“The business world today requires different tools, skills and mindsets because the world is changing, customers are changing. Unfortunately, many businesses are still on old assumptions and old views on what they think the world looks like and what clients want … But business as usual is dead.”
So says Patrick van der Pyle, innovation consultant and producer of the international best-seller Business Model Generation, in a recent webinar. “It is clear that there are new forces at work…new rules in the business game…a changing context.” He pointed to Lisa Kay Soloman’s book Moments of Impact which describes today’s environment as a VUCA world of constant Volatility, Uncertainty, Complexity and Ambiguity. This turbulence is a constant business factor that has to be dealt with. The speed of the market is extremely fast and the shelf life of companies and business models is getting shorter and shorter. Traditional business toolkits and strategy sessions were not built to address this kind of changing environment. Business plans, for instance, are great for execution, but they do not help you come up with and shape new ideas or innovations needed to differentiate oneself in this kind of operating climate.
The fact is that high growth firms in this environment are three times more likely to have a strong differentiator. Versus wimpy differentiators like “better service,” “commitment to excellence,” “experienced people,” “we care about our clients” or others along those lines, business model innovation has been at the core of many success businesses (Uber, Airbnb). It offers a process that specifically addresses the need of creating and delivering differentiation. That is why there is a growing interest on business models and where the business model canvas comes in.
A business model canvas is a visual tool, a diagram of what your business looks like, that helps facilitate discussion, and provides a process and a common language. The visual nature of the tool allows you to “see” where your present-day firm is capturing and delivering value to which specific clients. Download a template business model canvas here. You can see how it breaks down your firm and your activities and depicts them in separate boxes:
- Customer Segments
- Value Propositions
- Channels
- Customer Relationships
- Revenue Stream
- Key Resources
- Key Activities
- Key Partners
- Cost Structure