Summary BMC book
Business model: describes the rationale of how an organisation creates, delivers and captures value.
Can be best described through nine building blocks that show the logic of how a company intends to
make money. These blocks cover the four main areas of a business: Customers, Offer, Infrastructure
and Financial viability.
The business model is a blueprint for a strategy to be implemented through organisational
structures, processes and systems. This concept can become a shared language that allows you to
easily describe and manipulate business models to create new strategic alternatives. Without this, it
would be difficult to challenge assumptions about one’s business model and innovate successfully.
These are the nine building blocks:
1) Customer segments (CS)
2) Value propositions (VP)
3) Channels (CH)
4) Customer relationships (CR)
5) Revenue streams (R$)
6) Key resources (KR)
7) Key activities (KA)
8) Key partnerships (KP)
9) Cost structure (C$)
Customer segments: defines the different groups of people/organisations a company aims to reach
and serve.
Customers are the heart of the business model. In order to satisfy customers, they can be grouped
into segments with common needs, behaviours etc. These different segments are needed when:
Their needs require and justify a distinct offer.
They are reached through different distribution channels.
They require different types of relationships.
They have substantially different profit abilities.
They are willing to pay for different aspects of the offer.
There can be one customer segment (mass market, niche market) or multiple segments (segmented,
diversified (2 segments), multi-sided platforms/markets (2+)). An organisation needs to make a
conscious decision about which segments to serve and ignore, once this is decided, the BMC can be
designed around the customer needs.
Value propositions: describes the bundle of products and services that create value for a specific
customer segment. Aka the benefits that a company offers customers. Value propositions can be
quantitative (price, speed of service) or qualitative (design, customer experience). The following
elements can also lead to value creation:
Newness: satisfy a new set of needs, because there was no similar offering before.
Performance: improving a service or product.
Customization: tailoring to the specific needs of each individual customer.
Getting the job done: creating value by simply helping the customer get a job done.
Design: standing out because of superior design.
Brand/status: customers may find value in the act of displaying a specific brand.
Price: offering similar value at a lower price to satisfy the price-sensitive customer segments.
Cost reduction: helping customers reduce costs.
Risk reduction: customers value reducing the risks they take when purchasing something.
Accessibility: making products/services available to customers who earlier lacked access.
Convenience/useability: creating value by making things more convenient or easier to use.
Business model: describes the rationale of how an organisation creates, delivers and captures value.
Can be best described through nine building blocks that show the logic of how a company intends to
make money. These blocks cover the four main areas of a business: Customers, Offer, Infrastructure
and Financial viability.
The business model is a blueprint for a strategy to be implemented through organisational
structures, processes and systems. This concept can become a shared language that allows you to
easily describe and manipulate business models to create new strategic alternatives. Without this, it
would be difficult to challenge assumptions about one’s business model and innovate successfully.
These are the nine building blocks:
1) Customer segments (CS)
2) Value propositions (VP)
3) Channels (CH)
4) Customer relationships (CR)
5) Revenue streams (R$)
6) Key resources (KR)
7) Key activities (KA)
8) Key partnerships (KP)
9) Cost structure (C$)
Customer segments: defines the different groups of people/organisations a company aims to reach
and serve.
Customers are the heart of the business model. In order to satisfy customers, they can be grouped
into segments with common needs, behaviours etc. These different segments are needed when:
Their needs require and justify a distinct offer.
They are reached through different distribution channels.
They require different types of relationships.
They have substantially different profit abilities.
They are willing to pay for different aspects of the offer.
There can be one customer segment (mass market, niche market) or multiple segments (segmented,
diversified (2 segments), multi-sided platforms/markets (2+)). An organisation needs to make a
conscious decision about which segments to serve and ignore, once this is decided, the BMC can be
designed around the customer needs.
Value propositions: describes the bundle of products and services that create value for a specific
customer segment. Aka the benefits that a company offers customers. Value propositions can be
quantitative (price, speed of service) or qualitative (design, customer experience). The following
elements can also lead to value creation:
Newness: satisfy a new set of needs, because there was no similar offering before.
Performance: improving a service or product.
Customization: tailoring to the specific needs of each individual customer.
Getting the job done: creating value by simply helping the customer get a job done.
Design: standing out because of superior design.
Brand/status: customers may find value in the act of displaying a specific brand.
Price: offering similar value at a lower price to satisfy the price-sensitive customer segments.
Cost reduction: helping customers reduce costs.
Risk reduction: customers value reducing the risks they take when purchasing something.
Accessibility: making products/services available to customers who earlier lacked access.
Convenience/useability: creating value by making things more convenient or easier to use.
