The business model canvas

The business model canvas was developed in 2009 by Alexander Osterwalder, and has quickly become the standard tool to describe in one single document how an organization creates value. The canvas summarizes what the organization does, for whom, how, with what, and how much does it cost. The canvas facilitates analyzing all the components that are necessary to transform inputs (cost and resources) into outputs (market and revenue), using a unique value proposition.





A business model summarizes how all the components of a business correlate in a way that allows creating costumer value, in a sustainable way. The current standard to analyze the business model of an organization is the canvas, proposed by Alexander Osterwalder in his text Business Model Generation in 2009. The model is actually the result of the collaboration with more than 400 specialists in innovation, in 45 countries. The canvas template can be downloaded for free from the web www.businessmodelgeneration.com.

The canvas has nine components:

1. What is our value proposition ...
2. ... for which costumer segments
3. ... through which channels
4. ... with what sort of relationship
5. ... with which activities
6. ... with which key resources
7. ... with which key partners
8. Finally, all these processes end up generating a cost structure ....
9. ... and a revenue

Building a business model starts by creating a value proposition (1), that arises from our key activities (5), that use key resources (6), or key partners (7), with whom we have to create strategic alliances. This value proposition has to go through specific channels (3), to finally reach a defined group of costumers (2), from whom we will have to establish some feed-back in order to adjust again our value proposition to the market movements (4). We will end up generating an income (9), hopefully higher than our running costs (8), that should be able to support this process in a sustainable way.

Innovating means, all in all, working on our business model, fixing what goes wrong, and taking advantage of unmet costumer needs. Innovating in our business model means then defining new value propositions, new channels, new costumers and new ways of interacting with them, finding or generating new critical activities, discovering or developing new critical resources and improving those we already have, finding new partners, changing our cost and revenue structure, an so on ...

Analyzing and transforming the business model of an organization turns out to be one of the best ways of approaching innovation in a systematic way.