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Guide to business model innovation: Strategies and examples

In an ever-changing world, business model innovation is something every product manager and entrepreneur should focus on.

Business models that were solid a few months back might be irrelevant today, especially if we look at ever-increasing technological advances. If I had a penny for every business model that has had to pivot due to the advent of ChatGPT, I could retire today.

In this guide, I’ll show you how you can demystify business model innovation by simply asking the right questions.

What is a business model?

Let’s start with a high-level overview of what a business model actually is. You’ve probably already seen Strategyzer’s famous business model canvas at least once:

This business model canvas is one of the most common approaches to describing a business model. It includes answers to nine key questions:

• Customer segments — For whom are you creating value?
• Value proposition — What value do you deliver to customers?
• Channels — How are you reaching your customers?
• Customer relationship — What type of relationship do you establish with your customers?
• Key partners — Who are your key partners and suppliers?
• Key activities — What do you need to do to deliver the value proposition for your customers?
• Key resources — What key resources do your value proposition and distribution channels require?
• Revenue streams — How much value do you capture from your value delivery activities?
• Cost structure — How much does maintaining the business model cost you?

If you can get a good answer to all these questions, the overall strategy for your business is solid and self-supporting.

However, the business innovation canvas is just a template. Depending on the maturity of your company, you might need something more lightweight or more robust.

Ultimately, what you need is clarity regarding three critical areas of business operation:

• Value creation — What value do you offer to the market?
• Value delivery — How do you ensure the market discovers your value proposition?
• Value capture — How do you benefit from delivering that value?

In this article, I’ll focus on the more lightweight approach to business model innovation. It’ll make it more applicable for product managers, who often work only on a product-oriented part of the business model.

What is business model innovation?

Building a business model is similar to everything we do in a product and agile environment. Any guesses?

Yes! We do it iteratively!

In the past, we often worked thoroughly to establish a very detailed business model, probably got a company loan for that, and then spent years executing that model. In the modern world, this approach doesn’t work. Things just change too fast.

Today, business models are not planned; they are discovered. The best approach is to adjust, inspect, and adapt your business model iteratively:

That’s what business model innovation is. It’s a never-ending, iterative process of discovering the best business model given current micro and macro circumstances.

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Strategies to innovate on your business model

Now let’s try to put the theory into practice. Although there is no “right” approach to iterating on one business model, the lightweight process I prefer involves repeatedly asking three high-level questions:

• Can we improve the value we deliver to the market ?
• Can we improve the way we reach our customers ?
• Can we improve the way we capture the value along the way ?

Innovating on the value proposition

This part is the most well-known to product managers. To some extent, PMs are hired to focus chiefly on this area of the business model.

Start by visualizing your current value creation process. I like to use a double-layered value proposition model for that (my own framework).

A core value proposition includes:

• Customer profile — Who is your target persona? What gains do they want? What pains do they experience?
• Value canvas — How do you deliver value for your customer? Which pains do you relieve, and which gains do you create?

A category value proposition includes:

• Market standards and benchmarks — You should meet these to be relevant
• General performance expectations of the market — No matter how great the value proposition of your app is, people won’t use it if it takes 20 seconds to load
• Category rules — What are the must-haves for a given type of product? For example, good luck building an email app without a labeling option

Once you have visualized your business model, start challenging it. Use quantitative data, qualitative knowledge, and market expertise to determine how to deliver more value to the market.

The most common approaches to delivering more value include:

• Pivoting customer segments — Maybe the persona you target isn’t the right fit after all?
• Expanding customer segments — Even if your target segment is properly defined, at some point, the market gets saturated. Maybe it’s time to expand?
• Focusing on different pain points — Are the pain points you target most relevant for your customers?
• Expanding offering — Can you deliver more valuable services to your customers?
• Shrinking offering — Cutting out the noise and doubling down on your best solutions might also be a sound decision.
• Innovating on current offering — Maybe iterating on the current offering is the most optimal way?

What you should focus on depends heavily on the data you have and the context you operate in. But if I were to give a universal tip, focus on properly balancing small bets (improving the current business model) and big bets (pivoting the business model) for the most optimal outcomes.

Innovating on value distribution

Innovating on value distribution is all about searching for the most optimal channel for acquiring users and maximizing that channel’s potential.

Let’s assume you acquire users through LinkedIn ads (performance marketing). You should revisit this strategy regularly and ask yourself two questions.

• Embracing tactics to minimize CAC.
• Hiring performance marketing professionals / external agencies to help you boost your reach.
• Experimenting with new platforms.
• Trying programmatic advertising.
• Experiment with setting up a blog
• Use the data you have to automatically generate new pages at a sale
• Build virality mechanics into the app

My main tip here is the same as in the previous chapter: in an ideal scenario, you would continuously improve on both your current growth channel (small bets) while also exploring other growth channels (big bets) — especially if you haven’t reached product-channel fit yet.

Innovating on value capture

Capturing value might sound fancy, but let’s be honest — in most cases, it’s all about generating revenue.

You should regularly revisit how your product and business generate money from its operation. While the exact questions you should be asking yourself depend on your particular model, the four questions I believe every PM should ask themselves regularly are:

• Do we have the most optimal revenue model?
• Is the way we charge the best way?
• Do we charge at an optimal price point?
• Can we boost our revenue with better bundling and packaging?

1. Do we have the most optimal revenue model?

It’s a big question. If you are a subscription product , should you be a subscription product? Maybe you should try ad-based revenue, or combine both?

2. Is the way we charge the best way?

The way you charge is more important than how much you actually charge. Ideally, you should charge per value received (i.e., the number of transactions). Or, if this is impossible, per some proxy metrics (e.g., the number of seats), or a flat monthly fee. Is it the best way?

3. Do we charge at an optimal price point?

Different segments have different willingness to pay and price sensitivity . Finding the best price points to charge requires a lot of quantitative research, but it’s worth it.

In the end, increasing the price by 10 percent might be the fastest way to grow revenue or the fastest way to lose all your customers.

4. Can we boost our revenue with better bundling and packaging?

If you have a more mature product with various types of plans, consider bundling/unbundling them and experimenting with different plan settings.

Maybe there’s a gap between your tier 1 and tier 2 offering, leaving a lot of money on the table. Or, perhaps you should add to your most premium offering  a standalone, pay-per-use feature.

Sometimes, moving a feature from one plan to another can knock your revenue through the roof.

Business model innovation examples

Now that we’ve thoroughly explored the concept of business model innovation, let’s dive into some real-world examples. These cases highlight the impact that innovative business models can have on a company’s success or failure.

Netflix: Streaming revolution

One of the most well-known examples of successful business model innovation is Netflix. The company started as a DVD rental service by mail, but it quickly identified the potential of streaming technology.

By shifting its focus to on-demand streaming, Netflix transformed the way we consume entertainment and effectively disrupted the traditional cable TV industry. This strategic shift allowed the company to grow exponentially and become a global entertainment powerhouse.

Uber: Ride-sharing disruption

By leveraging then-nascent mobile app technology, Uber created a platform that connects drivers with passengers looking for a ride. This peer-to-peer model revolutionized the transportation industry, challenging traditional taxi services and expanding to other services like food delivery.

Although Uber faced regulatory hurdles and controversies along the way, it remains a prime example of how business model innovation can create a new market.

Blockbuster: A cautionary tale

On the flip side, Blockbuster’s failure to innovate its business model serves as a cautionary tale. As a movie and video game rental chain, Blockbuster was once the go-to place for home entertainment. However, the company failed to adapt to the digital age and recognize the potential of streaming services, ultimately leading to its decline.

Had Blockbuster been more agile and open to business model innovation, it might have remained a significant player in the entertainment industry.

LEGO: Reinventing the brick

LEGO, the iconic toy company, faced near bankruptcy in the early 2000s due to a lack of focus and an overly complex product portfolio. To turn things around, LEGO embraced business model innovation by refocusing on its core product — the beloved plastic brick — and expanding into new markets.

By capitalizing on brand partnerships, digital gaming, and even theme parks, LEGO successfully transformed its business model and remains a beloved brand worldwide.

Zipcar: Car-sharing pioneer

Zipcar was an early pioneer of the car-sharing model. By allowing members to rent cars by the hour or day, Zipcar offered a convenient and cost-effective alternative to traditional car ownership.

Although the company faced challenges and was eventually acquired by Avis Budget Group, its innovative business model inspired a wave of car-sharing services that continue to reshape urban transportation.

Business model innovation sounds like a big, daunting endeavor. In reality, though, it can be as complex or as straightforward as you want it to be.

I believe in simplicity. The more robust the innovation process is, the more neglected and deprioritized it often gets.

When it comes to business model innovation, I encourage you to think about it simply as an iterative process of asking the right questions. Start with the three main questions:

• Can we improve the value we deliver to the market?
• Can we improve the way we reach our customers?
• Can we improve the way we capture the value along the way?

Then, step by step, go a bit deeper and ask more detailed questions.

On the one hand, you must innovate your business model in a conscious, iterative manner to stay competitive. But on the other hand, you don’t have to do it all at once. In fact, you shouldn’t.

Revisit the main questions and focus on the part of your business model that requires the most attention in your current context. Trying to innovate on a business model as a whole is a fool’s game.

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The 9-Step Business Model Canvas Explained (2023 Update)

Written by Raquel Alberdi

Business | entrepreneurship, 16 comments(s).

Blog » The 9-Step Business Model Canvas Explained (2023 Update)

“A major mistake made by many start-ups around the world is focusing on the technology, the software, the product, and the design, but neglecting to ever figure out the business . And by “business” we simply mean how the company makes money by acquiring and serving its customers”.

-Reid Hoffman

After meeting with hundreds of entrepreneurs and business owners over the years I believe the LinkedIn co-founder and Blitzscaling author Reid Hoffman’s got it spot on.

People tend to focus on specific parts of their business, such as which software packages are being used, which is the cheapest supplier, how to optimize internal processes…?

They get so bogged down in the details of the day-to-day running that they lose the overall vision of their business.

Without this vision they are unable to scale, they make marginal profits, miss opportunities, struggle to innovate, and end up running “just another” business.

Another handy metaphor in understanding this common mistake is the soldier in the trenches .

Every meter of ground gained comes at a heavy cost, mistakes are made, and progress is hard-fought and slow…a day-to-day experience for 99% of entrepreneurs and businessmen.

But when you do have that 360 vision you see the entire battlefield. Decisions are much clearer, fewer mistakes are made, and progress is fast and methodical.

Fortunately, a business model framework exists that gives you both vision and clarity .

The Business Model Canvas provides entrepreneurs, business owners, and strategists with a tool to analyze, structure, and evolve a business while always keeping the bigger picture front of mind.

So let’s take a closer look at how it works.

Table of Content

What is the Business Model Canvas?

Created by Swiss entrepreneur and Strategyzer co-founder, Alexander Osterwalder, the Business Model Canvas is a visual representation of the 9 key building blocks that form the foundations of every successful business. It’s a blueprint to help entrepreneurs invent, design, and build models with a more systematic approach.

Why is it so popular within the business community?

Its simplicity. The business model canvas allows us to carry out a high-level analysis without drilling down and getting lost in the details. You just draw out the 9 building blocks on a blank canvas, fill them in as each concept relates to your business, and hang it somewhere everybody can see.

It’s a visual overview of your entire business on a single canvas.

While the Business Model Canvas is an extremely fluid concept and hyper-specific to individual companies, each canvas is still broken down into these 9 key building blocks:

Customer Segments

Value propositions, customer relationships, revenue streams, key resources, key activities, key partners.

When laid out on the canvas the model will look something like this:

While you’ve probably come across each of the 9 building blocks before, the attractiveness of the Business Model Canvas is that it confines them to a single page , not a traditional 42-page document.

This makes it a lot easier to digest, as well as assess existing business models or map out new ideas.

How do I fill out the Business Model Canvas?

To start your Business Model Canvas you will need to breakdown and analyze each of the 9 building blocks.

A good way to approach this is to gather the heads from marketing, sales, operations, finance, and manufacturing (if product-based) and pencil-in a morning where you can all meet together.

Then, after drawing a mock canvas onto a whiteboard, proceed to dissect and discuss each of the 9 building blocks as they relate to your business. You can use sticky notes to better organize your thoughts around the canvas.

If you are an entrepreneur or new business owner working alone and don’t have a team to bounce your ideas off, not to worry. You can still carry out your analysis before sharing it with a like-minded entrepreneurial community or forum, like those found on ThePowerMBA , to get useful, insightful feedback.

Whichever way you decide to approach it, I recommend you complete each block in the following order:

• Cost structure

For continuity, I’m going to use the fashion retail giant Zara when analyzing each of the 9 key building blocks.

If you’d like to skip to another case study similar to your own business, navigate to the table of contents at the top of the page and select one of the other business model canvas examples.

The first block of the Business Canvas Model is about understanding who is the most important customer(s) you’re delivering value to. Or, in other words, who are they? What do they do? And why would they buy your product or service?

Not a single company exists without its clients, making customer segments the best block to start with while drawing out your business model canvas.

A great exercise to define your customer segments is to brainstorm and create your company’s buyer persona (s) .

Buyer personas are fictional depictions of an ideal or hypothetical client. Typically when brainstorming a buyer persona you’d want to define certain characteristics (age, demographic, gender, income, industry, pain points, goals, etc.)

However, remember at this stage we want a snapshot of our customer segment. There’s no need to jump into great detail just yet.

In the case of Zara, there are three distinct customer segments to whom they offer different products.

The products created for each of these customer segments (clothing, shoes, and accessories) are not trans-consumable. That is to say, a woman’s dress is highly unlikely to be worn by a 7-year-old child.

Once we know exactly who it is we are targeting, it’s time to look at what we as a company have to offer.

The second phase is about figuring out your company’s value propositions , and importantly, your UVP (unique value proposition). The “what” that makes customers turn to you, over your competitors? Which of their problems are you best at solving?

Each value proposition consists of a bundle of products or services that fulfill the needs of a buyer persona from your customer segment. It’s the intersection between what your company offers, and the reason or impulse customers have for purchasing.

Some popular questions to ask while determining your UVP are:

• Which specific customer pain point are you trying to solve?
• What job are you helping customers get done?
• How does your UVP eliminate customer pain points?
• What products or services do you provide that answer this specific pain point?

So let’s try and apply this to Zara. Why do people choose to purchase from them, over their competitors?

Zara’s principal value propositions are fairly clear. They offer various ranges of stylish men’s, women’s, and children’s clothing and accessories at an affordable price.

But there’s more to it than that.

If we dive a little deeper we see Zara’s value propositions are more complex, which are behind the success of the brand:

Fast fashion

Zara adds new clothes and designs to its collections every 2-3 weeks, both in its stores and online. It keeps the brand updated, fresh, and modern while maintaining its all-important medium price point

Great eCommerce experience

Once you enter Zara’s online store you’re presented with a clean, easy-to-navigate, and high-end feel. The customer segments are visible on the left navigation bar with a search tab to further aid customers with their online experience.

Localized stores

You can find a store in nearly all major retail locations (shopping malls, retail outlets, airports, etc.) meaning accessibility is not an issue for the majority of consumers.

Flagship stores

Zara demonstrates its aesthetic evolution to customers through its flagship stores. The recent opening of their Hudson Yards , New York City flagship is a great example of this. Customers shop around its vivid, minimalist layout offering them an experience aligned with the brand’s deeper, eco-friendly values.

Zara Hudson Yards, New York

The next step is to ask yourself how you are reaching your customers, and through which channels ?

This includes both the channels that customers want to communicate with you as well as how they’ll receive your products or services.

Is it going to be a physical channel? (store, field sales representatives, etc.) Or is it a digital channel? (mobile, web, cloud, etc.).

Zara has 3 primary channels in which they communicate and deliver products to its customers:

• Direct sales through their stores
• Online (both app and website)
• Social media

Customers can go to a traditional “bricks and mortar” store to browse, model, and purchase different items of clothing at one of their retail stores.

Alternatively, they can shop online or through their mobile application and have the product delivered straight to their door or nearest store. The choice is completely up to them!

So that covers Zara’s commercial channels, but what about how they communicate with customers?

While they do communicate through their mobile app, their predominant channel is social media.

What’s more, they’re really, really good at it.

For example, did you know that Zara invests less than 0.3% of its sales revenue into advertising?

This is only possible due to an A-rated social media presence . Customer queries are not only dealt with quickly, but recommended re-works are sent back to HQ, forwarded onto in-house designers who then apply the feedback to future collections.

This customer-first approach through fluid communication channels has saved them thousands of dollars in marketing, strengthened their brand, and created a loyal customer base.

