic.
1. Define your scope and ambition. Start by asking yourself some crucial questions. Are you looking at the business model for the entire organization or just for a division, department or team? What is your ambition and what are you looking for? Do you want to create a new service or product? Or is it your ambition to find the blue ocean and create an entire new market? Are you prepared to question everything and turn around your company’s mission?
If you ask the right questions about scope and ambition, you will immediately perceive who should be involved and if, indeed, the canvas model is suitable for your challenges. Just be aware that although the model has a lot of value, it is not the appropriate answer to every business problem. For start-ups for instance, we propose to start with the ‘Lean Canvas’ model. And for coming up with new products, services, and value propositions we propose to start with the ‘Value Proposition Canvas‘.
2. Scan your business environment. To create a competitive business model that makes sense in today’s environment, you must have an understanding of what surrounds you and how it might evolve.Which customer needs and preferences are evolving? Which game-changing technology trends will impact you? Try to involve trendwatchers and industry experts in your canvas sessions.
You can use the business model canvas environment for this.
3. Integrate the business model canvas into a broader plan. To be effective, the Canvas should be part of a broader approach, namely `Business Model Generation’. This consists of several elements including the canvas model itself, business model patterns, design, strategy and process. Leveraging the canvas model on its own will not get you very far.
4. Step out of your comfort zone! Thinking outside of the box is not enough. Think in extremes. Let go of the yes-but attitude and be open to all options. Try applying ‘what-if’ questions to find possible options. For example: what could you do with your current skills and resources, if you weren’t doing what you do? What if your product or service was free? What if you were to only sell online?
5. Think beyond industry boundaries. Markets are artificial constructs that we have created to make sense of the business world. There is no reason to stay within their borders. This is a very tricky one – which many fail at – but you should always look beyond your traditional industry borders to spot new opportunities. Try looking at markets that are complementary in the minds of your customers. Amazon, Google, Facebook, Apple: they are all doing this. They all use an asymmetric business model that crosses industries, by forcing profits to migrate from one industry into another. By competing in multiple markets in parallel you can create a sustainable competitive advantage.
6. Continuously gather feedback and update your business model. Use the canvas as a living document and update it regularly. Foster an agile mentality of planning, verification and interaction. Realize that your model is merely a set of hypotheses that need to be tested and validated with actual customers. Experiment with your model, gather feedback and change it until you settle on the best model. And then keep on updating it regularly. In a volatile, uncertaint, Complex, and ambiguit (VUCA) world Ambiguity, you cannot afford not to.
Alexander Osterwalder’s business model canvas is one of the most effective tools on the market. You just need to apply it to the right challenges and use it as it’s intended.
“In today’s climate, it’s best to assume that most business models, even successful ones, will have a short lifespan.”
Reach out to us if you’re planning to work with the canvas and you need help doing this. We can play different roles (as project leader, facilitator, trend watcher, challenger, etc.) in your journey to find the right business model.