I am often surprised by how many of the clients we work with struggle to answer fundamental questions about how their business operates.
This is a real problem when it comes to working out how the web best fits into their organisation. I have therefore been looking for a way to help clients better understand their own businesses. This has led me to the business model canvas.
What is the business model canvas?
The business model canvas is a diagram that helps business owners understand the various factors that make up their business. The idea is that they ‘fill in the blanks’ for each of the nine building blocks. These are:
- Customer segments – Who are your target audiences?
- Value proposition – What problem are you solving or need are you meeting?
- Channels – How are you delivering your value proposition to customers?
- Customer relationships – How do you go about maintaining a relationship with customers and what expectations do they have about that relationship?
- Revenue streams – What are customers currently paying for and how much will they pay?
- Key resources – What resources are needed to support the business?
- Key activities – What activities does the company need to carry out to support the business?
- Key partnerships – Does the business rely on partnerships with third parties or suppliers?
- Cost structure – What are the most important costs in the business and what resources and activities are most expensive?
What the business model canvas shows us about the web
What is interesting about the business model canvas is that it perfectly demonstrates how the web can impact every part of the business. So many people perceive the web as nothing more than a marketing channel, but it is so much more. Lets look at that list again and how the web might impact on each.
The web can allow you not only to reach your customer segments easily, but also know them better. The web offers an opportunity to gain a deep insight into their behaviour, problems and wants.
With its deep understanding of how users behave through monitoring and direct feedback, the web makes an excellent tool for refining your value proposition. It makes testing new concepts and gathering feedback considerably easier than before.
In many sectors the web has become the primary channel for delivering your product or service. Music and news are classic examples of sectors that are now dominated by digital delivery.
The web is increasingly being used to support customers both through self service, communities and automated services. The web is even being used to create products and services in cooperation with customers. Take for example Youtube. That service would not exist without customers actively participating in it.
The web has had a profound impact on the revenue streams of many businesses by lowering marketing and distribution costs. It has even forced some sectors to move to a freemium or advertising driven model.
The web is also ideal for supporting a number of revenue streams from subscription to licensing or advertising.
The web can be used in a variety of ways to support key resources. It might be used to search for intellectual property infringements or to better support members of staff through an intranet.
Many key activities we carry out as a business could benefit from being brought online. Whether it is using third party tools like Basecamp or developing custom applications to facilitate specialist activities with your company, there are lots of ways the web can increase your efficiency.
The web is not only a good tool for finding potential partners, it also makes an excellent tool for communicatingwith them. Over the years Headscape have been involved in creating a number of systems for managing the relationship between a company and its various partners.
People often perceive the web as an expense to an organisation, but it can also bring significant cost savings in terms of replacing traditional marketing and distribution channels. It can also bring productivity savings.
Lesson to learn
The lesson here is simple. The sooner organisations wake up and realise the web is more than a marketing tool, the quicker they will be able to benefit from its full potential.
However, perhaps even more importantly, if they don’t they could be out of business. The web has a habit of disrupting sectors (think music, news and now cable TV) and those who have a limited view of its potential get left behind. Just ask Blockbusters or HMV.
“Fright” image courtesy of Bigstock.com