The Business Model Canvas: What It Is and Why You Need It

Earlier this week, I watched Alex Osterwalder introduce his Business Model Canvas to a group of avid listeners at MIT’s Legatum center and walked away from his presentation wishing that more Entrepreneurs used it. Osterwalder’s Canvas asks managers to think about their business model in the way that I think about it as a potential investor (at least at a high level.)

The canvas asks:

• What value do you deliver to the customer?
• What key activities do you need to perform to deliver that value?
• What key resources does your value proposition require?
• What type of relationship do you have/want to have with your customer?
• What are your go to market channels?
• What are your key customer segments?
• What does your cost structure look like?
• What makes up your revenue stream?

These questions are by no means exhaustive, but you’d be startled how often founders and CEOs can’t answer them or haven’t thought about them. That’s a problem, because being able to describe your business in these terms signals to potential investors that you’ve thought about how your business activities align to aid you in achieving your goals.

Osterwalder’s Canvas also helps you to identify any gaps that may exist in your plan and where an opportunity may lie for a potential innovation or pivot.  Try it out for yourself, and let me know what you think!