Is that necessary to add cost struture and value stream into business model canvas? what is main role of those elements?

Dear friends, 

Currently, I am doing a small research for using business model canvas to describe how to run a business and then put it into process modelling system ( MOOGO software).The simple way to understand is that I need to draw series of action with key performance indicators, it would be like BPMN with diffirent way to discribe. The problem is that just relying on key activity, key resource, key partner, value proposition and channel, for my poitn of view, it would be totally get the costs and revenue after analyzing those things above in more detail. Therefore, I wondered why we need cost structure and revenue if we can see the money flow? or maybe anything elses on revenue and cost I am missing or I did not get the main points of revenue and cost structure.

Please give me some advices for that problem.

Thank for your time 

Best regards,

Huy

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The fundamental flaw in your approach is you are mixing levels of abstraction - strategic and operational.

The BM canvas is a strategic tool used to design the business dynamic. It is the blueprint of your business strategy to guide how you would implement at an operational level.

Things like process descriptions (citing BPMN) and key performance indicators are operational level, implementation, considerations. More simply put you are mixing airplanes and submarines into one discussion.

As far as revenues streams and cost structures are concerned, they are critical to the discussion of the business design. A business model is defined as the rationale for how your enterprise will create and deliver a value that is important to your customers, and capture value in return in a repeatable sustainable way. The third part of that statement, which involves the financial reality of your organization, is about the sustainability of your initiative. What is the point of creating a business design that is unsustainable. To resolve that question you have to know revenues generated will support the business cost structure.

In the business model discussion, in the area of Key Activities, one is concerned with the core capabilities necessary for the business to be successful. That can be seen as one of the links to the operational view as capabilities are then expanded out into processes, structures and business assets at the operational level.

Thanks so much for your answer. You get your point.That is also the problem I need to solve because in the next level, I need to map between the strategy and operation. The idea is if we change something on strategy, how it show up in operation or process and also if we change something on process, how it react to the strategy. I need to find a solution for that thing by using BM canvas. Hope you can give some more advices.

There is a limit on what the business model canvas can be used for. It is not intended to be used to document operation changes. It can set the strategic context or targets for changes at the operational level.

One common point of transition between the two is the Key Activities component. As I mentioned above, at the business model level you identify the key capabilities the business needs to be successful.

For example, lets suppose you have to develop new software for the company to manage it's supply chain. At the business model level you would see elements such as mange supply chain and design, develop software. What you wouldn't see at the strategic level is an ambition to change from a waterfall approach to an agile approach. That is operational level.

Likewise if one wanted to make changes in the communications technology being used to interact with customers. At the strategic level in Channels one would see the companies web site as a key communications mechanism. An initiative to switch from Drupal to WordPress would not show up in business model - that is operational.

One would have to develop companion frameworks or approaches for the operational changes that would link to the business model described at a strategic level via the BM canvas.

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