How to create a powerful Business Model Canvas and understand your value proposition, competition and market.
Gary Fox is an Ecosystem & Platform Design Consultant, Doctoral Researcher on Digital Platform Ecosystems and Lecturer at Cranfield University. Here he talks through the different segment of the Business Model Canvas and how to think about using them effectively. The canvas is made up of nine segments which he will explain. In this part Fox focusses on key resources, key partners and cost structure.
Watch the rest of the series here:
7. Key resources
What people, knowledge, means, and finance do you need to run your business?
- Physical: Facilities, buildings, vehicles, machines, distribution networks
Do you need office space or a warehouse? Are your distribution networks tried and tested with contingency planning in place?
- Intellectual: Brands, proprietary knowledge, patents, copyrights, partnerships, customer databases
Your patents may give you a unique edge in the marketplace. If you run an advertising startup on a day-to-day basis you might have highly creative people coming up with great ideas on how brands can captivate people in the marketplace.
- Human: Key people involved in business activities
Is it your team’s specialist knowledge base that creates value in the marketplace? If so that makes them an essential resource that very few people can replicate.
- Financial: Capital, financial guarantees, lines of credit
Do you have enough to fund all the different parts of your business? Do you have to go into the marketplace and look for venture capitalists or investors to come in with working capital?
8. Key partners
Consider the partners that your business can’t function without. Who are your suppliers and service providers?
You might have a product that you're developing but you need partners to take it to market. Those partners might help you with distribution or advertising or manufacturing.
Sometimes partners can be aligned to supply chains but not necessarily aligned in the marketplace where they're competing for customers. How you think about your partnerships is critical. You might need partners that have deeper knowledge or capabilities than you.
9. Cost structure
- List your top costs by looking at activities and resources. What are your most important costs?
- The activities, resources and partnerships all incur costs. When using the Business Model Canvas the aim is to make sure the business is profitable. How do you put the elements together so that costs can be reduced and kept to a minimum?
- Increasingly in the marketplace there are different places and partnerships that you can use to lower your fixed costs and variable costs. At the time, cost structure determines your profitability and your price point. That in itself reflects your value proposition in the marketplace.
Types of cost structures:
Characteristics of cost structures:
- Fixed costs
- Variable costs
- Economies of scale
- Economies of scope