Business Model Generation
Section 1: Canvas
The Business Model Canvas
A business model describes the rationale of how an organization creates, delivers, and captures value
A business model can best be described through nine basic building blocks that show the logic of how
a company intends to make money. The nine blocks cover the four main areas of a business:
customers, offer, infrastructure, and financial viability. The business model is like a blueprint for a
strategy to be implemented through organizational structures, processes, and systems.
01 Customer Segments
The Customer Segments Building Block defines the different groups of people or organizations an
enterprise aims to reach and serve.
Customers comprise the heart of any business model. Without customers, no company can survive.
In order to better satisfy customers, a company may group them into distinct segments with
common needs, common behaviours, or other attributes. An organization must make a conscious
decision about which segments to serve and which segments to ignore. One this decision is made, a
business model can be carefully designed around a strong understanding or specific customer needs.
There are different types of Customer Segments.
Mass market
Business model focused on mass markets don’t distinguish between different Customer Segments.
The Value Propositions, Distribution Channels, and Customer Relationships all focus on one large
group of customers with broadly similar needs and problems.
Niche market
Business model targeting niche markets cater to specific, specialized Customer Segments. The Value
Propositions, Distribution Channels, and Customer Relationships are all tailored to the specific
requirements of a niche market.
Segmented
Some business model distinguish between market segments with slightly different needs and
problems.
Diversified
An organization with a diversified customer business model serves two unrelated Customer
Segments with very different needs and problems.
Multi-sides platforms
Some organizations serve two or more interdependent Customer Segments. Both segments are
required to make the business model work.
, 02 Value Propositions
The Value Propositions Building Block describes the bundle of products and services that create
value for a specific Customer Segment.
The Value Proposition is the reason why customers turn to one company over another. It solves
customer problems or satisfies a customer need. Each Value Proposition consists of a selected bundle
of product or services that caters to the requirements of a specific Customer Segment. Some Value
Propositions may be innovative and represent a new or disruptive offer. Others may be similar to
existing market offers, but with added features and attributes. Values can be quantative or
qualitative.
Elements from the following non-exhaustive list can contribute to customer value creation.
Newness
Some Value Propositions satisfy an entirely new set of needs that customers previously didn’t
perceive because there was no similar offering.
Performance
Improving product or service performance has traditionally been a common way to create value. But
improved performance has its limits.
Customization
Tailoring products and services to the specific needs of individual customers or Customer Segments
creates value. The concepts of mass customization and customer co-creation have gained
importance. This approach allow for customized products and services, while still taking advantage of
economies of scale.
“Getting the job done”
Value can be created simply by helping a customer get certain jobs done.
Design
Design is an important but difficult element to measure. A product may stand out because of
superior design.
Brand or status
Customers may find value in the simple act of using a specific brand.
Price
Offering similar value at a lower price is a common way to satisfy the needs of price-sensitive
Customer Segments. But low-price Value Propositions have important implications for the rest of a
business model.
Cost reduction
Helping customer reduce costs is an important way to create value.
Section 1: Canvas
The Business Model Canvas
A business model describes the rationale of how an organization creates, delivers, and captures value
A business model can best be described through nine basic building blocks that show the logic of how
a company intends to make money. The nine blocks cover the four main areas of a business:
customers, offer, infrastructure, and financial viability. The business model is like a blueprint for a
strategy to be implemented through organizational structures, processes, and systems.
01 Customer Segments
The Customer Segments Building Block defines the different groups of people or organizations an
enterprise aims to reach and serve.
Customers comprise the heart of any business model. Without customers, no company can survive.
In order to better satisfy customers, a company may group them into distinct segments with
common needs, common behaviours, or other attributes. An organization must make a conscious
decision about which segments to serve and which segments to ignore. One this decision is made, a
business model can be carefully designed around a strong understanding or specific customer needs.
There are different types of Customer Segments.
Mass market
Business model focused on mass markets don’t distinguish between different Customer Segments.
The Value Propositions, Distribution Channels, and Customer Relationships all focus on one large
group of customers with broadly similar needs and problems.
Niche market
Business model targeting niche markets cater to specific, specialized Customer Segments. The Value
Propositions, Distribution Channels, and Customer Relationships are all tailored to the specific
requirements of a niche market.
Segmented
Some business model distinguish between market segments with slightly different needs and
problems.
Diversified
An organization with a diversified customer business model serves two unrelated Customer
Segments with very different needs and problems.
Multi-sides platforms
Some organizations serve two or more interdependent Customer Segments. Both segments are
required to make the business model work.
, 02 Value Propositions
The Value Propositions Building Block describes the bundle of products and services that create
value for a specific Customer Segment.
The Value Proposition is the reason why customers turn to one company over another. It solves
customer problems or satisfies a customer need. Each Value Proposition consists of a selected bundle
of product or services that caters to the requirements of a specific Customer Segment. Some Value
Propositions may be innovative and represent a new or disruptive offer. Others may be similar to
existing market offers, but with added features and attributes. Values can be quantative or
qualitative.
Elements from the following non-exhaustive list can contribute to customer value creation.
Newness
Some Value Propositions satisfy an entirely new set of needs that customers previously didn’t
perceive because there was no similar offering.
Performance
Improving product or service performance has traditionally been a common way to create value. But
improved performance has its limits.
Customization
Tailoring products and services to the specific needs of individual customers or Customer Segments
creates value. The concepts of mass customization and customer co-creation have gained
importance. This approach allow for customized products and services, while still taking advantage of
economies of scale.
“Getting the job done”
Value can be created simply by helping a customer get certain jobs done.
Design
Design is an important but difficult element to measure. A product may stand out because of
superior design.
Brand or status
Customers may find value in the simple act of using a specific brand.
Price
Offering similar value at a lower price is a common way to satisfy the needs of price-sensitive
Customer Segments. But low-price Value Propositions have important implications for the rest of a
business model.
Cost reduction
Helping customer reduce costs is an important way to create value.
