... where visionaries, game changers, and challengers discuss business models
The business model canvas is an extremely effective framework and tool to understand, design and change the way one does business. Most people, even those very familiar with the canvas, often fail to appreciate the many ways in which the tool can be used within an organizational context.
We see four key areas of business in which the BM canvas can be used – strategy, innovation, organizational alignment and investing. In this post I will focus on the canvas as a strategic tool.
The canvas can be an integral part of the strategic planning process. Understanding the dynamic of one’s business, it’s strengths and weaknesses as well as external constraints and influences are key building blocks of a strategic plan. The canvas is a ‘blueprint’ of the strategy.
The canvas can be a part of business unit planning. It creates a shared language between business units, and each unit can extrapolate their business as part of the whole company (nested models).
The canvas can serve as a dashboard to track progression. By establishing metrics in each of the critical components – or those in which change initiatives are happening, one can track progress on the initiatives. One can even use colour coding (red, yellow, green) to visually track progress of strategic initiatives.
The canvas can be used for competitive analysis. The business environment analysis focuses on key trends and changes in the competitive environment. One can go further and sketch out business models of key competitors to better understand the landscape.
One can use the canvas to map out each of the various business lines within an organization and map them along the continuum of improving existing models to inventing new models. In doing this, the canvas becomes a key tool for managing a ‘portfolio’ of business models, an important component of long-term strategy.
In each of these areas, the business model canvas becomes a key tool as well as a language to support, integrate and align strategic conversations.
Thank you for this overview on the usage of BM canvas in these four key areas of business. I am Leandro Bitetti, scientific collaborator of inno3 Competence Centre (Innovation, Entrepreneurship and Business) of the University of Applied Sciences and Arts of Southern Switzerland.
In one of our current applied research projects with a Swiss company in the Food Processing industry, we are accompanying scientifically and methodologically the top management in developing and running their strategic planning process, through workshops, training sessions, surveys and interviews, data analysis, and so on.
More than one year ago, during the project design phase, after reviewing the state of the art in the field of strategic planning, we developed our approach - revising the approaches and processes adopted by other scholars - which starts, in our honest opinion, with one of the most important phases of the entire strategic planning process: the current Business Model description and its analysis, through the tool of BM Canvas by Alex.
We allocated a great portion of the total project time for this phase, because we think that without understanding the own business model through its description and its analysis, it is really difficult and inappropriate to go ahead with the strategic planning process. The BM Canvas has always been a great tool to achieve “business model understanding” in our projects, providing a great visualization and a common language among all managers.
What is our approach about?
For the Business Model description we had the role of coaches in order to lead managers to rebuild all the building blocks of the Canvas, dedicating the appropriate time to brainstorm, discuss and share. But the key activity during this phase was after the building blocks description. We used creative animation techniques to let managers think outside of their routines and see their company’s business model as a whole system. Why that? Because, the aim we had was to combine, link, match all the building blocks together to identify the COHERENCE among them. In case of inconsistencies between building blocks it is useless to go ahead with the strategic planning process, because, first of all, critical aspects have to be identified and to be solved. This was the first step towards the analysis of their current business model.
The second step was about analyzing the Business Model in terms of strengths, weaknesses, opportunities and threats. First, we started with the internal analysis (strengths and weaknesses), then we moved to the external environment to identify the key trends which could influence the business model in terms of opportunities and threats.
It is not just about performing the SWOT analysis! Once we rebuilt all the building blocks and verified their coherence, we worked in groups in order to identify the main strengths and weaknesses of the company and describe them in terms of the 9 building blocks (to have a much more holistic overview we added two additional blocks: “Governance Structure” and “Organizational Culture”). To gain much more value, we let managers assess the importance and the influence of every strengths and weaknesses.
The result was a colored BM Canvas of strengths (various shades of green) and weaknesses (various shades of red), which allowed a systemic view of the current internal situation of the company, block by block. It is not a list of “+” and “-“, but a map which locates the current strengths and weaknesses, always keeping in mind the dynamic and holistic role of the business model, which made managers understand that today’s strong customer segments could become weak tomorrow, because of today’s weak value proposition.
Regarding the external analysis we identified the key trends which would impact the company’s industry and business model. Then, every trend has been described by the managers as an opportunity or a threat and has been linked to its respective building blocks in the Canvas.
Now we are ready to start the strategic analysis, looking for opportunities to implement! And this is only possible always checking the current business model canvas, understanding the impacts of every choice, remodeling the business model and assessing the consequences of every change, always in a systemic view.
The BM Canvas is the right map for every strategic planning process. Managers have to go back to it all the time, and update it continuously. Strategic thinking and planning means thinking in terms of the own business model.
Thank you very much
All the best