The big idea
Business Model Generation is a relatively new approach but it has already been widely applied across a range of sectors and features in Susan Royce’s recent report on business models in the visual arts. Ultimately, the intention of the approach is to create value and replace outmoded models. It is based on the belief that all business models can be described through nine building blocks, which show how a business either makes money or delivers its mission and generates income. The nine blocks have arisen out of the four basic areas of a business: customers, offer, infrastructure and financial viability.
The purpose of the model is to create a shared language for describing, visualising, assessing and changing business models. It is intended to be a practical guide, which will give you a deep insight into your future business model and generate shared understanding of the value your business creates. The building blocks proposed by the Business Model Generation approach are:
- Customer segments: a breakdown of the customers being served
- Value proposition or offer: which seek to solve customer problems and satisfy customer needs or wants
- Channels: how the value propositions or offers are delivered
- Customer relationships: how relationships are established and maintained
- Revenue streams: where the money comes from as a result of successfully delivered value propositions or offers
- Key resources: the assets needed to develop and offer the value proposition
- Key activities: performing what is needed to deliver
- Key partnerships: activities and resources that are acquired outside the enterprise
- Cost structure: the cost structure that results from the other business model elements
The main element of the tool is the business model canvas, which encourages you to look at your business as a whole. You can print off the canvas attached, download a copy or create a large canvas with flip chart paper. The tool takes you through an ideation process, which involves several steps and key questions that really focus you on your future business vision.
It is best done as a group and really needs some time set aside for everyone to work together. If you work on your own, think about involving friends, family or your peers.
Business Model Generation is included in the toolkit with the kind permission of Alexander Osterwalder