Wednesday, February 9, 2011

The Business Model Canvas - Nonlinear Thinking

The Business Model Canvas | Jul 5th 2008

Alexander Osterwalder continues to deliver some of the very best thinking about business models.  He has recently completed some posts for his blog, Business Model Design and Innovation, that codify and condense many of the concepts that have been added to the literature on business model innovation in recent years.  I am providing this extract of his most recent post as an example of his thinking and one that provides a very clean and concise definition of a business model.

A business model is nothing else than a representation of how an organization makes (or intends to make) money. Based on an extensive literature research and real-world experience we define a business model as consisting of 9 building blocks that constitute the business model canvas :

1. The value proposition of what is offered to the market;

2. The segment(s) of clients that are addressed by the value proposition;

3. The communication and distribution channels to reach clients and offer them the value 


4. The relationships established with clients;

5. The key resources needed to make the business model possible;

6. The key activities necessary to implement the business model;

7. The key partners and their motivations to participate in the business model;

8. The revenue streams generated by the business model (constituting the revenue model);

9. The cost structure resulting from the business model.

Alex's nine building blocks are illustrated in the graphic below.

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