The Business Model Canvas, or BMC, is a tool created in the last five years, based on work done by two Europeans Alex Osterwalder and Yves Pigneur. It has been developed by Angela Cluff and Bernard Ross at =mc to make it useful for charities and NGOs keen to plot how their social business works – in fundraising, in service delivery, or running social enterprises.
The canvas provides an integrated process for establishing the offering / market fit. This is done through the structure of the canvas. If you draw a vertical line straight in the middle, you’ll have two sides: the left which addresses the Offering elements and the right which addresses the Market components. The canvas is joined in the middle where the Value Proposition is formed. Underneath are ways of exploring the cost and income base.
Nine Key Elements
The canvas, in essence, asks you to explain how you existing or new business idea works in terms of nine key interlinked elements. It captures the essential components that make up the business model. Here is what every section in the canvas means and the kinds of content in it:
- Key Partners – individuals or agencies, normally external, who contribute to some part of your business canvas. These can be suppliers, affiliates, vendors and even competitors. You may explore here what resources/services you get from partners and link it to how they add value.
- Key Activities – those activities that directly or indirectly contribute to delivering the value proposition to customers/consumers. So they can include elements of the value proposition, but also how they enable distribution channels, customer relationships and revenue streams.
- Key Resources – the resources that contribute to the value proposition, channels, relationships and revenue. These resources may be tangible or intangible- so might include intellectual property, brand, hardware, software, finance, facilities and people.
- Value Proposition – at the heart of the BMC is the Value Proposition- see below for more on this. A Value Proposition describes the actual and perceived value you deliver to your customer and the challenge you’re solving for them/need you’re meeting. Elements of a VP can include ease of use, design, brand/status, price etc.
- Customer Relationships – this covers the type of relationship each segment – consumer, donors, user, beneficiary- needs. For example, personal attention, self-service, sense of community, co-creation etc. You can also describe the relationship frequency- one-off, regular, infrequent.
- Distribution Channels – this explores how you plan to reach your customers- online, peer to peer, retail, wholesale, direct marketing etc. You may of course have multiple channels- and different channels for acquisition and maintenance. And indeed different channels for different customers.
- Customer Segments – here you should describe the key clusters of customers you engage with- who actually benefits from the value you create? How to they relate to the Value Proposition?
- Cost – this section lays out the most important costs- direct and indirect- in the organization. These are associated with the key resources and key activities
- Revenues – this covers the ways in which you will make money. This may how much they are willing to pay for the level of value you deliver? Think also about how they would like to pay?
Sequence for developing a strategy canvas
Creating the canvas is normally done in a particular sequence, ensuring you begin with and then build on the more important components.
This allows you to focus and then elaborate on each item separately. A common sequence would be:
- Customer Segments
- Value Proposition
- Customer Relationships
- Key Activities
- Key Resources
- Key Partners
- Revenue Streams
- Cost Structure
But you can begin as you would with a jigsaw and simply fill in what is obvious, and then build out to the other sections.
To understand how the model works in a connected way you might look at this brief video: https://goo.gl/y89uD 2’ 19”
For a more detailed version try https://goo.gl/BSXQJM 53’ 20”
There are also two books you can buy which go further into the models:
=mc social business canvas model
The model below shows the =mc version of the model. See the questions contained in each element – they should help you frame the content. Right click on the image to open in a new tab and view the content full size, or click here to download a PDF version.
At the heart of the strategy canvas sits the Value Proposition. This forms the link between your offerings – products and services – and issues – or jobs – your customers are trying to solve in their work or personal lives. So the value consists exclusively in the benefit offerings deliver for customers.
Think of these issues as having three dimensions, with complements on the product/service side:
- Jobs: the tasks they help achieve and needs they meet. These jobs can have a functional, social or emotional (Your offering should match these intents.)
- Gains are the benefits or advantages that customers are seeking. (Your offerings should provide a gain creator)
- Pains are the losses or potential losses customers want to avoid. (Your offerings should provide a pain reliever)
Where the three dimensions meet should be a fit – a match.
For a more detailed explanation try this video https://goo.gl/9HmXDK
Want to know more?
=mc has extensive helping social agencies – charities, INGOs, NGOs, CSOs and public bodies develop their business models canvases from South Downs National Park and British Red Cross to International Development Law Organisation and UNICEF International. For more information on the Business Model Canvas or the Social Value Proposition contact Bernard Ross, Director, The Management Centre on 020 7978 1516.
Creating your Social Value Proposition
Below are a series of questions chunked in sections to help you establish your Social Value Proposition(s). Again, right click on the image to view full size in a new tab or download the PDF here.
How can we help?
To find out more about the social business model canvas and value proposition, contact Bernard Ross, Director on 020 7978 1516 or email firstname.lastname@example.org
Share Developing a Business Model Canvas