You should only step away from this building block once you’ve decided how each of your customer segments want to be reached.

Once you have acquired customers, you will need to think about how you can build , nurture, and grow those relationships.

Now, this can be automated and transactional like large eCommerce brands Amazon or Alibaba. Or, it could be at the complete opposite end of the scale and require a more personal relationship you’d typically have with a bank or your local bike shop.

Zara’s relationship with its customers is threefold, and lies somewhere in the middle of transactional and personal:

• Salesperson at store
• Brand through social media
• Sentimental attachment to a product

Yes, you have the initial transactional touchpoint at the store or online, something relatively impersonal and for many the only interaction they’ll have with the brand.

However, customers (especially in the fashion industry) are encouraged to continue to interact with a brand through social media platforms.

As we mentioned before when discussing channels, Zara has a very effective communication system in place. Not only can people instantly get in touch with the brand, but also engage with new posts, images, and collections uploaded to social media.

This personal approach to customer relationship building can, in some cases, lead to the natural growth of brand ambassadors and communities .

An attachment can also develop between customers and particular garments or accessories from one of their collections. The sentimental attachment to these products also creates another potential form of brand loyalty.

Now that you’ve described how you are going to create real value for your customers, it’s time to look at how you plan to capture that value.

What are your revenue streams? Is it going to be a transactional, direct sales strategy ? Are you going to consider a freemium mode l, where you give a portion of your product or service away for free with the idea of converting later on down the line?

If you’re a SaaS company such as SalesForce or Strava , then it’s likely that a licensing or subscription revenue model will be more appropriate.

At Zara, it’s extremely simple. They make their money by selling clothes and accessories either at a store or online.

As you can see, we’ve filled in the entire right-hand side of our business model canvas. We touched upon:

Customer segments

• Value propositions
• Revenue streams
• Distribution channels

Now it’s time to move over to the left side of the business canvas model and look at what we need, internally , to deliver our value propositions.

To start with, let’s take a look at key resources.

The key resources are all things you need to have, or the assets required to create that value for customers.

This could be anything from intellectual property (patents, trademarks, copyrights, etc.) to physical holdings (factories, offices, delivery vans, etc.) right down to finances (the initial cash flow perhaps needed to start your brand).

Another key resource every company needs to consider is its human capital . Are you going to need highly specialized software engineers? Or field-based sales teams?

They are relatively capital-heavy resources that need to be factored into your business model.

In the case of Zara, they are going to need a number of key resources if they hope to deliver their propositions:

• Stock management
• A large, interconnected network of physical stores
• A strong brand
• Logistics and supply chain infrastructure

Stock is vital for both online and offline customers.

If they are unable to supply their range of products and meet customer demands, satisfaction levels fall and they have a serious problem on their hands.

A large distribution network of brick and mortar stores combined with a strong brand name help mitigate these factors, as well as reinforce any ongoing marketing activities and communication efforts.

Finally, an efficient logistics process within Zara is critical, especially when you consider the complexities involved with such a large-scale operation.

They will require the necessary technology to analyze data on inventory, storage, materials, production, and packaging, with the staff to execute each of these stages and manage the delivery of the final products.

The next step is to define the key activities – the areas you need to be good at to create value for your customers.

To mix it up a little let’s take a look at a slightly different business in Uber .

Their key activities can be broken down into:

• Web and mobile app development
• Driver recruitment
• Marketing: customer acquisition
• Customer service activities : drivers’ ratings, incidents, etc.

They need a fast, clean UX for their customers using the app, drivers to carry out their service, and the ability to both market the product and deal with any customer queries.

Zara’s key activities will differ to those of Uber. Some of the things they need to consider would be:

• Manufacturing
• Retail process (point of sale and 3rd party management)
• Distribution channel / logistics

Design is a key activity as Zara’s value proposition is to provide stylish garments at an affordable price. Their collections need to be constantly updated to follow the latest fashion trends at the time.

To produce their collections Zara will also require manufacturing capabilities. Now Zara doesn’t own their own factories (we will get to that in the Key Partners section) but they still need to be involved in the garment manufacturing process.

Everything from fabric selection to pattern making, to detailing and dyeing affects the outcome of the final product which of course they have to then go on and sell.

The effective management of the retail and distribution channels (online, offline, shipping, and communication with providers) is also key. A breakdown in either of these activities, such as a poor relationship with an important provider will have serious consequences for the business.

Most modern business models now require brands to build out and work with various key partners to fully leverage their business model.

This includes partnerships such as joint ventures and non-equity strategic alliances as well as typical relationships with buyers, suppliers, and producers.

A great example of a strategic partnership would be between ThePowerMBA and Forbes . In exchange for exposure of our brand to the magazine’s global audience, we provide expertise and content on high-level business education programs.

As we touched upon when discussing key activities , Zara requires strategic partnerships with many different providers if they are to design and produce their collections.

Another key partner is their major holding company, Inditex .

Inditex has several subsidiaries including Massimo Dutti , Pull & Bear , and Oysho . Being a subsidiary of Inditex means they share a consolidated balance sheet, stakeholders, management and control, and various legal responsibilities.

While as a subsidiary Zara is afforded certain freedoms when it comes to design, delivery, and the general running of the company, the overall strategy will need to be aligned with Inditex and its other subsidiaries.

The final step of the Business Model Canvas is to ask yourself, how much is it going to cost to run this model?

This includes some of the more obvious needs such as manufacturing costs, physical space, rent, payroll, but also areas such as marketing activities.

If you are unsure of exactly what to include in your cost structure take a look at a Profit and Loss statement ( P&L ) from a competitor or company in a similar industry to yours. You’ll find many items overlap such as research and development ( R&D ), cost of goods sold, admin expenses, operating costs, etc.

Once that’s done you should prioritize your key activities and resources and find out if they are fixed or variable costs .

As Zara is such a large, corporate business they are going to have both fixed costs (rent, payroll, point of sales personnel) and variables, such as costs associated with the fluctuating sale of goods, purchase of materials and, manufacturing costs.

Once you’ve completed these 9 steps, your Business Canvas Model should look something like this:

Business Model Canvas Examples

Hopefully, you were able to get a good feel for the effectiveness of the business model canvas with our run-through of Zara.

However, if you found it difficult to follow due to the stark difference between your industries, I’m going to quickly go through 3 more companies to demonstrate the tool’s flexibility:

• Netflix (Media service/production)
• Vintae (Vineyard)

Even if these business model canvas examples don’t align exactly with your industry, I honestly believe that studying different models gives you a competitive advantage in your professional career regardless.

If you’re currently employed by a company, you’ll better understand how your specific role helps the company achieve some of its “long-term” goals.

Alternatively, if you are a business owner yourself (or perhaps thinking of starting your own business) you’ll have a better understanding of your business and where potential opportunities lay.

I’m sure you’re familiar with our next business model canvas example candidate, Netflix .

The global media company offers an online streaming service of various movies, documentaries, and TV programs produced in-house or licensed 3rd-party content. Their success sparked a revolution in the online media world with the likes of Amazon, Apple, Disney, HBO, and Hulu all rushing to launch their own online video streaming platforms.

Netflix started life as an online DVD rental company, basically a web version of the more popular (at least at that time) “bricks and mortar” Blockbuster.

Co-founder Reed Hastings predicted as far back as 1999 that the future of media was in online streaming, saying “postage rates were going to keep going up and the internet was going to get twice as fast at half the price every 18 months.”

It wouldn’t be until 2007 that Hasting’s prediction would become true when Netflix, as we now know it, was born.

So let’s take a current look at their business model canvas:

As you probably know, there are very few people out there who haven’t subscribed, watched, or at least heard of Netflix. There is content for everybody: wildlife documentaries, sci-fi movies, rom coms, action-thrillers, you name it – it’s there.

That’s why their customer segment can be classified as a “ mass market ” as the base is just so diverse.

All people require is a computer, TV, internet, and/or smartphone and they’re good to go. For most developed markets, that covers just about everybody.

Value Proposition

Whether on the train to work, sitting in the car (if you’re not driving!), or relaxing at home in front of the TV, you can consume their online, on-demand video streaming service.

They also have a huge library of content for consumers to choose from, ensuring that people keep coming back, as well as increasing their mass-market appeal.

They also produce high-quality, original content to differentiate themselves from their competitors.

Most people access Netflix either through their website or mobile/TV App . Another popular channel that you may have picked up on is their affiliate partners .

You’ve perhaps signed up for a mobile, TV, and internet package where the provider offers Netflix as an extra to sweeten the deal, so to speak.

That would be an example of an affiliate partnership between Netflix and mobile service providers.

I doubt many consumers have had direct contact with Netflix unless it’s to resolve a subscription issue or general query. It’s very much a self-automated service – you download the app, select the program you wish to watch, and hit play.

Very simple, very effective.

Again, this doesn’t need much embellishment. Netflix generates money from the different tiers and packages put together in their subscription services.

This varies depending on the region to account for local markets, but on the whole, it’s sold at a low price point.

Originally, Netflix’s Key Resources would have been their unrivaled DVD collection combined with a cost-effective mail-order system.

Nowadays it’s undoubtedly the rights to stream online video content. Netflix has brokered deals with some of the biggest production studios worldwide.

Combined with their huge library of in-house productions , it’s more than enough to encourage customers to renew their subscriptions.

To help sustain interest in their product, Netflix understands they need to serve-up relevant content for each sub-sector of their mass audience. Therefore their machine learning algorithm selects content for consumers based on streaming habits (what they watched, at what time, etc,.) to personalize the customer experience.

This explains why over 80% of all content streamed on Netflix was cherry-picked by this algorithm, making it a Key Resource for their business model.

Also, Netflix accounts for a whopping 12.6% of global bandwidth usage . The literal capacity to stream their services must be met meaning bandwidth must also be included here.

Content procurement is arguably their biggest Key Activity. They need to find people to produce and deliver their original content, including actors, studios, writers, etc. as well as secure the licensing and streaming rights from 3rd party producers such as Sony, Warner Bros, and Disney.

Finally, they need a fast, easy-to-use application to host their online streaming service. This needs to be available for both TV and mobile devices if they are to deliver their “on-demand” value proposition.

K ey Partners

Seeing as Netflix’s entire business model is largely based around streaming 3rd party content, key partnerships need to be built with production studios . No content, no Netflix!

Also, as we touched upon earlier Netflix is one of the largest consumers of bandwidth worldwide. If the speed and delivery of their streaming service are to be continued then deals will also need to be made with internet service providers (ISPs).

Netflix’s biggest expenditures come from both their in-house content procurement and 3rd party licensing agreements . The high-quality standard of video streamed on Netflix is only possible due to the speed and performance of its online platform and application , which has additional costs of staff, software, etc.

To show you just how flexible the business model canvas can be, I wanted to throw in a slightly leftfield example. Vintae is a Spanish wine producer who, after a detailed analysis of the business model canvas, was able to innovate and disrupt one of the world’s most competitive industries.

As some of you may know, the wine industry is extremely competitive. It’s also steeped in history and tradition , making it very challenging for newcomers to grab market share, let alone think about year-on-year growth and revenue.

However, CEO “Richi” Arambarri looked at the traditional “ bodega ” business model and saw a chink in its armor.

A “small” innovation in the business canvas model helped them to become one of the region’s most important winery groups, with over 10 installations and a presence across all regional denominations (Rioja, Priorat, Rias Baixas, etc.) with year on year growth of 30% – practically unheard of in such a competitive industry.

So how did Vintae analyze the business model canvas to find a niche in their market?

To answer that question, we must first look at the traditional winery business model .

As you can see, the wine industry has historically been patrimonial. Vineyards and estates are passed down through generations with the winery responsible for all phases of production, clarification, and distribution.

The traditional winery business canvas model suggests you must be the owner of the winery/vineyard where the wine is “manufactured”, meaning physical assets are a key resource of the business model.

So, if you wanted to start producing a Rioja, for example, you’d have to set up your vineyard in the region.

This is monumentally expensive as you need to:

• Purchase the land
• Plant a vineyard
• Absorb set-up and installation costs
• Deal with maintenance costs

It’s here where Vintae saw their opportunity.

What if we move vineyard ownership across the business model canvas from key resources to key partners ?

By leasing the equipment and space of large wineries (of which there was plenty), they could still produce their wine but reduce the cost and exposure associated with land purchase, crushing equipment, huge storage tanks, vineyard maintenance, and their bottling line.

This enabled them to focus on their sales, marketing, and distribution channels to create a better brand experience for their customers.

Also, it afforded them more flexibility when creating new wines as they were no longer confined to the limitations of grapes grown on their vineyard.

The lightness of this new business model eliminates maintenance overheads, channels energy into personalizing the customer experience, and allows for unprecedented levels of growth in one of the world’s most competitive industries.

Business Model Canvas Software

Although I did mention starting with a large whiteboard, sticky notes, and a pack of colorful sharpies there are several options in which you can digitize the business canvas model production process.

While I still believe the aforementioned process is extremely valuable (it gets your entire team’s input in a single hour-long session) you may decide it more viable for each member of management to pool their ideas digitally before sharing with the rest of the group.

If that’s the case, then take a look at some of the following software tools for creating your business model canvas.

Strategyzer

Created by the founders of the business model canvas Alex Osterwalder and Yves Pigneur , Strategyzer offers a range of business model canvas templates for you to get started with.

If you opt for the paid model (there is a 30-day free trial period) they offer a series of various classes that teach you how to build and test different value propositions and business models.

A real-time built-in cost estimator analyzes the financial viability of some of your business ideas, identifying alternative areas you may wish to explore with your model.

All-in-all, it’s a great resource to play around with and test some of your business ideas, with the option to dive into further detail if you see fit.

Canvanizer is a free, easy-to-use web tool that allows you to share links between team members who are brainstorming ideas for a business model canvas, but working remotely.

Like Strategyzer, there are several business model canvas templates provided to help you get started with your analysis. The strength of this platform is its accessibility. Much like a Google Doc., several people can brainstorm on the same canvas simultaneously with changes being synchronized automatically.

Business Model Canvas Tool

A ThePowerMBA alumni, impressed by the simplicity and effectiveness of the tool, went ahead and created the free application Business Model Canvas Tool .

It’s an incredibly intuitive, and easy-to-use tool that allows you to create templates simply by clicking the + button in each building block.

Each business model canvas created can be downloaded and shared as a pdf. with the rest of the team.

Would You Like to Learn More about Business Models?

If, after going through our 9-step guide on how to use the Business Model Canvas you’d like to learn more about different business model analysis tools , take a look at our alternative MBA business program .

As you’ll see, the course gives students a 360-degree view of business and management practices – such as engines of growth, segmentation and targeting, and value propositions.

I highly recommend you go check it out.

Regardless, I’d love to hear what you thought about this guide. Was it helpful? Would you like to see additional business cases analyzed from your industry?

Let us know in the comments below.

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16 Comments

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Well explained with practical business case

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Business Model Canvas: Explained with Examples

Got a new business idea, but don’t know how to put it to work? Want to improve your existing business model? Overwhelmed by writing your business plan? There is a one-page technique that can provide you the solution you are looking for, and that’s the business model canvas.

In this guide, you’ll have the Business Model Canvas explained, along with steps on how to create one. All business model canvas examples in the post can be edited online.

What is a Business Model Canvas

A business model is simply a plan describing how a business intends to make money. It explains who your customer base is and how you deliver value to them and the related details of financing. And the business model canvas lets you define these different components on a single page.   

The Business Model Canvas is a strategic management tool that lets you visualize and assess your business idea or concept. It’s a one-page document containing nine boxes that represent different fundamental elements of a business.  

The business model canvas beats the traditional business plan that spans across several pages, by offering a much easier way to understand the different core elements of a business.

The right side of the canvas focuses on the customer or the market (external factors that are not under your control) while the left side of the canvas focuses on the business (internal factors that are mostly under your control). In the middle, you get the value propositions that represent the exchange of value between your business and your customers.

The business model canvas was originally developed by Alex Osterwalder and Yves Pigneur and introduced in their book ‘ Business Model Generation ’ as a visual framework for planning, developing and testing the business model(s) of an organization.

What Are the Benefits of Using a Business Model Canvas

Why do you need a business model canvas? The answer is simple. The business model canvas offers several benefits for businesses and entrepreneurs. It is a valuable tool and provides a visual and structured approach to designing, analyzing, optimizing, and communicating your business model.

