Staying Competitive with the Business Model Canvas
Global competition and a continued weak economy have made innovation and growth a challenge for all companies, large and small. Where do I get the funds to invest in true innovation? What can I create that’s really different from the zillions of products and services already available? It’s hard work rethinking business strategy. So when I run across tools that help make the job easier, I am quick to test them out.
Today, let’s look at two favorites of mine, Osterwalder & Pigneur’s Business Model Generation book and their Business Model Canvas. I’ve been through innumerable MBA classes (and even teach a bunch of them now 🙂 and this is the first time I’ve seen a tool that helps you quickly get to the heart of your business strategy and what makes you truly competititve.
The Business Model Canvas is a visual look at the core elements of your business. It breaks your strategy down into nine (9) pieces and lets you see the interactions and flows.
On the left are the cost-related parts of the business: Key Resources, Key Activities, Partnerships, and their associated Costs. On the right are the revenue-related parts of the business: Customer Segments, Customer Relationships, Channels, and associated revenue. Bridging the two parts of the business is the all-important Value Proposition.
What’s important about the Business Model Canvas is that it encourages you to look at these nine pieces of your business individually, reworking each until you find that sweet spot where you have a competitive advantage that customers are willing to pay for.
Not making any headway with your current products in your current markets? Maybe it’s time to pivot your business and rework your business model. For those of you new to the pivot, from Forbes:
In such situations, therefore, you need to honestly ask yourself, What is the market telling me? Can I truly be the best in this space? Is there some other, higher-value way to leverage what I’ve created that would make for a more successful business?
In short, is it time to pivot the business?
Pivoting is not necessarily a failure, nor even very uncommon in the consumer technology arena. As Tagged founder and CEO Greg Tseng pointed out last year, many of the Web’s great businesses started out as something else. YouTube started out as a video dating site. Twitter began life as a group SMS messaging venture. Groupon’s initial incarnation was as ThePoint.com, an online platform for collective political action.
In today’s highly competitive environment, the best approach is one of flexibility. If something’s not working, stop banging your head against the wall…do something different. And make use of the Business Model Canvas to help guide you through the process.