"CANVAS HEADACHE?"


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Little nightly thoughts
by Business Exploration

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If like me you remain disoriented by the Business Model Canvas,
I propose these few tweaks to the Osterwalder's original:

  1. Exchange Partners with Resources
  2. Exchange Relationships with Channels
  3. Read it Right to Left: starting with Customers

Now you have 3 horizontal layers that show you:

  • your company's internal processes from Resources to Customers
  • Your company's external activities from Resources to Customers
  • Your company's cash flow from Costs to Revenues

It's a small change, but people say it helps a lot:

What people say about the Blue Canvas:

the Blue Canvas

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“That was the missing Canvas arrangement / alignment that I've needed for years. Thanks Flavio!”
Bill Roth, CEO at InvestorGraphics.com

Thanks Flavio. It gave me headaches too in my MBA Innovation & Entrepreneurship module. Thanks for sorting it out
Noorul Islam Farhan Ahmed - CRM and Enterprise Applications Project Lead at STC Specialized

“Thank you Flavio. Interesting and practical! Innovative thinking in perspective!”
Donna-Luisa Eversley - Business Development Consultant

“Thank you for sharing your brilliant insight.”
Simone Fontana - Founder & Treasurer at ESCP Europe
Private Equity and Venture Capital Club

“This is a useful modification to the BMC!”
Sunil Malhotra - Founder - Ideafarms

...and the innovation team of BigJump
who has adopted it on the other side of the world.


How to use the Business Model Canvas:

  • Who should use a Business Model Canvas?
    The Entrepreneur. Then she and the co-founder. Better if helped by a coach or a community.
  • When to use the Business Model Canvas?
    As soon as you think about getting new clients.
  • How to use the Business model Canvas?
    Use it to define an initial sales engine to be discussed with other people.
  • What are the alternatives?
    I would recommend the "elevator pitch" from Moore: it summarizes your business idea in one sentence. (call me for an example)
  • Where to find tools, examples, tutorials, templates?
    There are tons of tools on-line. Here you can download my template with refined questions.
  • What are the pros and the cons of a BMC?
    Pros: you can quick define if a business ideas could sell. Cons: it does not take into account competition.
  • What are the problems with the BMC?
    I find the Osterwalder's version a bit confusing, expecially for first time entrepreuners like Engineers or Technicians.
  • What are the next steps after a BMC?
    I recommend to think to the market sizing and the competition. Then think to the Storytelling for the clients, and finally about the sales operations.
  • Is the BMC applicable for industrial SMBs, Saas Startups and B2B Corporate labs?
    Yes, you can use the business model canvas for B2B go to market if you know how to build a B2B sales funnel.
  • How good is BMC to shape company's organization?
    Not much. However the modification I propose at least give you a clear view of the supplychain, and the interfaces between it and the environment.

Why to reshuffle the Blocks of your Business Model Canvas:

The Business Model Canvas today is the base of any Start-up and most of business initiatives. Alexander Osterwalder has crafted it in 2008 providing all of us with a great tool to describe a business idea in a simple and effective way.
Its 9 blocks are really a guide in analyzing:

  • "why" a Customer should buy your value proposition
  • "how" your value proposition will reach your Customer
  • "what" you need to make it happen

and the cost / revenues sources that will make your business run.

The 9 blocks of the BMC:

  1. Customer Segments
  2. Channels
  3. Customer Relationships
  4. Value Propositions
  5. Key Activities
  6. Key Resources
  7. Key Partners
  8. Costs Structure
  9. Revenues Streams

The problem with the BMC:

You can find a lot of books explaining the 9 blocks and how to use them, however, every time I see wanna-be Entrepreneurs  trying to apply it...
I see minds wandering in space.
So I want to try to help with a couple of recommendations and a slight modification to the "holy Canvas" of Entrepreneurship that comes from few years of experience as Marketer and as Business Process re-Engineer.