• The business model canvas provides a comprehensive overview of a business model’s essential aspects. The BMC provides a quick outline of the business model and is devoid of unnecessary details compared to the traditional business plan.
• The comprehensive overview also ensures that the team considers all required components of their business model and can identify gaps or areas for improvement.
• The BMC allows the team to have a holistic and shared understanding of the business model while enabling them to align and collaborate effectively.
• The visual nature of the business model canvas makes it easier to refer to and understand by anyone. The business model canvas combines all vital business model elements in a single, easy-to-understand canvas.
• The BMC can be considered a strategic analysis tool as it enables you to examine a business model’s strengths, weaknesses, opportunities, and challenges.
• It’s easier to edit and can be easily shared with employees and stakeholders.
• The BMC is a flexible and adaptable tool that can be updated and revised as the business evolves. Keep your business agile and responsive to market changes and customer needs.
• The business model canvas can be used by large corporations and startups with just a few employees.
• The business model canvas effectively facilitates discussions among team members, investors, partners, customers, and other stakeholders. It clarifies how different aspects of the business are related and ensures a shared understanding of the business model.
• You can use a BMC template to facilitate discussions and guide brainstorming brainstorming sessions to generate insights and ideas to refine the business model and make strategic decisions.
• The BMC is action-oriented, encouraging businesses to identify activities and initiatives to improve their business model to drive business growth.
• A business model canvas provides a structured approach for businesses to explore possibilities and experiment with new ideas. This encourages creativity and innovation, which in turn encourages team members to think outside the box.

How to Make a Business Model Canvas

Here’s a step-by-step guide on how to create a business canvas model.

Step 1: Gather your team and the required material Bring a team or a group of people from your company together to collaborate. It is better to bring in a diverse group to cover all aspects.

While you can create a business model canvas with whiteboards, sticky notes, and markers, using an online platform like Creately will ensure that your work can be accessed from anywhere, anytime. Create a workspace in Creately and provide editing/reviewing permission to start.

Step 2: Set the context Clearly define the purpose and the scope of what you want to map out and visualize in the business model canvas. Narrow down the business or idea you want to analyze with the team and its context.

Step 3: Draw the canvas Divide the workspace into nine equal sections to represent the nine building blocks of the business model canvas.

Step 4: Identify the key building blocks Label each section as customer segment, value proposition, channels, customer relationships, revenue streams, key resources, key activities, and cost structure.

Step 5: Fill in the canvas Work with your team to fill in each section of the canvas with relevant information. You can use data, keywords, diagrams, and more to represent ideas and concepts.

Step 6: Analyze and iterate Once your team has filled in the business model canvas, analyze the relationships to identify strengths, weaknesses, opportunities, and challenges. Discuss improvements and make adjustments as necessary.

Step 7: Finalize Finalize and use the model as a visual reference to communicate and align your business model with stakeholders. You can also use the model to make informed and strategic decisions and guide your business.

What are the Key Building Blocks of the Business Model Canvas?

There are nine building blocks in the business model canvas and they are:

Customer Segments

Customer relationships, revenue streams, key activities, key resources, key partners, cost structure.

• Value Proposition

When filling out a Business Model Canvas, you will brainstorm and conduct research on each of these elements. The data you collect can be placed in each relevant section of the canvas. So have a business model canvas ready when you start the exercise.  

Let’s look into what the 9 components of the BMC are in more detail.

These are the groups of people or companies that you are trying to target and sell your product or service to.

Segmenting your customers based on similarities such as geographical area, gender, age, behaviors, interests, etc. gives you the opportunity to better serve their needs, specifically by customizing the solution you are providing them.

After a thorough analysis of your customer segments, you can determine who you should serve and ignore. Then create customer personas for each of the selected customer segments.

There are different customer segments a business model can target and they are;

• Mass market: A business model that focuses on mass markets doesn’t group its customers into segments. Instead, it focuses on the general population or a large group of people with similar needs. For example, a product like a phone.  
• Niche market: Here the focus is centered on a specific group of people with unique needs and traits. Here the value propositions, distribution channels, and customer relationships should be customized to meet their specific requirements. An example would be buyers of sports shoes.
• Segmented: Based on slightly different needs, there could be different groups within the main customer segment. Accordingly, you can create different value propositions, distribution channels, etc. to meet the different needs of these segments.
• Diversified: A diversified market segment includes customers with very different needs.
• Multi-sided markets: this includes interdependent customer segments. For example, a credit card company caters to both their credit card holders as well as merchants who accept those cards.

Use STP Model templates for segmenting your market and developing ideal marketing campaigns

Visualize, assess, and update your business model. Collaborate on brainstorming with your team on your next business model innovation.

In this section, you need to establish the type of relationship you will have with each of your customer segments or how you will interact with them throughout their journey with your company.

There are several types of customer relationships

• Personal assistance: you interact with the customer in person or by email, through phone call or other means.
• Dedicated personal assistance: you assign a dedicated customer representative to an individual customer.  
• Self-service: here you maintain no relationship with the customer, but provides what the customer needs to help themselves.
• Automated services: this includes automated processes or machinery that helps customers perform services themselves.
• Communities: these include online communities where customers can help each other solve their own problems with regard to the product or service.
• Co-creation: here the company allows the customer to get involved in the designing or development of the product. For example, YouTube has given its users the opportunity to create content for its audience.

You can understand the kind of relationship your customer has with your company through a customer journey map . It will help you identify the different stages your customers go through when interacting with your company. And it will help you make sense of how to acquire, retain and grow your customers.

This block is to describe how your company will communicate with and reach out to your customers. Channels are the touchpoints that let your customers connect with your company.

Channels play a role in raising awareness of your product or service among customers and delivering your value propositions to them. Channels can also be used to allow customers the avenue to buy products or services and offer post-purchase support.

There are two types of channels

• Owned channels: company website, social media sites, in-house sales, etc.
• Partner channels: partner-owned websites, wholesale distribution, retail, etc.

Revenues streams are the sources from which a company generates money by selling their product or service to the customers. And in this block, you should describe how you will earn revenue from your value propositions.  

A revenue stream can belong to one of the following revenue models,

• Transaction-based revenue: made from customers who make a one-time payment
• Recurring revenue: made from ongoing payments for continuing services or post-sale services

There are several ways you can generate revenue from

• Asset sales: by selling the rights of ownership for a product to a buyer
• Usage fee: by charging the customer for the use of its product or service
• Subscription fee: by charging the customer for using its product regularly and consistently
• Lending/ leasing/ renting: the customer pays to get exclusive rights to use an asset for a fixed period of time
• Licensing: customer pays to get permission to use the company’s intellectual property
• Brokerage fees: revenue generated by acting as an intermediary between two or more parties
• Advertising: by charging the customer to advertise a product, service or brand using company platforms

What are the activities/ tasks that need to be completed to fulfill your business purpose? In this section, you should list down all the key activities you need to do to make your business model work.

These key activities should focus on fulfilling its value proposition, reaching customer segments and maintaining customer relationships, and generating revenue.

There are 3 categories of key activities;

• Production: designing, manufacturing and delivering a product in significant quantities and/ or of superior quality.
• Problem-solving: finding new solutions to individual problems faced by customers.
• Platform/ network: Creating and maintaining platforms. For example, Microsoft provides a reliable operating system to support third-party software products.

This is where you list down which key resources or the main inputs you need to carry out your key activities in order to create your value proposition.

There are several types of key resources and they are

• Human (employees)
• Financial (cash, lines of credit, etc.)
• Intellectual (brand, patents, IP, copyright)
• Physical (equipment, inventory, buildings)

Key partners are the external companies or suppliers that will help you carry out your key activities. These partnerships are forged in oder to reduce risks and acquire resources.

Types of partnerships are

• Strategic alliance: partnership between non-competitors
• Coopetition: strategic partnership between partners
• Joint ventures: partners developing a new business
• Buyer-supplier relationships: ensure reliable supplies

In this block, you identify all the costs associated with operating your business model.

You’ll need to focus on evaluating the cost of creating and delivering your value propositions, creating revenue streams, and maintaining customer relationships. And this will be easier to do so once you have defined your key resources, activities, and partners.  

Businesses can either be cost-driven (focuses on minimizing costs whenever possible) and value-driven (focuses on providing maximum value to the customer).

Value Propositions

This is the building block that is at the heart of the business model canvas. And it represents your unique solution (product or service) for a problem faced by a customer segment, or that creates value for the customer segment.

A value proposition should be unique or should be different from that of your competitors. If you are offering a new product, it should be innovative and disruptive. And if you are offering a product that already exists in the market, it should stand out with new features and attributes.

Value propositions can be either quantitative (price and speed of service) or qualitative (customer experience or design).

What to Avoid When Creating a Business Model Canvas

One thing to remember when creating a business model canvas is that it is a concise and focused document. It is designed to capture key elements of a business model and, as such, should not include detailed information. Some of the items to avoid include,

• Detailed financial projections such as revenue forecasts, cost breakdowns, and financial ratios. Revenue streams and cost structure should be represented at a high level, providing an overview rather than detailed projections.
• Detailed operational processes such as standard operating procedures of a business. The BMC focuses on the strategic and conceptual aspects.
• Comprehensive marketing or sales strategies. The business model canvas does not provide space for comprehensive marketing or sales strategies. These should be included in marketing or sales plans, which allow you to expand into more details.
• Legal or regulatory details such as intellectual property, licensing agreements, or compliance requirements. As these require more detailed and specialized attention, they are better suited to be addressed in separate legal or regulatory documents.
• Long-term strategic goals or vision statements. While the canvas helps to align the business model with the overall strategy, it should focus on the immediate and tangible aspects.
• Irrelevant or unnecessary information that does not directly relate to the business model. Including extra or unnecessary information can clutter the BMC and make it less effective in communicating the core elements.

What Are Your Thoughts on the Business Model Canvas?

Once you have completed your business model canvas, you can share it with your organization and stakeholders and get their feedback as well. The business model canvas is a living document, therefore after completing it you need to revisit and ensure that it is relevant, updated and accurate.

What best practices do you follow when creating a business model canvas? Do share your tips with us in the comments section below.

Join over thousands of organizations that use Creately to brainstorm, plan, analyze, and execute their projects successfully.

FAQs About the Business Model Canvas

• Use clear and concise language
• Use visual-aids
• Customize for your audience
• Highlight key insights
• Be open to feedback and discussion

More Related Articles

Amanda Athuraliya is the communication specialist/content writer at Creately, online diagramming and collaboration tool. She is an avid reader, a budding writer and a passionate researcher who loves to write about all kinds of topics.

Disrupting beliefs: A new approach to business-model innovation

Let’s face it: business models are less durable than they used to be. The basic rules of the game for creating and capturing economic value were once fixed in place for years, even decades, as companies tried to execute the same business models better than their competitors did. But now, business models are subject to rapid displacement, disruption, and, in extreme cases, outright destruction. Consider a few examples:

• Bitcoin bypasses traditional banks and clearinghouses with blockchain technology.
• Coursera and edX, among others, threaten business schools with massive open online courses (MOOCs). 1 1. Rich Lyons, “Haas dean confidently predicts demise of business schools,” interview by Della Bradshaw, Financial Times , April 10, 2015, ft.com.
• Tencent outcompetes in Internet services through microtransactions.
• Uber sidesteps the license system that protects taxicab franchises in cities around the world.

The examples are numerous—and familiar. But what’s less familiar is how , exactly, new entrants achieve their disruptive power. What enables them to skirt constraints and exploit unseen possibilities? In short, what’s the process of business-model innovation ?

For incumbents, this kind of innovation is notoriously hard. Some struggle merely to recognize the possibilities. Others shrink from cannibalizing profit streams. Still others tinker and tweak—but rarely change—the rules of the game. Should it be so difficult for established companies to innovate in their business models? What approach would allow incumbents to overturn the conventions of their industries before others do? Our work with companies in telecommunications, maritime shipping, financial services, and hospitality, among other sectors, suggests that established players can disrupt traditional ways of doing business by reframing the constraining beliefs that underlie the prevailing modes of value creation. 2 2. For broad application of reframing as a methodology, see Karim Benammar, Reframing: The art of thinking differently , Amsterdam: Uitgeverij Boom, 2012. This article shows how.

Reframing beliefs

Every industry is built around long-standing, often implicit, beliefs about how to make money. In retail, for example, it’s believed that purchasing power and format determine the bottom line. In telecommunications, customer retention and average revenue per user are seen as fundamental. Success in pharmaceuticals is believed to depend on the time needed to obtain approval from the US Food and Drug Administration. Assets and regulations define returns in oil and gas. In the media industry, hits drive profitability. And so on.

These governing beliefs reflect widely shared notions about customer preferences, the role of technology, regulation, cost drivers, and the basis of competition and differentiation. They are often considered inviolable—until someone comes along to violate them. Almost always, it’s an attacker from outside the industry. But while new entrants capture the headlines, industry insiders, who often have a clear sense of what drives profitability, are well positioned to play this game, too.

How can incumbents do so? In a nutshell, the process begins with identifying an industry’s foremost belief about value creation and then articulating the notions that support this belief. By turning one of these underlying notions on its head—reframing it—incumbents can look for new forms and mechanisms to create value. When this approach works, it’s like toppling a stool by pulling one of the legs.

The fuller process and the questions to ask along the way look like this:

1. Outline the dominant business model in your industry. What are the long-held core beliefs about how to create value? For instance, in financial services, scale is regarded as crucial to profitability.

2. Dissect the most important long-held belief into its supporting notions. How do notions about customer needs and interactions, technology, regulation, business economics, and ways of operating underpin the core belief? For instance, financial-services players assume that customers prefer automated, low-cost interfaces requiring scale. Because the IT underpinning financial services has major scale advantages, most of a provider’s cost base is fixed. Furthermore, the appropriate level of risk management is possible only beyond a certain size of business.

3. Turn an underlying belief on its head. Formulate a radical new hypothesis, one that no one wants to believe—at least no one currently in your industry. For instance, what if a financial-services provider’s IT could be based almost entirely in the cloud, drastically reducing the minimum economic scale? Examples of companies that have turned an industry belief on its head include the following:

• Target: What if people who shopped in discount stores would pay extra for designer products?
• Apple: What if consumers want to buy electronics in stores, even after Dell educated them to prefer direct buying?
• Palantir: What if advanced analytics could replace part of human intelligence?
• Philips Lighting: What if LED technology puts an end to the lighting industry as a replacement business?
• Amazon Web Services: What if you don’t need to own infrastructure yourself?
• TSMC: What if you don’t need to develop your own process technology or invest in your own infrastructure?
• Amazon Mechanical Turk, TaskRabbit, and Wikipedia: What if you can get stuff done in chunks by accessing a global workforce in small increments?

4. Sanity-test your reframe. Many reframed beliefs will just be nonsense. Applying a reframe that has already proved itself in another industry greatly enhances your prospects of hitting on something that makes business sense. Business-model innovations, unlike product and service ones, travel well from industry to industry: Airbnb inspires Uber inspires Peerby. So look again at the reframes described in step three above. All of them have broad application across industries.

5. Translate the reframed belief into your industry’s new business model. Typically, once companies arrive at a reframe, the new mechanism for creating value suggests itself—a new way to interact with customers, organize your operating model, leverage your resources, or capture income. Of course, companies then need to transition from their existing business model to the new one, and that often requires considerable nerve and sophisticated timing. 3 3. For more about this transition, see Constantinos Markides and Daniel Oyon, “What to do against disruptive business models (When and how to play two games at once),” MIT Sloan Management Review , June 26, 2010, sloanreview.mit.edu.

Four places to reframe

Executives can begin by systematically examining each core element of their business model, which typically comprises customer relationships, key activities, strategic resources, and the economic model’s cost structures and revenue streams. Within each of these elements, various business-model innovations are possible. Having analyzed hundreds of core elements across a wide range of industries and geographies, we have found that a reframe seems to emerge for each one, regardless of industry or location. Moreover, these themes have one common denominator: the digitization of business, which upends customer interactions, business activities, the deployment of resources, and economic models.

Innovating in customer relationships: From loyalty to empowerment

Businesses should strive for customer loyalty, right? Loyal customers tell their friends and contacts how good a company is, thereby lowering acquisition costs. Loyal customers stick around longer, keeping the competition at bay. Loyal customers provide repeat business, a bigger share of wallet, and more useful feedback about problems and opportunities. No wonder companies in so many industries emphasize locking in customers by winning their loyalty.

But the pursuit of loyalty has become more complicated in the digital world. The cost of acquiring new customers has fallen, even without loyalty programs. Customers—empowered by digital tools and extensive peer-reviewed knowledge about products and services—now often do a better job of choosing among buying options than companies do. Switching costs are low. Most significant, the former passivity of customers has been superseded by a desire to fulfill their own talents and express their own ideas, feelings, and thoughts. As a result, they may interpret efforts to win their loyalty as obstacles to self-actualization.

