11 years, 2 months ago

Business Model Analysis with the Business Model Canvas

<p><span style="color: #505050; font-size: 11px; line-height: 19px;">In an earlier blogpost </span><span style="color: #505050; font-size: 11px; line-height: 19px;">we described the issue of ‘doing the things right’ vs. ‘doing the right things’. In that blogpost we introduced the </span><a style="font-size: 11px; line-height: 19px;" title="Blog ‘Business Models: Do the right thing’" href="http://www.bizzdesign.com/blog/business-models-do-the-right-thing/">Business Model Canvas</a><span style="color: #505050; font-size: 11px; line-height: 19px;"> (Osterwalder, 2009) as a useful tool for describing how a business creates, delivers and captures value.</span></p><p>In this posting, we will elaborate on Business Models, introducing the subject of Business Model Analysis. We will describe the rationale for doing analyses and present different possible techniques using the case of Nextpresso, a virtual coffee-cup company. The example model is included, in a trial version of our software. Download the trail version of the <a title="Business Model Module" href="http://www.bizzdesign.com/tools/business-model-canvas-module/">BiZZdesign Business Model Canvas Software</a> to learn more about this Tool.</p><h2><span style="color: #e3004a; font-size: 11px; line-height: 14px;">Business Model Analysis</span></h2><div class="captionImage left" style="width: 600px;"><p>Analysis of business models answers questions concerning why and how a venture is, or will be, viable and valuable; After completing a Business Model Canvas for a current or future business Model, designers have questions such as:</p><ul><li>Where are our revenues coming from? </li><li>What value is delivered to which markets? </li><li>What costs are involved in delivering that value? </li><li>Are our perceived key activities and key resources as important for gaining revenues as we think they are? </li><li>If we change our model in a specific way, what are the effects?</li></ul><p>This requires insight in the elements of the business model, attributes of the elements and the relations between different elements. Results from analysing these elements, attributes and relations become the foundation for business model change and innovation in an organization. When conducting analysis on a business model, there are different perspectives to start from. In our example, each possibility for an analysis is done from a different perspective, answering a specific question.</p><h3>Case and tool introduction</h3><p>In this blog we will present different possibilities for analysis on the Business Model Canvas for a virtual coffee-cup company, Nextpresso. The Nextpresso machines brew espresso from coffee capsules, a type of pre-apportioned single-use aluminium container of roasted coffee with a variety of flavours. Nextpresso initially operates in the Dutch coffee market and intends to “cuppify” the traditional coffee world from there.</p><p><span style="font-size: 11px; line-height: 19px;">We will present several possibilities for analysis using the <a title="Business Model Canvas tool" href="http://www.bizzdesign.com/tools/business-model-canvas-module/">BiZZdesign Business Model Canvas Software Tool</a></span><span style="font-size: 11px; line-height: 19px;">. Using a tool for Business Modelling is useful since the model is created and stored in a central place, reducing the risk of miscommunication and maximizing the effect of collaboration. Furthermore, communication is made easier through publication functions (html, word, pdf-posters), making the business model better accessible. Needless to say, this is quite important for models that describe how your company creates value. Especially in the case of Business Model Analysis, tooling can help identifying strengths and weaknesses through relating building blocks, and providing insight in cash flows by calculations. Finally, tools help you to work your way “downstream” from your high level business model, to more detailed implementation views e.g. process models, customer journey maps and enterprise architecture models.</span></p><h3>Business Model Canvas for ‘Nextpresso’</h3><p>The Canvas below presents the current business model of Nextpresso. As said, Nextpresso is a coffee-cup company, providing “Great espresso experiences at home and at the office”.