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Chapter 14: Business Model Canvas

Chapter 14: Business Model Canvas

Video: Business Model Canvas & Lean Canvas: Visualise, Align, and Strengthen Your Case Solution

Learning Objectives

By the end of this chapter, you should be able to:

  • understand how an organisation creates, delivers, and captures value
  • identify relationships between customers, activities, resources, costs, and revenues
  • identify gaps or inconsistencies in a business model
  • use the Business Model Canvas to test a recommendation
  • connect a proposed strategy to the broader business model

Why This Matters

Many teams jump directly to recommendations without understanding how the business actually works. The result is often a collection of initiatives that don't fit together. The Business Model Canvas provides a one-page view of the business model. Check out the existing Masterclass video to learn more about using it as a blueprint to show how a company creates, delivers, and captures value.

The Nine Building Blocks

  • Key Partners: Who helps the organisation create and deliver value?
  • Key Activities: What must the organisation do?
  • Key Resources: What assets and capabilities are required?
  • Value Proposition: What value does the organisation deliver?
  • Customer Relationships: What relationship does each customer segment expect?
  • Customer Segments: Who is the organisation serving?
  • Channels: How does the organisation reach customers?
  • Cost Structure: What are the major costs?
  • Revenue Streams: How does the organisation make money?

Discover Your Mad Skills Principle

Everything must fit together logically.

A change in one part of the business model can affect several others. For example: A new premium customer segment may require:

  • a new value proposition;
  • different channels;
  • different customer relationships;
  • new resources;
  • different activities;
  • a different cost structure;
  • new revenue streams.

That is why the Canvas is so useful for testing strategic coherence.

Deciphering Case Characteristics

The Business Model Canvas is particularly useful when cases involve:

  •  startups;
  •  business model innovation;
  • digital transformation;
  • new products;
  • new customer segments;
  • platform businesses;
  • revenue model changes;
  • strategic pivots.

Lean Canvas

For startup-oriented cases, a Lean Canvas can be useful and highlights elements such as:

  • the problem;
  • top customer problems;
  • solution;
  • unique value proposition;
  • unfair advantage;
  • early adopters;
  • key metrics;
  • channels;
  • costs;
  • revenue.

The important point is not which Canvas you choose. It is whether the Canvas helps you understand the business decision.

Coach's Lens

One of the best uses of the Business Model Canvas in a competition is to compare the Current Business Model with the Proposed Business Model.

  • Ask: What changes?
  • And then: What else must change because of that change?

Use the Canvas to test assumptions, identify gaps or inconsistencies, and connect the proposed solution to analysis, alternatives, and implementation.

Common Mistakes

  • Filling in the Canvas Without Thinking
  • The objective is understanding, not completion.
  • Ignoring Relationships
  • The blocks interact.
  • Focusing Only on Revenue
  • A revenue model cannot be separated from the value proposition and customer.
  • Showing the Entire Canvas When It Isn't Necessary
  • Use the parts that answer the case question.

Mad Skills Drill

Create a Business Model Canvas for a company. Then change only one element. For example: Change the customer segment. Now identify every other block that might need to change. How many connections did you discover?

Chapter Summary

The Business Model Canvas helps teams see the organisation as an integrated system. It is particularly powerful when the recommendation changes how the company creates, delivers, or captures value.

Key Takeawys

✓ The Business Model Canvas provides a holistic view of how an organisation creates, delivers, and captures value through nine interconnected building blocks.

Analyse the relationships between customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key activities, key partnerships, and cost structure rather than viewing each element independently.

✓ A strong business model aligns customer needs with organisational capabilities while generating sustainable financial performance.

✓ Changes to one component of the Business Model Canvas often influence multiple other components, making it essential to consider the business model as an integrated system.

✓ Use the Business Model Canvas to identify gaps, inefficiencies, risks, and opportunities for innovation rather than simply describing the organisation's current operations.

✓ Evaluate whether the proposed recommendation strengthens the organisation's value proposition, improves customer experience, increases operational efficiency, or enhances long-term profitability.

✓ Consider how changing market conditions, emerging technologies, customer preferences, or competitive pressures may require the business model to evolve.

✓ The Business Model Canvas is most effective when combined with tools such as Value Chain Analysis, Customer Journey Mapping, Porter's Five Forces, SWOT Analysis, Financial Analysis, and Blue Ocean Strategy to develop integrated strategic recommendations.

Looking Ahead

The Business Model Canvas focuses on the business model, but businesses are also organisations made up of people, structures, systems, and cultures. The next tool helps us understand those internal organisational connections.

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