Instead of fighting that trend, why shouldn’t companies embrace the paradox that goes with it: the best way to retain customers is to set them free. The invention company Quirky, for example, lets the ideas and votes of its online community guide the products it designs and produces. MakerLabs, an interactive design–build collective, provides its members with the tools and expertise they need to build what they want.

Established companies can also make the switch from loyalty to empowerment. Consider the pension and insurance industry, long governed by the belief that complex investment decisions are best made by experts (companies or intermediary financial advisers) on behalf of account holders. A multinational insurance and pension provider reframed that belief by proposing the opposite: what if customers preferred to make their own investment decisions, even if they didn’t have the credentials of investment professionals? The company now provides customers with web-based investment information and decision-making tools, along with appropriate risk warnings. These enable customers to invest a percentage of their funds directly in businesses of their choice. This effort is in its early days, but customer pick-up and the profitability of products are promising.

Innovating in activities: From efficient to intelligent

One of the most dominant beliefs governing today’s big companies is that improving efficiency is the most reliable way to increase profits. Especially if market requirements change only gradually, companies have plenty of time to minimize the production costs of their existing products. Today, of course, constant efficiency improvements are a prerequisite for a healthy bottom line.

They may be necessary, but they’re not sufficient. In today’s rapidly changing markets, many products become obsolete before they have been “leaned out,” so managers get less time to optimize production processes fully. Companies are therefore building flexibility and embedded intelligence directly into the production process to help them adapt quickly to changing needs. Embedded intelligence can, over time, help companies to improve both the performance and the value-in-use of products and services and thus to improve their pricing. In essence, digitization is empowering businesses to go beyond efficiency, to create learning systems that work harder and smarter.

Consider how a web-based global hotel-booking platform used quick feedback cycles to reframe the focus of its business model from efficiency to user satisfaction, thereby opening new revenue opportunities. The hotel-booking industry’s central belief has been that success depends on two things: negotiating power with hotels and a reliable web interface for customers. The company reframed this dominant belief by asking if customers booking a hotel room might look for more than convenience, speed, and price. It tested this reframe through a series of iterations to its website. Even minor changes—such as the use of photographs, a warmer (or sometimes cooler) tone for the site’s text, and the inclusion of testimonials from happy customers—raised the click-through rate. This insight confirmed the reframe: a booking site is more than just a functional service; it can also become an engaging customer experience.

As a result, the company has integrated constant feedback loops and daily experiments into its key activities, creating a true learning system. Now it improves and adjusts its site daily to boost customer engagement and increase revenue. It may well be on its way to becoming the industry’s global standard.

Innovating in resources: From ownership to access

One widespread premise in business is that companies compete by owning the assets that matter most to their strategy. Competitive advantage, according to this belief, comes from owning valuable assets and resources, which tend to be scarce and utilized over long time periods, as well as firm and location specific. Thus ownership (rather than, say, leasing) frequently appears to be the best way to ensure exclusive access.

But what if assets are used infrequently or inconsistently? In these cases, digital technology, by increasing transparency and reducing search and transaction costs, is enabling new and better value-creating models of collaborative consumption. As a result, ownership may become an inferior way to access key assets, increasingly replaced by flexible win-win commercial arrangements with partners. On the consumer side, the examples include Peerby, an app that allows neighbors to share tools and other household items that would otherwise sit idle in garages, and Uber, which allows any driver with a qualified vehicle to provide taxi service. House- and room-sharing programs apply the same thinking to underused real estate. In every case, consumers opt to access rather than own these assets.

Big companies are following suit—for example, by reducing sourcing costs through “cradle-to-cradle” approaches that collect and repurpose what they previously considered waste. 4 4. See Hanh Nguyen, Martin Stuchtey, and Markus Zils, “ Remaking the industrial economy ,” McKinsey Quarterly , February 2014. Instead of buying (and thus owning) the raw materials needed for products, companies access these materials in previously sold products and repurpose them. Similarly, the global sourcing firm Li & Fung limits risk, increases efficiency, and enhances flexibility by using broad networks focused on access to (rather than majority ownership of) suppliers. The software maker Adobe Systems no longer licenses new versions of its products to customers through one-time sales; instead it provides access to them through monthly subscriptions. (For more on Adobe’s transition to its new business model, see “ Reborn in the cloud .”)

The move from ownership to access mirrors a more broadly evolving societal mind-set toward open-source models. For example, in 2014 the electric-vehicle company Tesla made all of its intellectual-property patents freely available in an effort to encourage the manufacture of clean vehicles.

These possibilities penetrate deeply into traditional industries. Consider how a big European maritime port embarked on a large-scale land-management program. The industry belief reframed by the port was that large liquid-bulk-load ships valued private access to storage tanks. The underlying assumption was that shipping companies wanted the ability to deliver their bulk loads anytime and therefore required entry to their tanks at close range.

In response to this perceived need, most maritime ports have developed jetties to which they provide individual shipping companies private access—essentially the equivalent of “ownership.” As a result of each company’s varying schedules and traffic, many jetties ended up being mostly unused, but others weren’t sufficient for peak times. Seeing this problem, the port’s management reframed the industry belief by asking if customers cared more about access on demand than exclusivity. The port now intends to help all customers use any jetty to access any fuel tank, by developing a common-carrier pipe connecting them. Just as Peerby in effect shifts a neighborhood’s “business model” by increasing the utilization of underused assets, so the maritime port is making more of underutilized jetties and storage tanks by shifting the business model so that shipping companies pay for access to jetties and storage rather than the exclusive use of them. In the future, this model may evolve into a dynamic multiuser slot-booking system that matches the real-time availability of jetties with demand for liquid-bulk-carrier ships.

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Innovating in costs: from low cost to no cost.

According to historian Peter Watson, humans have been trading goods and services for more than 150,000 years. During that time, we’ve always believed that to sell more of an offering you had to produce more of it. The underlying notion was that a single unit of a given product or service could be used only by one customer at a time. Any increase in production therefore required a commensurate increase in labor, resources, and equipment. While volume advantages did translate into lower average costs per unit, economies of scale could never get the average cost down to zero.

Digitization is reframing this ancient belief in powerfully disruptive ways. In fact, of all the reframes discussed here, this one has had the most devastating effect, since it can destroy entire industries. What’s driving prices to zero is the reframe that multiple customers can simultaneously use digital goods, which can be replicated at zero marginal cost. Massive open online courses, for example, provide a nearly zero-marginal-cost education.

Consider the implications for telecommunications, where the dominant belief has been that value is best captured through economies of scale—the more telephone minutes sold, the lower the unit cost. As a result, the larger the mobile-phone plan, the lower the cost per minute. One telecommunications company is upending this belief by making customers an “all you can eat” offer. It realized that unlimited use of voice and texting units comes at no additional cost to itself, so it can compete against emerging voice-over-IP competitors. As a result, the telco started to offer unlimited texting and voice plans by focusing its economic model on making money from data usage and from its investments in a huge data network and storage capacity. Such plans eliminate confusion among customers and increase their satisfaction. As soon as the network has reached its planned return on investment, incremental data service will also be free.

Big companies have traditionally struggled to innovate in their business models, even as digital technology has brought business-model innovation to the forefront of the corporate agenda. Yet big companies can be disruptive, too, if they identify and overcome common but limiting orthodoxies about how to do business.

Marc de Jong is a principal in McKinsey’s Amsterdam office, and Menno van Dijk is the cofounder and managing director of the THNK School of Creative Leadership and a former director in the Amsterdam office.

The authors wish to thank Karim Benammar, Berend-Jan Hilberts, and Saskia Rotshuizen for their contributions to this article.

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How to Use The Business Model Canvas for Innovation

November 2 by Justin Lokitz

There are many…many ways to use a Business Model Canvas (BMC). Often we see people employ the BMC to better understand how their company creates, delivers, and captures value today. And, just as often it’s used to make an idea (for the future) more concrete. However, in between those two things is ideation. In other words, if you know where you are today and you’re looking for ways to create business models for tomorrow, you must ideate.

While there are plenty of really great methodologies and frameworks, like open brainstorming and the Creative Matrix, designed specifically for ideation, the BMC can also be a really powerful tool to get the creative (ideation) juices flowing. The key to using the BMC for ideation is that it’s best to start with your current business model. In other words, if you’re starting from zero, there are probably better methods for ideation.

FRESHWATCHING

Need a jumpstart to start ideating based on your current business model? Why not use another company’s business model to start your creative engine. This is the purpose of the freshwatching ideation technique.

Freshwatching – a made-up term invented in The Netherlands – is an ideation method by which you mix and match (or overlay) business models from other companies, often totally outside of your business or industry, with your own business model to see what you can come up with. For instance, say you’re current business model is one by which you sell accounting software to accountants through an extensive reseller channel to other business (i.e. B2B).

What might happen if you applied Uber’s business model to your own? How would it change things? How would you go about making money in a different way? How would your company change operationally?

It doesn’t matter if the company is an online business, an offline retailer, or even a massively popular one. With Freshwatching you’re simply looking at your company through the lens of another.

REMOVE YOUR CORE

Look at your business model, and find the one thing you are absolutely certain is how your company creates, delivers, or captures value (it’s your special sauce). For instance, if you’re running a business wherein you make and sell cars, like BMW, this might be the core value proposition, “The Ultimate Driving Machine ® ” (i.e. nice, German-engineered cars built for people who love to drive). It could also be an irreplaceable partner or a specific customer segment.

Now, remove that sticky note. Chances are your business model now has a big hole in it. Your task: try to fix it. No cheating: don’t sneak the removed sticky note back in! This constraint will definitely give you new ideas.

If you’re familiar with the BMC, then you know that this tool represents a dynamic system, whereby there is interplay – cause and effect – between each and every block; changing an element in one block will affect another. This lends itself well a technique called epicenter-based ideation.

With epicenter-based ideation, you effectively have nine different boxes, or epicenters, to play with in order to generate more ideas. One way this works is to clear your business model of eight boxes, leaving the focus on one. What would you build if you kept that one? For instance, what if you were able to bring to bear your company’s resources to create an entirely new business model? Amazon did just this when it figured out that it could use its cloud-infrastructure to generate revenue.

If again, we were BMW, and we removed everything but the key resources, we might be left with a shiny brand, a pool of really talented people, manufacturing facilities, and perhaps a bunch of IP. Now what? What else could we do with such resources?

Other areas to place focus on using this method might be your customer segments (what else could you offer them); your value proposition (what other customer segments could you address?); revenue streams (what other ways might you sell, lease, or rent your product/service?); or even your channels (what else could you leverage your channels to do?).

FOLLOW PATTERNS

When you scan the landscape of existing business models, one thing you’ll notice is that there exist lots of business model patterns. Business model patterns are like formulas that can be applied to a business model to address a new customer need, or create a new revenue stream, etc. Some well-known examples of business model patterns are ones that use subscription revenue streams and/or have product platforms whereby one part of the product relies on the other to make money (think cheap handles, expensive blades, or cheap printers, expensive ink), often called bait-and-hook.

ASK TRIGGER QUESTIONS

Asking “what if?” is a powerful way to help a team come up with great ideas. The key to doing this with the BMC is to come up with a list of questions that challenges what you do today…perhaps for each box of your business model. If, for instance, you’re BMW and you sell your product today through dealers, what would happen if you sold it directly to customers through an online channel? What would that look like? You get the picture.

As the trigger questions are asked by a facilitator in 10-15 second intervals (which is important that they are), each person will simply write whatever comes to mind on a sticky note using a permanent marker. By the end of this exercise, there should be a pile of at least as many sticky notes as there are questions in front of each participant.

BRINGING IT ALL TOGETHER

The above ideation (and innovation) techniques are meant to give you concrete starting points for coming up with new ideas. The best way to use these is to do so with a group of people brought together to create novel, new options for your company or product.

The keys to making these, and other ideation/innovation techniques, work for you are the following:

• When ideating always wear a yellow hat. Not necessarily literally. Rather, using Edward De Bono’s “ Six Thinking Hats ” metaphor, everyone must be optimistic while ideating. Anything is possible at this moment…until it’s invalidated later on in the process.
• Having a strong facilitator will make all the difference. We all know how hard it is to work on your company while in your company. Bringing in someone from outside your company or even outside your group will help to keep the energy high and the yellow hats on.
• Use the above techniques as prompts during a workshop. While you might get interesting ideas from people by sending them the prompts ahead of time, more likely everyone will overthink everything. The best way to get people’s creative juices flowing is to have the moderator use these techniques as prompts during a live workshop.
• Gamify the ideation process. The facilitator should get people to eke out every last idea…to the very last one. A good way to do this is to create a contest out of the ideation process, whereby the person with the most unique ideas on sticky notes wins.
• Cluster the ideas and apply them to BMCs. Having a bunch of sticky notes with half-baked ideas is…well…not even worth the sticky notes the ideas were written on. To make ideas concrete, cluster all of the ideas into a few bigger categories then have teams of 3-5 people build new business models based on the clusters.

What other techniques have you used for business model innovation/ideation?

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By Justin Lokitz - Author

Justin is an experienced strategy designer and MD of the Business Models Inc. San Francisco office. He leverages his experience across a wide range of industry sectors to help companies design innovative, sustainable business models and strategies for the future.

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Business Model Innovation: 5 Frameworks for Success

At its heart, business model innovation is about change. It’s a way for businesses to look at what they do and ask, “Can we do this differently?” This isn’t just about adding a new product or tweaking a service; it’s about shaking up how a business operates from the ground up. Why? Because the world doesn’t stand still. Technology advances, customer needs shift, and what worked yesterday might not work tomorrow.

Think of it like updating an old map. The old paths and landmarks might no longer apply, and clinging to them could lead you astray. Business model innovation is about drawing a new map that shows the current landscape, with all its new opportunities and challenges.

In this article, we’re going to explore why changing your business model is crucial in today’s world. We’ll look at what business model innovation really means, why it’s important, and how you can start thinking about your own business in new ways. It’s about finding new paths to success in a world that’s always changing.

Let’s dive into some essential concepts to ensure we all understand the basics.

• What Is Business Model Innovation?

A business model outlines how a company creates, delivers, and captures value. It covers whom you serve, what you offer, how you generate revenue, and how you deliver your offerings. Business model innovation involves changing these aspects significantly to respond to shifts in the market, technology, or customer preferences. It’s about finding new ways to operate and compete, ensuring your business remains relevant and successful.

• Examples of Business Model Innovation

Exploring prime examples of business model innovation can provide unique insights into how companies across different industries have successfully adapted and transformed their operations. Here are three such examples:

Netflix: The company famously transitioned from a DVD rental service to a streaming giant, pioneering the online entertainment streaming industry. This innovation disrupted traditional media consumption, shifting from physical rentals and purchases to unlimited on-demand digital content, and significantly impacting the cable TV industry.

Adobe: Originally selling packaged software, the company shifted to a subscription-based cloud service with its Adobe Creative Cloud. This transition was innovative because it offered continuous updates, cloud storage, and a range of subscription plans, addressing piracy issues and making their products more accessible and affordable to a broader audience, fundamentally changing software consumption in creative industries.

Lego: By integrating digital experiences with its physical building blocks, such as video games, augmented reality apps, and interactive playsets, Lego expanded its appeal beyond traditional toys, engaging children in both physical and digital creative play. Lego’s adaptation to the digital age helped it to remain relevant and grow in a market where digital entertainment increasingly competes with physical toys.

5 Frameworks for Business Model Innovation

To effectively navigate the complexities of business model innovation, adopting proven frameworks and methodologies can provide a structured and strategic approach. These tools can help businesses systematically explore new opportunities, evaluate potential changes, and implement innovative models. Here are several key frameworks and methodologies that can guide your business model innovation efforts:

• 1. The Business Model Canvas

Developed by Alexander Osterwalder and Yves Pigneur, the Business Model Canvas is a visual chart with elements describing a company’s value proposition, infrastructure, customers, and finances. It offers a straightforward way to understand, design, and pivot your business model. By mapping out each component, companies can identify areas for innovation and explore how changes in one area may impact others.

• 2. Lean Startup Methodology

The Lean Startup methodology , created by Eric Ries, emphasizes the importance of rapid prototyping, validated learning, and other iterative product and service development techniques. This approach encourages businesses to test their hypotheses about new business models and customer behaviors quickly and efficiently, minimizing the resources spent on ideas that don’t work while identifying viable innovations faster.