My recommendations:

  • Start with "Customer"
    No Customer - No Party. You may say what you want, but "Business follows Relationship". And if you do not "have" a Customer, you cannot even think of doing business. If you have a look at the yellow picture of the Canvas I put in the heading, the number "1" is in the "value proposition" block. 
    This yellow canvas is "borrowed" from a Steve Blank*  presentation. So moving that "1" in another block, it's quite a bold move...I recognize, But my experience is that: when you start describing your Customer, all the following blocks come easy.
  • Go on with "Problem"
    Ok, "Problem" is not an official block of the Canvas, but it's the core of the "Value Proposition" block. I am used to say to my Clients that "Problem" is the block written full page on the reverse side of the canvas.If you can articulate the problem (and here a bit of classic marketing tools may help), to talk about the "Value Proposition", comes much easier.


My modifications:

So far for the easy part. Now let's talk about the slight modification I want to propose.(Osterwalder, please, I beg your pardon...).As someone of you knows, I have done this "doubleface" career path that make me think Marketing as a Process guy and Business Processes as a Marketing guy. The result is that every time I approached the Business Model Canvas my schizophrenia was pumped to stars, causing me a lot of headaches.
My "Marketing-me" loved the Canvas at first sight.
My "Process-me" was unable to stare at it.
My "Process-me" was striving to find symmetry and direction in it but everything conjured against both of them.

1) Read your BMC in the right direction:

I told you above that the problem was the starting point. As a seasoned project manager, I am used to think "R2L" - Right to Left: i.e. from "Customer" to "Resources".
Moving the "1" to the "Customer" block helped a lot to build again a R2L rhythm into the Canvas.

2) Move Resources where they belong:

But much more helped moving the "Key Resources" block to the extreme left, in place of the "Key Partners" block.

Now you can read the canvas Left to Right almost like a classic Porter's "Value Chain": where "resources" are the foundation of your business process.


3) Give symmetry to your Business Model:

"Symmetry" was reeeealy a nightmare... till I noticed that the blocks were perfect, but in the "wrong" place. "Wrong" I mean, (with all due respect to Osterwalder) compared the two key organizational models used in any business organization already running on Earth:

  • Taylorism or co-ordination of activities
  • Mayo-ism or co-laboration as a form of human relationship**

If you draw a red line from R2L across the upper part of the canvas you will notice that the remaining blocks are kind of "reversed".
Try reading the blocks in this way:

  • Key Actvities > it's a matter of co-ordination - processes - Taylor
  • Key Partners --> it's a matter of co-laboration - relationship - Mayo

while:

  • Customer Relationships > it's a matter of co-laboration - relationship - Mayo
  • Channels --> it's a matter of co-ordination - processes - Taylor

Now you see what I saw:

The Business Model Canvas describes key organizational models too.
But displaced in an asymmetric order. This was causing my "Process-me" get mad: I could not follow the R2L reading.

So I decided to invert the "Customer Relationships" with the "Channel" Block.

Now I have a Canvas that I can read from "Customer" to "Resources" without wandering up and down at middle way.
Above I have all the "Taylor" blocks: and i can see how the value chain processes co-ordinate to use the resources to deliver the value proposition to Customer.
Below I have all the "Mayo" blocks and they point me to all the "human factors" on which I have to count, to make those processes work.


The result is the Blue Canvas:

The Blue Canvas, re-aligns the blocks so you can see your organization processes and relationships flowing smoothly from Resources to Customers, and build a better model of your business.

Now you can talk of the Green side ( right - commercial ) and the Red side ( left - costs )

you can also talk about a Yellow result: the Value Proposition.

Top, left to right, you have all company's processes
Middle, left to right, you have your untangible supports
Bottom you have your "P&L": Profit and Loss

(Note that when I talk about Partners I think to them as "accelerators", who bring smarter ideas to support the value creation)

It's really presumptuous to name these little changes Business Model Canvas 2.0, but I really hope that you will like this re-shuffling of blocks and that it will help you "digest" faster the "business model canvas" methodology, and sprint up your next Investors Presentation.

Good luck with your Business Idea!
Flavio

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*) Steve Blank has invented "Lean Startup"
**) Taylor has started the "scientific management" approach to organizations at Ford Motor Company. Mayo has started the "human relationship" approach to organizations at Western Electric.
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