What is Canvas Model? Definition of Canvas Model, Canvas Model Meaning and Concept
The canvas model is the tool to analyze and create business models in a simplified way. It is displayed globally on a canvas divided into the main aspects that involve the business and revolves around the value proposition that is offered.
The canvas model is used to go from idea to project and translate our idea into a business model. It is a "living" model, that is, we modify it as it develops, we validate clients, new ideas arise... that is why are used to complete it.
Origin of the canvas model
The canvas model was created and designed by Dr. Alexander Osterwalder and more information can be found in his book “Generation of business models”. This model is integrated into the lean-startup methodology that is based on finding and promoting new ways of creating, delivering and capturing value for the client through validated learning.
Benefits of using the canvas model
1. Improve comprehension: Use visual tools. This methodology encourages the creative thinking of the workers who create the canvas.
2. Broad points of focus: In this model, a constant vision of the business model is maintained from different perspectives: commercial, market, distribution channels...
3. Strategic analysis: In just one sheet you can see all the elements of the canvas. A simple way to get the most out of this tool.
How to generate a canvas model?
It logically shows the interconnection between the 9 basic aspects of a business model. Below, we show how a canvas model should be completed, in what order, and what each section of the canvas means.
1. Customer segment
Detect the needs of the market, the client. Our focus is always the customer and we must guide the product to their needs and desires.
In order to identify our client, we must put ourselves in their shoes and analyze what they think, feel, see, hear, what their problems are and the benefits that our product/service can bring them.
We must respond to:
- Who are we creating value for?
- Who are our most important clients?
2. Value proposition
It is the key piece of the entire business model. The value proposition or competitive advantage is the reason why the customer is going to buy from us and not from another. This includes what makes our product/service different and innovative.
You can innovate in different aspects such as the revenue model, business alliances, production processes, product/service delivery, brand...
We must respond to:
- What value are we delivering to our customers?
- What problem do we solve?
- What is the need we satisfy?
- What type of product do we offer?
3. Channels
Once we have defined our clients and the value proposal that we offer them, we have to reach them. If they don't know us, they won't buy from us. Here we are going to define the distribution channels of the product or service.
We must respond to:
- With what channels can we reach our customers?
- Which channels work best?
- Which of these channels are the most profitable?
4. Relationship with clients
We must communicate correctly with our clients and be aware of them. They are our central axis, so knowing how to define the relationship that we are going to have with each customer segment is essential for the success of a business.
We must respond to:
- What is the relationship we have with each of our customer segments?
- What kind of relationship do they expect?
- How much does it cost?
5. Income stream
For a business to be profitable and for us to survive in the market, we have to think about how to monetize it? That is, where are we going to get the billing?
We must respond to:
- What is our main line of income?
- How will our customers pay?
- What are our customers willing to pay for?
6. Key resources
Knowing what resources we have and those we must have to carry out our business activity is key when establishing the business plan. We must be cautious and prudent when defining these resources. We must always think about how to optimize them, that is, try to achieve the maximum possible productivity at the minimum cost.
We must respond to:
- What essential resources does our value proposition require?
7. Key activities
To carry out the value proposition that we want to offer our customers, certain activities are necessary to prepare the product before it reaches the market. In other words, here we think about the core of our business, what we will do in our day to day.
We must respond to:
- What core activity does our value proposition require?
- What are our channels?
- What are our sources of income?
8. Key allies
To carry out a business, it is essential to have allies. These allies can be;
A series of partners/collaborators: a good network of partners can help us reach the customer faster, backed by their reputation and experience.
Suppliers: those who provide us with the key resources to be able to offer the services/final product.
We must respond to:
- Who are our key partners in the market?
- Who are our suppliers?
9. Cost structure
Obviously, all this infrastructure has costs that we must pay and optimize. We must define what our priorities are and the fundamental expenses in the business from those that are not.
Having this structure very clear will help us not to deviate from the budgets and that the business fails due to financing problems.
We must respond to:
- What are the most important costs within our business model?
- Which key resources are the most expensive?
- Which key activities are the most expensive?
Here we see a completed example of a canvas model for the well-known brand Coca-Cola. With these guidelines, you may already be able to start turning your idea into a business project.