• 3. Blue Ocean Strategy

Blue Ocean Strategy , formulated by W. Chan Kim and Renée Mauborgne, encourages companies to explore new market spaces or “blue oceans” that are uncontested by competitors. It focuses on creating new demand and making the competition irrelevant by offering a unique value proposition. Applying this strategy involves analyzing current industry factors and exploring ways to redefine them in favor of your business. Examples of brands following this approach include Marvel, through their expansion into movies, and Nintendo, whose Wii console opened up a new market of customers who weren’t previously interested in video games.

• 4. Disruptive Innovation Theory

Clayton Christensen’s Disruptive Innovation Theory outlines how smaller companies can challenge established incumbents by targeting overlooked segments or creating new markets through innovative business models. This theory underscores the importance of focusing on simplicity, convenience, accessibility, or affordability to disrupt an existing market.

• 5. Design Thinking

Design Thinking is a problem-solving approach that encourages businesses to focus on understanding their users’ needs and developing creative solutions. It involves empathy, ideation, prototyping, and testing to explore innovative business models that deeply resonate with customers. This iterative process ensures that innovations are user-centered and market-driven.

Each of these frameworks and methodologies offers a unique lens through which to view business model innovation. By leveraging these tools, companies can systematically explore potential changes, evaluate their impact, and implement new strategies with greater confidence. Choosing the right approach depends on your specific business context, goals, and the type of innovation you’re pursuing. Through thoughtful application of these methodologies, businesses can transform their models to stay ahead in a rapidly evolving marketplace.

• Achieving Business Model Innovation with Innovation Management Software

Innovation management software offers a suite of tools that streamline the innovation process , facilitate collaboration across departments, and provide analytics to measure the impact of proposed changes. By leveraging such a platform, companies can gather insights from a broad spectrum of sources, including employees, customers, and partners, ensuring that the innovation process is inclusive and grounded in diverse perspectives. This inclusivity not only enriches the pool of ideas but also increases the likelihood of uncovering transformative business model innovations that can lead to significant competitive advantages.

Moreover, the software supports the iterative nature of innovation, allowing businesses to test, refine, and pivot their strategies based on real-time feedback and data. This agility is crucial in today’s fast-paced market environment, where the ability to quickly respond to emerging trends, customer needs, and technological advancements can make the difference between leading the market or falling behind.

By providing a structured framework for managing the innovation process, innovation management software helps demystify the journey of business model innovation. It transforms what might seem like an overwhelming challenge into a manageable, step-by-step process, enabling enterprises to navigate their path to innovation with greater clarity and confidence.

Discover how Qmarkets’ innovation management software can empower your business to drive successful business model innovation. Explore our tools and services designed to support your strategic transformation journey, and join the ranks of forward-thinking enterprises that are shaping the future of their industries.

Charlie is an innovation strategist at Qmarkets. He started his innovation journey at a boutique consultancy in London, where he worked with some of the world’s leading retail and CPG brands. In his spare time, he’s a voracious reader of crime fiction and an avid supporter of Arsenal FC.

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Business Model Innovation: What It Is And Why It’s Important

Industry Advice Business

Amazon launched in 1995 as the “Earth’s biggest bookstore.” Fast-forward 22 years, and that “bookstore” is now a leader in cloud computing, can deliver groceries to your doorstep, and produces Emmy Award-winning television series. 

The trillion-dollar organization has achieved this growth by being continuously willing to innovate upon its business model in order to address new challenges and pursue new opportunities. 

“Amazon is amazing at new business model development,” says Greg Collier, an academic specialist in   Northeastern’s D’Amore-McKim School of Business and the director of international programs for the Center for Entrepreneurship Education . “They look at themselves from a customer-defined perspective.”

That approach has helped Amazon scale because rather than rely on one revenue stream or customer segment, the company continuously asks “ What’s next?” This has allowed leadership to iterate on its business model accordingly, repeatedly experimenting with a process known as business model innovation .

As Amazon’s success demonstrates, this process can be incredibly exciting and impactful when you’re in control. However, when the need to innovate your business model is thrust upon you by outside forces, it can also feel quite disruptive. 

For instance, today, the novel coronavirus is causing tremendous shifts in both the national and global economy. Many companies are being forced to innovate and adapt their business models in order to meet these challenges, or else risk falling victim to these drastic changes.

Read on to explore what business model innovation is and why it is so important for businesses to be capable of change.

What Is Business Model Innovation?

A business model is a document or strategy which outlines how a business or organization delivers value to its customers. In its simplest form, a business model provides information about an organization’s target market, that market’s need, and the role that the business’s products or services will play in meeting those needs. 

Business model innovation , then, describes the process in which an organization adjusts its business model. Often, this innovation reflects a fundamental change in how a company delivers value to its customers, whether that’s through the development of new revenue streams or distribution channels.

Business Model Innovation Example: The Video Game Industry

Amazon is not the only company known for continuously innovating its business model.

The video game industry, for example, has gone through a number of periods of business model innovation in recent years, Collier says, by envisioning new ways in which to make money from customers.

When video games were first created, the consoles that housed them were expensive and bulky, which put them out of reach of most consumers. This gave rise to arcades, which would charge customers to essentially purchase credits needed to play the games. 

As manufacturing processes and technological advancements made it easier to create smaller, more economical units, however, companies like Atari took advantage of the demand by selling units directly to the customer—a massive departure from what had been the accepted practice.

More recently, game developers have had to undergo rapid business model innovation in order to meet the evolving demands of customers—many of whom want to be able to play their games right on their smartphones. 

Originally, many companies adjusted their practices in order to put their games in this format, charging consumers a subscription fee or making them pay to unlock new levels. Some of those businesses, however, were able to innovate their business models to make gameplay free to the end-user by incorporating in-app advertising or selling merchandise such as T-shirts and plush toys. This practice, they found, was able to dramatically increase their reach, while also bringing in substantial funds from consumers.

As Collier notes, “Competitors can easily change how they price.” That’s why it’s crucial for companies to consider how their products are being delivered.

The Importance of Business Model Innovation 

Business model innovation allows a business to take advantage of changing customer demands and expectations. Were organizations like Amazon and Atari unable to innovate and shift their business models, it is very possible that they could have been displaced by newcomers who were better able to meet the customer need.

Business Model Innovation Example: Blockbuster vs. Netflix

Take Blockbuster, for example. The video rental chain faced a series of challenges, particularly when DVDs started out selling VHS tapes. DVDs took up less shelf space, had higher quality video and audio, and were also durable and thin enough to ship in the mail—which is where Netflix founders Reed Hastings and Marc Randolph spotted an opportunity.

The pair launched Netflix in 1997 as a DVD-by-mail business, enabling customers to rent movies without needing to leave their house. The added bonus was that Netflix could stock its product in distribution centers; it didn’t need to maintain inventory for more than 9,000 stores and pay the same operating costs Blockbuster did.

It took seven years for Blockbuster to start its own DVD-by-mail service. By that point, Netflix had a competitive advantage and its sights set on launching a streaming service, forcing Blockbuster to play a game of constant catch-up. In early 2014, all remaining Blockbuster stores shut down .

“Blockbuster’s problem was really distribution,” Collier says. “DVDs inspired Netflix, and the technology change then drove a change in the business model. And those changes are a lot harder to copy. You’re eliminating key pieces in the way a business operates.”

For this reason, it’s often harder for legacy brands to innovate. Those companies are already delivering a product or service that their customers expect, making it more difficult for teams to strategize around what’s next or think through how the industry could be disrupted.

“Disruption is usually then done by new entrants,” Collier says. “Established organizations are already making money.”

Business Model Innovation Example: Kodak

By focusing solely on existing revenue streams, however, organizations could face a fate similar to Kodak. The company once accounted for 90 percent of film and 85 percent of camera sales . Although impressive, that was just the problem: Kodak viewed itself as a film and chemical business, so when the company’s own engineer, Steven Sasson, created the first digital camera, Kodak ignored the business opportunity. Executives were nervous the shift toward digital would make Kodak’s existing products irrelevant, and impact its main revenue stream. The company lost its first-mover advantage and, in turn, was later forced to file for bankruptcy.

Business Model Innovation Example: Mars

Mars started as a candy business, bringing popular brands like Milky Way, M&M’s, and Snickers to market. Over time, however, Mars started expanding into pet food and, eventually, began acquiring pet hospitals. In early 2017, Mars purchased VCA —a company that owns roughly 800 animal hospitals—for $7.7 billion. further solidifying its hold on the pet market.

“Mars looked at its core capabilities, which is what corporate entrepreneurship is all about,” Collier says. “It’s about looking at your products and services in new ways. Leverage something you’re really good at and apply it in new ways to new products.”

The Role of Lean Innovation

Implementing lean innovation is advantageous. Lean innovation enables teams to develop, prototype, and validate new business models faster and with fewer resources by capturing customer feedback early and often.

Collier recommends companies start with a hypothesis: “I have this new customer and here’s the problem I’m solving for him or her,” for example. From there, employees can start to test those key assumptions using different ideation and marketing techniques to gather customer insights, such as surveying. That customer feedback can then be leveraged to develop a pilot or prototype that can be used to measure the team’s assumptions. If the first idea doesn’t work, companies can more easily pivot and test a new hypothesis.

“This is a big part people forget to do,” Collier says. “Lean design allows us to rapidly test and experiment perpetually until we come to a model that works.”

Pursuing Innovation in Business

In addition to business model innovation, companies could also pursue other types of innovation , including:

• Product Innovation : This describes the development of a new product, as well as an improvement in the performance or features of an existing product. Apple’s continued iteration of its iPhone is an example of this.
• Process Innovation : Process innovation is the implementation of new or improved production and delivery methods in an effort to increase a company’s production levels and reduce costs. One of the most notable examples of this is when Ford Motor Company introduced the first moving assembly line, which brought the assembly time for a single vehicle down from 12 hours to roughly 90 minutes .

The choice to pursue product, process, or business model innovation will largely depend on the company’s customer and industry. Executives running a product firm, for example, need to constantly think about how they plan to innovate their product.

“When the innovation starts to slow down, that’s when firms should be thinking of and looking at next-generation capabilities,” Collier suggests.

If a company is trying to choose where to focus its efforts, however, the business model is a recommended place to start.

“Business model innovation is often more impactful on a business than product innovations,” Collier says. “It’s Amazon’s business model that’s disrupting the market.”

Innovation Doesn’t Always Come Easy

While the examples above demonstrate that innovation is an important part of running a business, it’s also clear that it doesn’t always come easy. Corporate history is littered with examples of companies that were unable to innovate when they needed to the most.

Luckily, there are steps that business owners, entrepreneurs, and professionals can take to become better suited to pursuing innovation when an opportunity appears. 

Learning the fundamentals of how businesses and industries change will prove to be instrumental in enabling you to carry out your own initiatives. Assess and dissect the successes and failures of businesses in the past, and learn how to apply these valuable lessons to your own challenges. 

This article was originally published in December 2017. It has since been updated for accuracy and relevance.

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What Your Innovation Process Should Look Like

• Steve Blank
• Pete Newell

Whether you’re a company or a government agency.

For innovation to contribute to a company or government agency, it needs to be designed as a process from start to deployment. When organizations lack a formal innovation pipeline process, project approvals tend to be based on who has the best demo or slides, or who lobbies the hardest. A canonical Lean Innovation process inside a company or government agency would include sourcing, curation, prioritization, hypothesis testing and exploration, incubation, and integration.

Companies and government agencies often make the mistake of viewing innovation as a set of unconstrained activities with no discipline. In reality, for innovation to contribute to a company or government agency, it needs to be designed as a process from start to deployment.

• SB Steve Blank is an adjunct professor at Stanford University, a senior fellow at Columbia University, and a lecturer at the University of California, Berkeley. He has been either a cofounder or an early employee at eight high-tech start-ups, and he helped start the National Science Foundation Innovation Corps and the Hacking for Defense and Hacking for Diplomacy programs. He blogs at www.steveblank.com .
• PN Pete Newell , Colonel (Retired), ran the U.S. Army’s Rapid Equipping Force and now runs BMNT, providing battlefield tested solutions to corporate and government problems.

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The Business Model Canvas

What is the business model canvas.

The business model canvas is a tool designers use to map out a business or product’s key actors, activities and resources, the value proposition for target customers, customer relationships, channels involved and financial matters. It gives an overview to help identify requirements to deliver the service and more.

“A business model describes the rationale of how an organization creates, delivers, and captures value.” — Alexander Osterwalder, Co-creator of the Business Model Canvas  

Learn about the business model canvas and how it helps in design.

• Transcript loading…

The Business Model Canvas – Flexible Chart, Early-Warning System and More 

In service design , two tools are essential to use early in your design process: the business model canvas and the value proposition canvas . You can use the business model canvas to build an overview of changes to be made to an existing business (e.g., a merger) or of a totally new business opportunity or market gap . At the start of your design process, it’s vital to map out the business model of your service to see how it will fit into the marketplace. You’ll also need to ensure what you propose can bring maximum value to both your customers and business, and keep doing so in terms of customer retention, profitability and more.

To gain the most accurate vision of a proposed product or service, it’s essential to understand all the components and dynamics of not only the customer experience but also the service as a whole ecosystem . This ecosystem contains all the channels and touchpoints that must work together to deliver and sustain maximum value to the customer.

This canvas gives you several important advantages, namely these:

It’s collaborative – so you can bring the various partners together on the same page to generate and analyze ideas, and have an early testing ground for concepts before you advance to service staging a prototype.

It’s human-centered – so you can keep close track on how to create and maximize value for customers as well as stakeholders and other partners.

It makes it easier to collect rich data – if you have a clear purpose and strategy in mind. 

A business model canvas typically contains 10 boxes:

Key Partners – The people who will help you fulfill the key activities, using the key resources. 

Key Activities – Those vital actions that go into the everyday business to get things done; these are all the activities needed to realize and maintain the value proposition, and to power everything else involved.

Key Resources – The tools needed to get those things done, stretching across all areas the canvas covers to include, for example, customer retention.

Value Proposition – The item you think will create value for your customer: e.g., a new idea, a price drop. This is a summary of what your business will deliver to customers, and feeds into the value proposition canvas, the tool you’ll use to expand this.

Customer Relationships – Where you envision the relationship each customer segment expects: e.g., customer acquisition, retention and upselling (i.e., How do you get customers? How do you keep customers? How do you continue to create value for them?).

(Note: boxes 5 and 4 are closely linked as everything you do revolves around retaining the customer and considering the customer lifecycle.)

Customer Segments – Your most important customers (e.g., seniors); consider the value of personas here.

Channels – How you deliver the value proposition. Will it be online, through physical means or a combination? Here, you identify which channels are the best (both desirable for customers as well as cost-efficient and cost-effective for the brand).

Cost Structure – Here you find the most essential cost drivers. This allows you to consider the return on investment (ROI).

Revenue Streams – Where you find potential revenue sources (e.g., advertising). 

Sustainability – How sustainable your offering is overall, to the environment, to the social good, etc.

© Strategyzer AG, modified, CC-BY-SA-3.0

How to Build a Business Model Canvas

For the best results, follow these guidelines and aim to fill in all the gaps, looking out for cause-and-effect relationships that run between boxes/throughout:

Complete the top seven boxes (Key Partners to Customer Segments) – using all the information you can gather from your research.

Complete the next boxes:  

Cost Structure – Determine the cost drivers from the Key Partners, Activities and Resources boxes; and

Revenue Streams – Determine these from the Customer Relationships, Customer Segments and Channels boxes.

Once you have established these, you can work to estimate them in monetary terms.

Complete the Sustainability box – according to the insights you’ve found.  

Here’s an example of a business model canvas as a work in progress:

© Interaction Design Foundation, CC BY-NC-SA 3.0

Overall, remember your canvas is a flexible tool. It’s also a living document that you can revisit and use to find the most effective alternatives. With a clear sense of goals, a keen eye for detail and ear for input, and a readiness to refine this canvas, you can use it to fine-tune the best service prototype every time.

Learn More about The Business Model Canvas

Take our Service Design course , featuring a template for service blueprints.

Read this example-rich piece by experienced strategy designer Justin Lokitz for tips on using the business model canvas .

Find some additional tips on how to make the most of your business model canvas here .

Literature on the Business Model Canvas

Here’s the entire UX literature on the Business Model Canvas by the Interaction Design Foundation, collated in one place:

Learn more about the Business Model Canvas

Take a deep dive into Business Model Canvas with our course Service Design: How to Design Integrated Service Experiences .

Services are everywhere! When you get a new passport, order a pizza or make a reservation on AirBnB, you're engaging with services. How those services are designed is crucial to whether they provide a pleasant experience or an exasperating one. The experience of a service is essential to its success or failure no matter if your goal is to gain and retain customers for your app or to design an efficient waiting system for a doctor’s office.

