Business Model Generation: 8 key ideas
The core ideas of Business Model Generation, each in under a minute, written in our own words. Want the full depth? Get the book.
- IDEA 1 OF 8
A business fits on one page
Osterwalder and Pigneur offer the Business Model Canvas, a simple one-page tool that describes how an organisation creates, delivers and captures value.
It divides a business into nine building blocks that can be sketched and discussed together.
- IDEA 2 OF 8
Know your customers
The canvas begins with customer segments, the groups of people or organisations a business serves.
Different segments may need different offers. In the authors' view, knowing exactly who you serve is the first step, since everything else on the canvas depends on it.
- IDEA 3 OF 8
Offer clear value
The value proposition describes what problem the business solves or what need it meets for customers.
It is the reason customers choose it. In the authors' view, a business with a weak or unclear value proposition struggles, however well it handles the other blocks.
- IDEA 4 OF 8
Reach customers through channels
Channels describe how a business communicates with and delivers value to customers.
They include stores, websites and partners. In the authors' view, a good product can fail if customers cannot easily find it, learn about it or get hold of it.
- IDEA 5 OF 8
Build relationships
Customer relationships describe how a business interacts with customers, from personal service to automated systems.
Relationships affect loyalty. In the authors' view, a business can attract new customers, keep them or sell them more, depending on the kind of relationship it builds.
- IDEA 6 OF 8
Revenue streams bring money
Revenue streams describe how the business earns money, such as sales, subscriptions or fees.
Each segment may pay differently. In the authors' view, a business should know exactly what customers are willing to pay for and how they like to pay.
- IDEA 7 OF 8
Resources, activities and partners matter
The canvas includes key resources, key activities and key partnerships, describing what the business needs and who helps.
These make the value proposition possible. In the authors' view, a business must check that it has the means and the helpers to actually deliver what it promises.
- IDEA 8 OF 8
Costs must be understood
The cost structure describes the main costs of running the business.
Understanding costs helps design better models. In the authors' view, a model is only useful if the money coming in is more than the cost of running it.
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