In a service design process, you use an in-depth understanding of the business and its customers to ensure that all the touchpoints of your service are perfect and, just as importantly, that your organization can deliver a great service experience every time . It’s not just about designing the customer interactions; you also need to design the entire ecosystem surrounding those interactions.

In this course, you’ll learn how to go through a robust service design process and which methods to use at each step along the way. You’ll also learn how to create a service design culture in your organization and set up a service design team . We’ll provide you with lots of case studies to learn from as well as interviews with top designers in the field. For each practical method, you’ll get downloadable templates that guide you on how to use the methods in your own work.

This course contains a series of practical exercises that build on one another to create a complete service design project . The exercises are optional, but you’ll get invaluable hands-on experience with the methods you encounter in this course if you complete them, because they will teach you to take your first steps as a service designer. What’s equally important is that you can use your work as a case study for your portfolio to showcase your abilities to future employers! A portfolio is essential if you want to step into or move ahead in a career in service design.

Your primary instructor in the course is Frank Spillers . Frank is CXO of award-winning design agency Experience Dynamics and a service design expert who has consulted with companies all over the world. Much of the written learning material also comes from John Zimmerman and Jodi Forlizzi , both Professors in Human-Computer Interaction at Carnegie Mellon University and highly influential in establishing design research as we know it today.

You’ll earn a verifiable and industry-trusted Course Certificate once you complete the course. You can highlight it on your resume, CV, LinkedIn profile or on your website.

All open-source articles on the Business Model Canvas

Service design - design is not just for products.

The Relationship Between Visual Design and User Experience Design

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Business Model Innovation

Product and service innovation are essential, but business model innovation can deliver more lasting competitive advantage, particularly in disruptive times. BCG helps leaders leverage innovative business models to tackle their most pressing challenges and capture their greatest opportunities.

In the past 50 years, the average business model lifespan has fallen from about 15 years to less than five. As a result, business model innovation is now an essential capability for organizations seeking to drive breakout growth, reinvigorate a lagging core, or defend against industry disruption or decline.

What Is Business Model Innovation?

Business model innovation is the art of enhancing advantage and value creation by making simultaneous—and mutually supportive—changes both to an organization’s value proposition to customers and to its underlying operating model. At the value proposition level, these changes can address the choice of target segment, product or service offering, and revenue model. At the operating model level, the focus is on how to drive profitability, competitive advantage, and value creation through these decisions on how to deliver the value proposition:

• Where to play along the value chain
• What cost model is needed to ensure attractive returns
• What organizational structure and capabilities are essential to success

Business model innovation is also critical to business transformation . Many organizations share a common set of concerns: What type of business model innovation will help us achieve breakout performance? How do we avoid jeopardizing the core business? How do we build the capability to develop, rapidly test, and scale new models? Inspiring an organization to change is not a trivial undertaking, but given the current strategic environment, it’s a critical one.

Imagine If Companies Were Better at Imagination

Creativity is too important to be left in the sandbox. It belongs in the boardroom. Martin Reeves , chairman of the BCG Henderson Institute , explains how to bring it there.

Listen on Apple Podcasts | Listen on Spotify | Listen on Other Platforms

Our Approach to Business Model Innovation

Companies hoping to drive growth through business model innovation face a number of critical questions: How broad should the scope of the effort be? What’s the appropriate level of risk to take? Is it a onetime exercise, or does it call for an ongoing capability?

To answer those questions, it’s important to realize that not all business model innovation efforts are alike. Understanding the four distinct approaches to business model innovation can help executives make effective choices in designing the path to growth:

1. The reinventor approach is deployed in light of a fundamental industry challenge, such as commoditization or new regulation, in which a business model is deteriorating slowly and growth prospects are uncertain. In this situation, the company must reinvent its customer-value proposition and realign its operations to profitably deliver on the new superior offering. 

2. The adapter approach is used when the current core business, even if reinvented, is unlikely to combat fundamental disruption. Adapters explore adjacent businesses or markets, in some cases exiting their core business entirely. Adapters must build an  innovation engine  to persistently drive experimentation to find a successful “new core” space with the right business model. 

3. The maverick approach deploys business model innovation to scale up a potentially more successful core business. Mavericks—which can be either startups or insurgent established companies—employ their core advantage to revolutionize their industry and set new standards. This requires an ability to continually evolve the competitive edge or advantage of the business to drive growth. 

4. The adventurer approach aggressively expands the footprint of a business by exploring or venturing into new or adjacent territories. This approach requires an understanding of the company’s competitive advantage and placing careful bets on novel applications of that advantage in order to succeed in new markets. 

Our Client Work in Business Model Innovation Consulting

BCG helped a Southeast Asian bank develop a new business model that delivered superior results at 50% of the cost of the traditional model.

Our Insights on Business Model Innovation

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Companies have plenty of “will” but much less “way” when it comes to climate and sustainability innovation readiness.

Four Steps to Sustainable Business Model Innovation

We propose an iterative cycle of activity that helps companies optimize for both business value and social value in a single business model.

How Leaders Bring Product and Sales Teams Together

The best innovators encourage customer-facing and technology-facing teams to collaborate. What can we learn from companies that have broken down silos?

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Business Model Canvas (2023) – Ultimate Example and Free Download

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Vaughan Broderick

Have you been wondering what the business model canvas is? Or, what are the 9 components of the business model canvas? Or, why the business model canvas is important?

If these questions sound familiar, you are not alone.

Since 2021, this guide has been downloaded thousands of times by global leaders, innovators and entrepreneurs to disrupt, redesign, transform and accelerate business competitiveness and growth.

The guide has been updated the guide to respond to today’s ambiguity and volatility with hundreds of hours of research and real-world use, making it the ultimate business model canvas guide.

In the article, I’ll show you :

• What the business model canvas is
• How to fill in the business model canvas
• How to innovate the business model canvas

Let’s get going!

What is the Business Model Canvas?

The Business Model Canvas (BMC), invented by Alex Osterwalder of Strategyzer, is a tool to describe and visualise how a business creates, delivers and captures value all in an easy to understand, one-page document.

It’s a way to organise and present assumptions regarding the nine inter-related building blocks: customer segments, value proposition, channels, customer relationships, key partners, key resources, key activities, cost structure and revenue.

Most importantly, the BMC describes a story of a business strategy or lean startup innovation template. For example, how ‘back-stage’ infrastructure (partners, activities and resources) supports customer facing ‘front-stage’ value (value propositions, relationships, channels and segments).

What is the Purpose of the Business Model Canvas?

BMC has three main purposes:

• A BMC is useful for mapping existing business models to visualise and explain what currently happens. The approach can also be taken to map out competitors to have an understanding of the ‘current state’, differences, similarities and identify some opportunities.
• Often, the BMC is used to design new business models. Whether, a company is a startup or established business, using the BMC for innovation is an effective method to find competitive advantage.
• The BMC can also be used to manage an innovation portfolio or pipeline. Because of the ease of use and visual nature, many promising innovations can be explored during the startup and incubation phase using innovation approaches. Then, during exploration ideas are either ‘killed’ or moved on to be exploited in a growth and business management style.

The 9 Components of the Business Model Canvas

The nine components best understood across the design thinking lens of Desirability, Feasibility and Viability.

Business Model Canvas - Desirability

1. customer segments.

This section describes who value is created for and who are our most important customers. For example, who is using the product or service, or whose problems are being resolved or needs satisfied.

The customer segment is the ‘customer profile’ from the Value Proposition Canvas . An organisation makes a conscious decision of which customer segment is most important to the business.

Also, customer segments are more than  demographics, they consist of common behaviours, needs and attributes. And, what ‘jobs’ they are trying to get done.

A customer segment could be described as broadly as mass market or more niche.

Remember to:

• Create a segment for each distinct and important market. For example, if parents are the market, is it parents with pre-schoolers or empty-nesters. These segments will have very different value propositions.
• If selling B2B then you are likely to need a few segments because you may need to understand and target different ‘customers’ in the same company. The ‘customers’ might include the decision-maker, the buyer, the salesperson, the influencer, the user / customer. Also, keep an eye out for any saboteurs.
• Business models with intermediaries or double-sided markets will need segments and value propositions for both. For example, Air BnB has both home owners and travellers as customer segments.
• The whole BMC is designed to deliver value to each customer segment in a profitable and scalable way that is relevant to the ‘jobs’ they are trying to get done.
• The essential question is:  ‘who do you want to create value for and what job are you helping them get done’.

2. Value Propositions

Your Value Proposition describes how your products and services create value for the customer segments.

It is what attracts customers to you, or what fundamental jobs, pains and gains are being addressed?

Ultimately, value propositions are the bundle of products and services and is often why customers may choose business over another.

• A value proposition is how you create value. It often isn’t the product. For example: a pair of headphones value proposition might be – reducing ambient sound.
• A value proposition is needed for each customer different customer segment. 
• Use the value proposition canvas for the detail, keeping the value propositions on the BMC high-level.

There are 12 common types of value propositions under the themes of functional, emotional and social :

• Performance: creating value in the form of being faster or better than the competition.
• Accessibility or democratisation: providing access to something that the customer previously didn’t have access to.
• Customisation: Value creation in the form of personalisation of experience.
• Usability: Providing convenience.
• Affordability or cost reduction: Saving customers money.
• Status: Helping customers to signal premium ownership or exclusivity.
• Communication: Messaging uniqueness or other social signals.
• Fashion: Looking trendy or modern.
• Newness: Providing something that isn’t available elsewhere.
• Price: Being the most inexpensive, while sufficient quality.
• Design: The form and functions of the product.
• Emotional state: Such as connection to  experiences or identity.

3. Channels

Channels describe the various means that you reach customer segments, such as:

• Communication channels
• Distribution channels
• Sales channels

Examples might be directly through a website or a salesforce or indirectly (partners) through third-party stores or wholesalers.

The purpose of channels is to:

• Raise awareness
• Help customers to evaluate products and services
• Provide a way for customers to purchase 
• Deliver the value proposition
• Provide ongoing customer service

The essential question is: ‘how do your customers want to be reached?’

4. Customer Relationships

This section details your relationship to support each customer segment.

The driver for the relationship follows one of these three themes:

• Customer acquisition
• Customer retention
• Customer growth (upselling, cross-selling)

Relationships are on a spectrum within four themes. The four themes are:

• Type. This means that relationships are either direct (customers only deal with you) or indirect (customers only deal with an intermediary).
• Bond.  This means that the relationship is either long-term (hard for them to leave) or one-off/transactional (easy for them to leave).
• Intimacy. This means   that the relationships are more personal (high touch) or more automated (low touch).
• Life-cycle. This means that the relationship goes through a development from acquisition (how you get customers) to retention (how you keep customers) to cross-selling (how you earn more from customers).

There are several types of customer relationships:

• Personal assistance: By interacting with the customer in-person, via email or personal phone calls.
• Dedicated customer assistance: Such as an account manager for an individual customer.
• Self-service: The ability for the customer to help themselves.
• Automated: Automation to help the customer to help themselves.
• Communities: Providing a platform for customers to solve their own problems. This is also a great option for customer research and testing.
• Co-creation:  Customers participating in the creating of a product or service. Such as, lego providing a platform for fans to design new themes.

MUST READ – 9 Cognitive biases that stop innovation in its tracks

Business Model Canvas - Feasibility

5. key partners.

What network of partners and suppliers can be leveraged to make the business model work?

Partners are often strategic to provide a necessary capability that the business does not possess or to help scale the business.

And, they may often take the form of partnerships between competitors or non-competitors, joint ventures or buyer-supplier relationships.

Partnerships evolve to:

• Optimise value chains: Producing a key part of the value chain that the company cannot produce itself.
• Optimise economies of scale: Producing a key part of the value chain to gain the necessary cost advantages.
• Reduce risk and uncertainty: protection from current or potential  competitors.
• Acquire resources or activities: That you lack or are unable to perform. Such as knowledge, licences or access to customers.

Remember: no business exists in isolation. So, it is likely that you will need to develop a win/win partnership to be successful.

The essential question is: “what partners could help you maximise your business model.”

6. Key Resources

What critical resources do you need to make the business model work?

Resources are often, physical, financial, intellectual or human and are what is essential to support the delivery of  the value proposition, relationships and to reach customer segments.

Resources can be intangible or tangible and might include:

• Intellectual property
• Customer base
• Website traffic
• People are often essential, but not always critical. What are the critics resources that drive you business?
• Challenge your assumptions on what the key that you need internally are. Can these be outsourced?

7. Key Activities

What are the essential activities that drive success for your business model? These are the things that you will need to be great at.

Activities will be different for different product types and may include:

• Problem-solving (ie consulting)
• Risk management (ie banking)
• Production (ie computer manufacturing)
• Net-working (ie credit card networks)
• Customer relations
• Get clarity on what activities you need to be great at delivering.
• Stay high-level. You aren’t at the implementation phase and so granularity isn’t necessary.

MUST READ – The 3 levels of fit every business owner needs

Business Model Canvas - Viability

8. cost structure.

The cost structure is an outline of all the costs that will be incurred when executing the business.

Costs are either fixed (remain the same regardless of the volume produced) or variable (vary proportionally on the volume produced).

Costs will be different for a value driven business compared to a cost driven business.

The two types of cost structures are:

Value driven businesses:  Focus more on offering premium value rather than reducing costs.

Cost driven:  Focus more on creating a lean cost structure in conjunction with sufficient value. They will focus more on automation and efficiency.

Cost advantages are achieved through:

• Economies of scale: (unit price becomes cheaper as volume increases)
• Economies of scope: (same business model components applied to different products).

Remember to: understand your cost drivers  and whether your business should be value driven or cost driven.

Cost examples might include:

• Manufacturing costs
• Sales costs
• Marketing costs
• Research and development costs

9. Revenue Streams

Revenue streams describes how each segment will pay for the value that is delivered thereby ‘capturing value’.

They are either, one-off transactions (asset sale) or recurring such as monthly subscriptions (SaaS) and are an outcome of the choices made in the ‘font stage’ customer focused components.

Types of revenue streams are:

• Assets sales (ie vehicle purchase) where you sell the rights of the product to the purchaser.
• Rental fee (vehicle hire) where you allow exclusive rights to the customer for a period of time.
• Usage fee (ie electricity supply) which charges the customer based on usage.
• License fee (ie intellectual property usage – franchises) 
• Advertising fee (ie google ads) charges the customer by allowing them to advertise on company  assets.
• Subscription fee (ie access to online newsletters) charges the customer for regular, consistent usage.
• Brokerage fee (ie mortgage brokers) is revenue that is generated by intermediaries.
• Free (ie free use in the case of Google search)

Revenue can have different pricing mechanisms, such as:

• Negotiation (ie vehicle sales)
• Auction (ie competitive bidding on livestock)
• Real-time (ie the stock exchange) which is good for high volume of transactions and a large customer supply.
• Yield management (hotel bookings) which is good for perishable or limited goods.

Remember to: identify who is paying and what they are paying for. This avoids ‘orphan’ revenue streams.

How to Use the Business Model Canvas - 7 Step Guide

There are seven main steps to complete the BMC:

Step 1 – Zoom Out.

Ideally, best practice is to firstly research the environment that the business operates in.

There are four main areas to research – industry forces, market forces, macro-economic forces, key trends.

Industry forces:  research your competitors, potential competitors, what are the substitute products or services, stakeholders, value chain actors.

Consider things like:

• Which players are dominant?
• What are their competitive advantages?
• Which segments do they target?
• What are their value propositions?
• How are they different?
• What products or services could customers replace ours with?
• How easy is it for customers to switch over?
• How influential are certain stakeholders?

Market forces:  research market issues, segments, customer needs, switching costs and revenue attractiveness.

• What is shifting in the landscape?
• What are the most important segments?
• What are the growth trends?
• What are customers needs, pains and gains.
• What will customers pay?

Key trends: research technology and regulatory rends, socio-economic, societal, cultural trends.

• What technology changes are ocurring even in the extremes?
• What are the pending regulatory changes?
• What societal cultural  changes are happening or likely to happen?
• What are the disposable incomes?

Macro-economic forces: research global market conditions, capital markets, resources and infrastructure.

• Is the global economy booming or declining?
• What is happening with unemployment?
• What is the GDP growth rate?
• What is the confidence in the market?
• Is capital easy to access and not too costly?
• Are commodities over-priced?
• Can you access talent?
• Are prices increasing?

The big idea here is to understand the environment that will influence the business and the resultant BMC strategy.

Step 2 – Zoom in – Create your ‘as is’ business model.

Then, working through the 9 components, map out how your current business model looks like using post-it notes.

The BMC can be completed in any order. However, I suggest to start the on the ‘front stage” by completing 1) customer segments, 2) value proposition, 3) customer relationships, 4) channels, 5) revenue streams.

Then, completing the ‘backstage’ components, 6) key partners, 7) key activities, 8) key resources, and 9) cost structure.

Some important things to keep in mind are to:

• Keep the map high level by only documenting the ‘critical’ pieces.
• Make sure there are clear and necessary linkages between the components and that each component supports the model and is not redundant.
• If there are multiple segments, use different coloured post-it notes to see how the components connect to each segment. Alternatively, use different maps for each different segment.

Step 3 – Zoom in more.

Create your ‘as is’ value proposition canvas . Similar to the BMC, we need to understand the current state of the VPC.

Using post-it notes, map out the segments jobs, pains and gains, then the products and services that currently relieve pains and increase gains.

MUST READ – The Value Proposition Canvas: Ultimate Guide and Download

Step 4 – Use the Business Model Scorecard.

The business model scorecard is a set of seven key business model design factors.

The scorecard can be used to assess the competitive advantage of your business model, a competitors and any business model that is being explored.

Rate each factor on a scale of one (poor) to ten (excellent).

Business Model Factors:

• Switching costs. Rating from ‘it is extremely easy to switch companies’ to ‘customers are locked in for the long-term’.
• Recurring revenues. Rating from ‘all of my revenues are one-offs’ to ‘all of my revenues are recurring’.
• Front-loading cashflow. Rating from ‘I incur all of my cost of goods sold before earning revenue’ to ‘I earn all of my revenue before incurring costs of goods sold’.
• Competitive cost structure. Rating from ‘my costs structure is 30% or more higher than competitors’ to ‘my cost structure is 30% or more lower than my competitors’.
• Leveraging people. Rating from ‘I incur all the costs for the value created in my business’ to ‘other external people create for free all the value in the business’.
• Scaling Up. Rating from ‘it takes significant resources and effort to grow’ to ‘there is unlimited growth potential to my business’.
• Guarded from competitors. Rating from ‘I’m vulnerable to competitors’ to ‘I have significant guards that competitors will find it difficult to overcome’.

Step 5 – Innovate your business model.

Taking into account what you have learned so far, are there any key insights that have emerged from the research and indicate potential opportunities or obstacles?

Then, use design thinking to innovate new business model ideas.

Design thinking is a a proven process for innovation and problem-solving and aligns perfectly with the desirability, feasibility and viability of a BMC.

There are several business model factors to explore. however, my starting point is often understanding customers needs and pain points (desirability).

Then, exploring ways to alleviate the pains and increase gains. To learn more about design thinking, I’ve written a comprehensive guide  here .

To explore the seven business model factors, try using trigger questions such as:

• How might we increase scalability?
• Or, how might we create more recurring revenue?
• The objective here is to create many different business model ideas not just limiting to one idea.

As you are exploring the environment, consider opportunities like:

• Can you draw inspiration from another business model even if it’s in another sector?
• Can you create a new value proposition that is difficult to copy?
• Can you gain competitive advantage by adopting new technology trends?
• Are there under-served (or soon to be) markets?
• Are there economic trends that are providing opportunities (such as rising living costs)?

As you are exploring your current business model, can you:

• Design a new value proposition based on new partnerships?
• Increase existing advantages that you have with resources and activities?
• Reduce your cost structure?
• Offer customers new value propositions with existing relationships and channels?
• Increase your prices?
• Give away core products to obtain high-vale add-ons or derive revenue from other sources like advertising?
• Find a new customer job, pain or gain that would be game-changing?
• Re-imagine a new product/service or bundle of that creates a gain or relieves a pain.

Step 6 – Experiment.

Starting with the model that indicates the most significant opportunity based off using the Business Model Scorecard, start testing all the hypotheses by running experiments for the most riskiest assumption.

The process follows three main steps:

• What is your idea (BMC hypothesis).
• What needs to be true for the idea to work? (riskiest assumption).
• How can the assumption be tested?
• Have any insights changed the assumption?

Common ways to test business models include:

Testing desirability. Try these methods to test customers interest in your business:

• Run ‘fake ads’. These could be on social media, in newspapers, industry publications or printed flyers.
• Create a landing page with a signup to register or to complete a survey

Testing a customers willingness and ability to pay. Try these methods:

• ‘Fake’ sales by using a ‘buy now’ button on the landing page. Measuring the clicks confirms intent.
• Pre-selling is another way to measure the actions people take. This method is common to obtain funds before building. If you don’t get enough funds, you can return the money.
• Build a minimum viable product. An MVP is a smaller core product version.

Testing customers preferences and priorities.  Try these methods:

• Split testing or A/B testing helps understand preferences between two options.
• Have the customer order features under headings of ‘must have’ ‘could have, ‘would have’ and ‘deal breaker’.

Step 7 – Staying lean.

Traditional innovation was a lengthy and risky process of R&D, business planning, building a product and taking to market before getting real evidence of a customers interest in a product, willingness to pay, preferences and priorities.

The same applies to business models.

By making small, calculated risks to test and learn about every part of a business model is far more effective.

Remaining open to change, getting insight from experiments and failure is a sure-fire way to improve the odds of success.

As you learn more, you can increase the investment into more high-fidelity experiments.

Business Model Canvas Storytelling

There are several important elements that are effective for creating and telling the story of your business model canvas:

• Stay high-level. Too much granularity will not help with shared understanding and clarity.
• Use colour-coding to describe the story. This will help your teams to understand the connection and avoid any orphan content.
• Create as-is and to-be business models.
• Identify the known elements and those that are assumptions. Perhaps use colour coding for this too.
• Separate significantly different ideas into different ‘prototype’ canvases.

Business Model Canvas Example - Netflix

Business Model Canvas Example - Airbnb

Airbnb’s business model is based on connecting travellers looking for unique and interesting places to stay and matching those needs with property owners that have spare space or complete homes for rent.

The underlying success of the business model is that Airbnb is avoiding the resource cost of the properties and therefore significantly reducing its cost structure.

Key points for double-sided platform business models.

Airbnb is using what is called a double-sided platform:

• They provide a way for home owners to monetise their spare property by listing on the platform which has a large pool of travellers.
• Travellers find a desirable place to stay and also become part of a community of Airbnb users. Although each property is potentially a different experience, trust has been established through the community and brand.

To  explore this type of resource diversion business model, here are some key points:

• Identify your businesses / sectors most costly resources. Airbnb have avoided the most costly resources in the accommodation business, property, staff, vacancies.
• Identify what potential resource owners might provide the required resources. Airbnb found that there are many property owners with spare rooms or complete properties that are under-utilised. And, for short-term stays it would be a hassle for individual property owners to manage the process.
• Design an innovative VP for the partners that you need the resources from. By providing access to a large pool of travellers, home owners can make significant extra income.
• Establish the new cost structure. Airbnb have found a lower cost model compared to traditional hotels because it does not pay property or staffing costs, while its overheads are mostly platform development, maintenance, marketing and promotion.

Benefits of the Business Model Canvas

There are several key benefits to the Business Model Canvas:

• Clarity – The BMC provides a clear picture of either your current business model or the business model that you are innovating towards.
• Communication – Having everyone on the same page is essential in any transformation or innovation process, and the BMC is an ideal way to communicate essential information to all stakeholders. Think of it as a living, one page business plan.
• Collaboration – Now that your team have clarity and a standard communication tool, the BMC allows a unifying platform to collaborate on ideas. Ideas can easily be mapped and explored in a matter of minutes.
• Risk reduction – Building a startup or innovating an existing business is risky. The BMC, helps to understand the risks and prioritise the riskiest factors to then approach validation in a logical way to minimise risk.
• Proven innovation model – The Business Model Canvas has been around for about 20 years, and during that time, thousands of companies have used the BMC for innovation. The BMC has become a standard tool for innovation and strategy.
• Customer-centric – It’s no surprise that the Value Proposition is in the centre of the canvas. When designing your BMC, also use the Value Proposition Canvas (VPC) to oscillate or zoom in and out between the BMC and the VPC. Doing so helps to continually evolve a BMC from within the lens of ‘creating value for the business’ and creating value for the customer’.
• Simple, not simplistic – You don’t need an MBA to pick up the BMC and start to innovate. The critical approach is to make your business model visual, ideate, test and learn as you innovate and develop a business model with competitive advantage.
• Speed – Given the simplicity and practicality of the BMC, many iterations can be made in a short space of time.
• Design thinking  – The BMC is one of the best tools for leveraging the power of design thinking for innovation.

Are There Any Disadvantages of the Business Model Canvas?

No. Some people think that the BMC does not consider the environmental forces shaping a sector and, therefore, your business. Or, that it has limitations for start-ups.

While it is true that environmental forces are critical to consider, such as competitors, technology or legal changes, trends or macro-economic factors.

The forces are not part of your business model and, as such, is best understood through other strategy tools such as Porters 5 Forces or the Blue Ocean Strategy.

As far as limitations for start-ups, there may be a preference to use the Lean Canvas because some of the focus and terminology may be specifically tailored towards start-ups.

But, on the other hand, the BMC continues to be used effectively in the start-up phase of a business. 

And, if an existing company is exploring new business models and exploiting existing models, then my preference would be to use the consistency of the BMC.

The BMC is a proven innovation tool for both startups and existing businesses.

Business Model Canvas Innovation

Innovate your Business Model Canvas using the following approaches:

• Create a blue ocean: Create an entirely new market opportunity with no competitors.
• Meet unmet demand: Utilise customer research to understand their jobs, pains and gains that are currently not being met.
• Improve the business model: Consider the value chain and what could be either brought in-house to improve margins and control tor outsourced to strengthen areas of weakness.
• Bring something new to the market: something new such as, technology, products and services that provide better value to customers.

The challenge with innovation is that there are two distinct phases of operating:

• Explore. The explore phase is about searching for new value and business models and requires. Uncertainty and risk is high which requires creativity, speed experimentation and adaptation. Leadership need to create a culture and capability to support innovation.
• Exploit. During the exploit phase, uncertainty and risk is low and the business can focus on scaling and investing more into efficiency. Execution is more linear and requires leaders who are are strong in optimisation.

How to Operationalise the Business Model Canvas

• Download the Business Model Canvas.
• Increase your teams capability. Ensure that the team have training in the purpose and use of the Business Model Canvas.
• Clarify context. Understand the current state of the external forces and existing Business Model Canvas.
• Design the Business Model Canvas.  Create Business Model Canvas options and test assumptions to select the best one.
• Execute the Business Model Canvas. Once you have chosen a new Business Model Canvas, focus now shifts to execution.
• Manage the Business Model Canvas. Your new Business Model Canvas needs to be continually evaluated and iterated to ensure it meets both the market demand and business demand.

Want More About the Business Model Canvas?

If, after going through the our 7-step guide on how to use the Business Model Canvas you’d like to learn more about business model tools and analysis, contact me here .

Regardless, I’d love to hear what you thought about this guide, Was it helpful? Would you like see more case examples analysed?

Let me know by clicking here .

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Hi, I’m Alex Osterwalder

Innovation is my passion. For 20+ years I've helped senior leaders and startup founders better tackle the topic. I won’t rest until senior executives around the world learn How to Build Invincible Companies.

Business Thinker

Entrepreneur

Currently, I'm ranked No. 4 on the Thinkers50 list of management thinkers worldwide. I'm most passionate about simplifying complex challenges that today's leaders face. I invented the Business Model Canvas and other practical tools with Yves Pigneur. These are now used by millions of practitioners around the globe.

Strategyzer, the company I co-founded, provides technology-enabled innovation services to leading organizations. Clients include, but are not limited to, Colgate-Palmolive, MasterCard, or Merck. We help companies effectively and systematically manage innovation strategy, growth, and transformation.

I spend most of my time advising leaders on how to scale their innovation efforts and get results. They already have the assets, but lack the organizational design and innovation culture.

My books include Business Model Generation , Value Proposition Design , Testing Business Ideas , The Invincible Company , and High-Impact Tools for Teams . Together with my kids, I crafted Biz4Kids , a comic book to promote entrepreneurship.

I started working on innovation and business models two decades ago. First with a doctoral dissertation on business models. Then I “escaped” academia to apply and enrich my knowledge as a practitioner. My work as entrepreneur and senior leadership advisor shapes all my thinking and writing.

Business Model Canvas

Strategic management tool to describe how an organization creates, delivers and captures value. Initially presented in the book Business Model Generation.

Value Proposition Canvas

Strategic management tool to design, test, build and manage products and services. Fully integrates with the Business Model Canvas.

Portfolio Map

A strategic management tool to simultaneously visualize, analyze and manage the business models you are improving and growing and the future business models you are searching for and testing.

Together with my team at Strategyzer, we publish blog articles weekly on the topics of Corporate Innovation, Business Strategy, Innovation Culture, and Team & Project Management. Subscribe to our Newsletter to receive our Weekly Blog directly in your inbox.

I’m the proud co-founder and CEO of Strategyzer. We bring technology to strategy and innovation for the Global Fortune500. We launched Strategyzer after the success of bestseller Business Model Generation. That book project in itself was a crowd-funded entrepreneurial undertaking. Strategyzer is my fifth venture.

• Growth Portfolio

Build a structured Innovation Ecosystem. Systematically reduce risk and uncertainty of new business ideas. Be ready to scale a new business model in only 12 months.

• Innovation Management Software

Centralize your strategy and innovation workflow for better collaboration, increased transparency, and improved rate of success.

Online Courses On Demand

Online courses on demand teach the core Strategyzer business toolkit for growth and innovation. Highly interactive, bite-sized learning experiences are engaging and challenging.

I love sharing our latest insights from work with the Global Fortune500. All my talks and keynotes are engaging and hands on. With senior leadership I work in intimate settings on growth strategy and execution. In conferences I engage thousands in live exercises to make innovation tangible.

• Masterclasses

Multiple times a year, I facilitate Masterclasses opened to the public around Building Invincible Companies and Testing Business Ideas. During those Masterclasses, we have you discover and practice our Innovation Methodologies.

Building Invincible Companies

Acquire the skills, tools & processes needed for world-class business strategy and innovation remotely from your home or office.

Discover the Virtual Masterclass

• Testing Business Ideas

Stop wasting time and money, and apply the tools and processes that millions of corporate innovators and entrepreneurs use to systematically reduce the risk and uncertainty of new business ideas.

I enjoy having the opportunity to deliver keynotes for large organizations and innovation conferences all around the globe.

Podcast • Superhumans At Work by Mindvalley

The Power Of The Business Model Canvas

February 2021

Join the business consulting legend Alex who popularized the 1-page business model canvas during an interview with Jason Marc Campbell where we will d...

Podcast • Thinkers & Ideas

The Invincible Company with Alex Osterwalder

Alex is co-author of a new book, The Invincible Company, which decodes how some of the world’s leading companies have built superior business models a...

Podcast • Foundr Magazine Podcast with Nathan Chan

Why Products, Technology, And Price Aren’t Enough To Keep Your Company Competitive

Alex Osterwalder is primarily known for developing the Business Model Canvas, a template that helps startups develop and document new or existing busi...

Podcast • Disrupt Yourself Podcast

Disrupt Yourself with Whitney Johnson

We welcome innovation expert and one of the top-ranked thinkers in the world, Alex Osterwalder. You will hear how Alex views failure, about his mentor...

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My first book, Business Model Generation (2009), sold millions in almost 40 languages. Since then I led or participated in 4 more books in the Strategyzer series. All books are visual and practical and help solve key business challenges. Together with my kids I also published a business comic.

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September 2020

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October 2020

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Book Excerpt: What Makes Amazon’s Approach to Innovation (and Failure) Unique

December 2020

Dialogue Review

How to Build an Invincible Company

February 2020

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Alexander Osterwalder, the inventor of the Business Model Canvas: “All interesting things happen at the border”

November 2020

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The Business Model Canvas

The Business Model Canvas is a strategic management and entrepreneurial tool. It allows you to describe, design, challenge, invent, and pivot your business model. This method from the bestselling management book Business Model Generation is applied in leading organizations and start-ups worldwide.

The Business Model Canvas enables you to:

• Visualize and communicate a simple story of your existing business model.
• Use the canvas to design new business models, whether you are a start-up or an existing businessManage a portfolio of business models
• You can use the canvas to easily juggle between "Explore" and "Exploit" business models.

About the speakers

Download your free copy of this whitepaper now, explore other examples.

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Mastering business models

A self-paced online course with 
Alex Osterwalder and Yves Pigneur.

Are you trying to improve your existing business model? Or trying to create a new one that can compete in today’s market?

To read this content please select one of the options below:

Please note you do not have access to teaching notes, business model innovation canvas: a visual business model innovation model.

European Journal of Innovation Management

ISSN : 1460-1060

Article publication date: 3 June 2021

Issue publication date: 1 December 2022

More and more enterprises have realized the importance of business model innovation. However, the model tools for it are still scarce. There is a clear research gap in this academic field. Therefore, the aim of this study is to put forward a visual business model innovation model.

Design/methodology/approach

The scientific literature clustering paradigm of grounded theory is used to design business model innovation theory model (BMITM). BMITM and the business model innovation options traced back from 870 labels in the grounded process are integrated into a unified framework to build the business model innovation canvas (BMIC).

BMIC composed of three levels and seven modules is successfully developed. 145 business model innovation options are designed in BMIC. How to use BMIC is explained in detail. Through the analysis of innovation hotspots, the potential business model innovation directions can be found. A new business model of clothing enterprises using 3D printing is innovated with BMIC as an example.

Research limitations/implications

Compared with the previous tools, BMIC owns a clearer business model innovation framework and provides a problem-oriented business model innovation process and mechanism.

Practical implications

BMIC provides a systematic business model innovation solution set and roadmap for business model innovation practitioners.

Originality/value

BMIC, a new tool for business model innovation is put forward for the first time. “Mass Selection Customization-Centralized Manufacturing” designed with BMIC for the clothing enterprises using 3D printing is put forward for the first time.

• Business model innovation
• Grounded theory
• Business model canvas
• Scientometrics
• 3D printing

Acknowledgements

This work was supported by Youth Fund for Humanities and Social Sciences Research of the Ministry of Education of China (Project name: Research on Business Model Innovation and Simulation of Garment Enterprises under the Background of 3D Printing) [grant number 19YJC630068]; National Natural Science Foundation of China [grant numbers 71471049, 71702112, 71772082 and 71802103]; Program for Liaoning Innovative Talents in University [grant number WR2019018]; Liaoning Provincial Philosophy and Social Science Planning Fundgs4: [grant number L19BGL023]; and Excellent Talents Project of University of Science and Technology Liaoning [grant number 2019RC07].

Declaration of Conflicting Interests: The authors declare that there is no conflict of interest.

Jin, Y. , Ji, S. , Liu, L. and Wang, W. (2022), "Business model innovation canvas: a visual business model innovation model", European Journal of Innovation Management , Vol. 25 No. 5, pp. 1469-1493. https://doi.org/10.1108/EJIM-02-2021-0079

Emerald Publishing Limited

Copyright © 2021, Emerald Publishing Limited

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Business Model Innovation

A fresh approach to strategy

Tools: Business Model Canvas, 6 Steps Approach to Business Model Innovation

We all love tools since they are great to structure good ideas and make them better. But beaware also about the fallacies of tools. In my firm, we use a proverb to express this:

A fool with a tool is still a fool.

But when Alex Osterwalder heared it, he answered:

A genius without a tool may be (or is) a fool.

So you are warned against the perils of tools. And please, when you use them, be concrete in your answers.

The best tool for business model innovation is the business model canvas to describe your current business or your future business model. Be concrete with what you write. It is easy to write just something on the canvas, but useful and action-oriented description takes more time. Take the time to think. Below you find an empty business model canvas you can use for your own business. At the bottom you find the process we at fluidminds pursue with our clients to find business model innovations. All these tools you can download also as a pdf here .

Business Model Canvas

We use the business model canvas with all the questions as a guideline for the design process of the business model. We use the empty business model canvas to fill in our own ideas. Here is Business Model Canvas in A0 (very large) as a pdf.

The fluidminds’ 6 step approach to business model innovation

Greater innovation at greater speed: Blowing the lid off academic scholarship through “open science”

A leader in collaborative research, FIU hosts NASA-funded meeting on broadening public access to findings

By Alexandra Pecharich

May 16, 2024 at 3:04pm

Committed to the promise of impactful research, FIU brought together higher education leaders and the heads of federal agencies to promote widescale sharing of results and data. 

More than 50 university presidents, provosts and directors of research from a variety of institutions gathered with representatives from NASA, the National Science Foundation, the National Institutes of Health and the Department of Energy to work toward greater exchange of information in support of greater innovations at greater speed. 

The conversation came out of a directive from the United States Office of Science and Technology Policy. In August of 2022, its then-deputy director posted a document stating that “free, immediate and equitable access to federally funded research” was meant to “serve our collective goals of accelerating scientific discovery, strengthening translation and policymaking and lowering the barriers of access to science for all of America.” Such an approach has general bipartisan support.

“Everyone wants to see the investments that we make actually have an impact on society,” says FIU Associate Dean of Research Rita Teutonico, a molecular biologist who for 10 years served as science advisor at the NSF. She spearheaded the FIU workshop with the Higher Education Leadership Initiative for Open Scholarship.

FIU brought together university presidents, provosts and directors of research from a variety of institutions to gather with representatives from NASA, the National Science Foundation, the National Institutes of Health and the Department of Energy. 

The federal government currently funds 55% of all research conducted at American institutions of higher education, or $54 billion in fiscal year 2022. Now it wants to ensure that such taxpayer-funded work is easily accessible by others, including by researchers across the nation who are in the best position to build upon their peers’ findings.

Known as “open science,” the practice refers to “making research products and processes available to all while. . . maintaining security and privacy, and fostering collaborations, reproducibility and equity.”

The pandemic provided perhaps the best example of how making high-level scientific information broadly available in real time serves the greater good.

“Immediate public access to COVID-19 research is a powerful case study on the benefits of delivering research results and data rapidly to the people,” stated the same Office of Science memo.

The Open Source COVID-19 Drug Discovery program relied on a consortium of universities that focused on speeding up research for COVID-19 drug treatments. Scientists from a range of fields were encouraged to participate, and findings were made freely available to researchers worldwide.

The Human Genome Project represents another important example. Twenty universities and research centers across the country participated in the 13-year sequencing work, which established an open approach to data sharing and adopted open-source software. The findings paved the way for the development of new diagnostic methods and treatments, as well as new research to establish the genetic mechanisms involved in certain diseases.

Demonstrated commitment

At FIU, researchers play a key role in several major open-access projects. The Carnegie R1 university, which saw research expenditures surpass $317 million during the most recent fiscal year , has garnered millions in grants for investigations related to environmental resilience and public health - two of its research pillars - and has already shared actionable results with the world.

Scientists in the Institute of Environment within the College of Arts, Sciences & Education, for example, for three decades have contributed to the largest restoration project on the planet. The NSF’s Florida Coastal Everglades Term Ecological Research program, based at FIU , brings together investigators from multiple partner institutions to better understand the needs of the fragile, historically mismanaged ecosystem, today the source of drinking water for some eight million Floridians.

“There is a common data methodology,” Teutonico says of how the consortium has implemented a uniform system. “They have a platform and set standards for how to pull the data, what is that process, what is the format. All that makes [the data] actually useable,” she explains.

Teutonico touches upon the hard details of making available ongoing research in an operable way. In the case of the Everglades work, data is shared publicly for use by South Florida water managers as well as by administrators in other parts of the world who seek guidance for their own efforts around saving endangered wetlands.

Advancement of health and security

FIU is integrally involved in the National Institutes of Health Adolescent Brain Cognitive Development study, the largest long-term study of brain development and child health in the United States. Twenty-one institutions nationwide are participating, and the initial results of the longitudinal study are available through the National Institute of Mental Health Data Archive.

And FIU’s Population Health Initiative , launched recently with $10 million from the National Institute of Minority Health and Health Disparities, will for two decades support university-wide collaboration in addition to partnerships with other universities, among them the University of Washington, with a goal of sharing data broadly. Areas of research will include climate change, food quality and sufficiency and housing availability, among others.

In another example of data transparency, the Steven J. Green School of International & Public Affairs is successfully integrating and sharing social science and policy work with researchers and the general public with a single click. The Department of Defense-funded Security Research Hub uses public data and applies analytic tools that aggregate research, which leads to new, original findings that are shared openly in a series of online dashboards to enhance security and well-being in Latin America. Created in partnership with U.S. Southern Command, the repository focuses on topics such as transnational organized crime, migration, illegal fishing, regional health concerns and strategic competition.

The university’s strong, longstanding record of open scholarship bodes well for its newfound role as a thought-leader on the matter.

“Digital technology has made possible the proliferation of open-source initiatives which contribute to the acceleration of knowledge," says FIU Provost, Executive Vice President and Chief Operating Officer Elizabeth M. Béjar. “FIU has long embraced the aim that through increased collaboration researchers, universities and industry together can solve the world’s most-pressing problems. Open Scholarship contributes to greater economic benefits, research integrity and innovation and knowledge transfer."

An interior designer from Crate and Barrel gave my living room a virtual $21,000 makeover. Photos show the dramatic difference.

• I booked a consultation with Crate & Barrel's Design Desk to revamp my living room.
• Crate & Barrel's CEO credits the Design Desk with driving more business to the brand.
• I got personalized design help, product recommendations, and a 3D model of my space for free.

When I visited a Crate & Barrel store for the first time in March, I found the retailer excels at elevated home basics like whiteware dishes and furniture in polished neutrals.

I also learned about the Design Desk service offering free interior design consultations, which Crate & Barrel's CEO, Janet Hayes, has credited with driving more business to the brand.

I decided to give the Design Desk a try to see why it's been such a success for the company — and to help revamp my living space. I booked a virtual consultation with a designer on Crate & Barrel's website .

Take a look at how the Design Desk reimagined my New York City apartment.

The Design Desk offers in-store, in-home, and virtual appointments with interior designers.

Crate & Barrel's 23,000-square-foot flagship store in New York City opened in November. Crate & Barrel CEO Janet Hayes credited the store's team of 30 designers, as well as Design Desk workstations on both floors, with the new location's success.

Hayes told Business of Home in February that the flagship store books three times more design appointments and does 20% more business than the old SoHo location, which was 40% larger.

I booked a meeting with an interior designer to see how they could help me improve my living space.

I recently moved into a new apartment with more space than my old one. I chose to have the interior designer help me with my foyer and living room since I've found them the most puzzling to furnish.

While I have basic pieces of living-room furniture — an entryway table, sectional couch, dining table, and bookshelves — parts of the room still feel blank. I hoped that an interior designer could advise me on how to lay out the floor plan, enhance the room with more decor, and perhaps add some more pieces of furniture.

The online booking form asked me questions about which rooms I wanted help with, as well as my color and design preferences.

The form consisted of seven questions and only took a few minutes to fill out.

It also provided a space to share inspiration photos or link to a Pinterest board of images to help the designer get a sense of my taste.

Once a form is submitted, a Design Desk team interior designer reaches out to coordinate further.

Abbey Walker, the Crate & Barrel designer I was paired with, asked for lots of photos of my apartment from various angles.

The entryway of my apartment features a console table, a bench that functions as a shoe rack, and a colorful rug that has seen better days.

The large foyer leads right into the sunken living room, a layout I've never been quite sure how to furnish.

I've seen some people with similar layouts use the foyer as a dining room, but that always seemed a bit too cramped for the dinner parties I like to host. I was eager for Walker's professional opinion about how best to use the long space.

The living room features bookshelves, a TV, a sectional couch, an expandable dining table, and lots of empty space on the walls and floor.

I have a gallery wall of artwork from friends and family on the right side of the room, but the rest of the walls feel empty. With beige walls, a beige rug, and a beige couch, the room needs some more color, too.

Walker also requested measurements in order to create a three-dimensional model of the space and fill it with items from Crate & Barrel.

I sent her a floor plan of my apartment that included the sizes of the foyer and living room, and measured out the placement of windows and doors on the walls so that she could create the 3D model.

For me, this was the most time-consuming part of the process — it took around two hours to put it all together. Measuring every corner of my apartment required balancing on a stepladder, wrangling a tape measure across large distances, and a good amount of math. I'd recommend having an extra set of hands to help you with this if you can.

After I sent everything in, Walker and I met for our virtual consultation.

She asked me to describe my design style and share more about how I use the space.

"I think it's really important to view design not just as checking off things that you think you need within your space, but tuning in to how the client lives," she said.

I told her that I like minimalistic designs with pops of color and quirky details, and that I wanted to optimize my entryway-living room combination for hosting to make it feel cozy and inviting.

She also asked about my favorite colors and if there were any colors I definitely didn't want to see in the room. I'm not too picky about that — I actually prefer multicolored accent pieces instead of just picking one color to sprinkle throughout.

A few days later, the 3D rendering of my apartment appeared in my inbox. I couldn't believe how amazing it looked and that I hadn't paid a cent for it.

Walker kept my current sectional couch and TV, but replaced everything else with items from Crate & Barrel. She added a new wool and viscose area rug that retails for $5,299 and replaced my dark wood TV stand with a lighter burl wood media console that retails for $1,999.

She also added a Henning leather accent chair for $1,599 for more color and seating options, as well as new coffee tables, a faux fig leaf tree, multicolored throw pillows, curtains, and additional art on the walls to fill the empty space I'd highlighted to her.

She recommended swapping the positions of the bookshelves and dining table to open up the room.

"Moving your bookcases will create a separate living area space that is elevated and balanced," she wrote in her Design Desk notes. "It will also open up the whole room to have the table pulled out when needed."

She also recommended adding floating shelves near the table and a small gallery wall to the left of the TV. The shelves retail for $150 each, and the set of four picture frames for the gallery wall costs $239.80.

At $399 each, the white Petrie dining chairs she chose looked much nicer than my current ones, which I got for free from a neighborhood Facebook group.

In the virtual entryway, she replaced my small storage bench with a much larger one that also included hooks.

I'd been unsure about whether to use the foyer for dining or simply as an entryway. Walker helped settle the debate by saying I shouldn't crowd the area too much.

"Keeping the entryway open and minimal will make it feel inviting," she wrote.

The Batten brown oak storage bench and panel set, which offered hidden storage to conceal clutter, costs $1,711 from Crate & Barrel.

She also reimagined the entryway table as a canvas for pieces of decor and floral displays.

Walker's choice of a dark-blue rug for the high-traffic foyer area seemed more practical than my current one, which has turned gray over the years. The rug she included in the 3D floor plan retails for $1,599.

Altogether, the Crate & Barrel products chosen by the Design Desk for my apartment totaled $21,802.44.

I'm not able to spend that much on redecorating my apartment at the moment, but I appreciated learning some of the design principles that informed my interior designer's thought process. I was also grateful to finally get some answers to my design quandaries.

If I had wanted to buy anything from this list, I would have been able to work with an in-store Design Desk designer to look at the items in person and coordinate deliveries.

I can see why the Design Desk drives so much business for Crate & Barrel. On average, hiring an interior designer costs $100 per hour, with some charging up to $500 per hour, Forbes reported. While the price of the suggested product list was steep, getting personalized advice from the Design Desk was completely free.

One simple change I did make, inspired by the 3D model, was adding more art to the wall where my TV is.

I initially hadn't put artwork next to the TV because I thought it would be too distracting, but I loved how the gallery wall frames in Walker's design filled the blank space.

I hung two paintings by my grandmother, a prolific artist, and am thrilled with the way they look there.

• Main content

Can new rules in Ohio address a pharmacy staffing shortage and improve care?

Uc pharmacy expert joins wvxu's cincinnati edition.

As pharmacies face a staffing shortage nationwide, pharmacy workers are often being asked to do more with less. The Ohio Board of Pharmacy has released new rules to help address the issue.

The rules, effective May 1, include minimum staffing levels based on all services offered rather than only on how many prescriptions are filled and a requirement to create a process where workers can report concerns to management that are addressed in a timely manner.

The University of Cincinnati's Michael Hegener, PharmD, joined WVXU's Cincinnati Edition to discuss the new rules and the underlying issues currently affecting pharmacies. He said many of the issues are caused by tighter profit margins, as pharmacy benefit managers are sometimes reimbursing pharmacies less than what they have to pay for the drugs.

"You can actually lose money filling a prescription," said Hegener, director of the Wuest Family Pharmacy Practice Skills Center and associate professor of pharmacy in UC's James L. Winkle College of Pharmacy. "So how can you pay to have an adequate staffing model when you have to try to, again, do more with less?"

Hegener said the new rules are a "step in the right direction" if pharmacies implement them as intended without finding loopholes.

"I do think its a positive step and helps hopefully mitigate some of these concerns that pharmacists have had," he said.

Listen to the Cincinnati Edition segment.

Featured photo at top of a pharmacist speaking with a customer. Photo/Drazen Zigic/iStock.

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