</p><p><img class="left" src="http://www.bizzdesign.com/assets/BlogDocuments-2/_resampled/resizedimage600476-Business-model-canvas-for-Nextpresso.png" alt="Business Model Canvas made for Nextpresso" title="This Business Model Canvas was made for the virtual coffee-cup company Nextpresso" width="600" height="476"/></p><div class="captionImage left" style="width: 600px;"><p class="caption">Business Model Canvas Nextpresso</p></div><h2><span style="font-size: 1em; line-height: 19px;">Comparison of business models</span></h2><p>If we enter a new market, how will this affect our revenues? If we stop providing certain services, will we decrease our costs? Why is the model of our competitor more successful than our model? Comparing different business models is useful in addressing such questions. The Nextpresso case provides a good example of such an analysis:</p><p><img class="left" src="http://www.bizzdesign.com/assets/BlogDocuments-2/_resampled/resizedimage600449-Business-model-canvas-for-Nextpresso-new.png" alt="Business Model Canvas made for Nextpresso" title="This Business Model Canvas was made for the virtual coffee-cup company Nextpresso" width="600" height="449"/></p><div class="captionImage left" style="width: 600px;"><p class="caption">New Business Model Canvas Nextpresso</p></div><p><span style="font-size: 11px; line-height: 19px;">The Canvas represents the business model of Nextpresso according to the situation before the value proposition ‘Great espresso experience at the office’ was added. At first Nextpresso provided machines and cups for households only. One can see the differences in Customer Segments, Channels, Customer Relationships and Revenue Streams. When elements from the other business model would have been removed, one should have these elements indicated with red. While knowing these differences, Nextpresso can calculate the differences in revenues and costs before and after this change. In the next example, we will present an example of calculating these costs and revenues.</span></p><p><span style="font-size: 11px; line-height: 19px;">Typical usage of business model comparison addresses questions regarding GAP-analyses (difference between as-is and to-be models), analyses on optional changes to a business model and comparison of alternative business models for the future. (Note: the feature to compare business models canvasses is standard available in BiZZdesign-software from release 4.2 and up)</span></p><h2>Analyzing Revenues and costs</h2><p>What value do we deliver to which markets and what costs are involved in delivering that value? Where are our revenues coming from? What prices generate what sort of revenues? The ‘Costs and revenues’ function provides a useful way of addressing these questions. Organizations get a simple and clear oversight in the size of the markets they operate in, revenues per revenue stream and costs per cost structure. </p><div class="captionImage left" style="width: 600px;"><img class="left" src="http://www.bizzdesign.com/assets/BlogDocuments-2/_resampled/resizedimage600122-Business-model-canvas-Nextpresso-cost-and-revenue.png" alt="Business Model Canvas Costs and Revenues made for Nextpresso" title="This Business Model Canvas Costs and Revenues was made for the virtual coffee-cup company Nextpresso" width="600" height="122"/><p class="caption">Costs and Revenues. Business Model Canvas Nextpresso</p></div><div class="captionImage left" style="width: 531px;"><img class="left" src="http://www.bizzdesign.com/assets/BlogDocuments-2/Business-model-canvas-detailled-cost-structure.png" alt="Business Model Canvas detailled costs structure made for Nextpresso" title="This Business Model Canvas detailled costs structure was made for the virtual coffee-cup company Nextpresso" width="531" height="278"/><p class="caption">Detailled costs structure. Business Model Canvas Nextpresso</p></div><p><span style="font-size: 11px; line-height: 19px;">For an overview of revenues and costs, specific information per Cost Structure and Revenue Stream serves as input:</span></p><p><span style="font-size: 11px; line-height: 19px;"> </span></p><div class="captionImage left" style="width: 530px;"><img class="left" src="http://www.bizzdesign.com/assets/BlogDocuments-2/Business-model-canvas-detailled-marketing.png" alt="Business Model Canvas marketing made for Nextpresso" title="This Business Model Canvas marketing was made for the virtual coffee-cup company Nextpresso" width="530" height="275"/><p class="caption">Marketing. Business Model Canvas Nextpresso</p></div><p align="center"><span style="font-size: 11px; line-height: 19px;"> </span></p><h2>Analyzing the customer relations</h2><p>In the Nextpresso case, management asks themselves: “Do we have different operating concepts for our segments ‘Households’, ‘Office users’ and ‘Companies’? Why? How many? Using the Customer Relations Landscape Map in BiZZdesign Architect, an answer to those questions can look like this:<span style="font-size: 11px; line-height: 19px;"> </span></p><div class="captionImage left" style="width: 530px;"><div class="captionImage left" style="width: 600px;"><img class="left" src="http://www.bizzdesign.com/assets/BlogDocuments-2/_resampled/resizedimage600202-Business-model-canvas-customer-relationships-landscape-map.png" alt="Business Model Canvas detailled marketing made for Nextpresso" title="This Business Model Canvas detailled marketing was made for the virtual coffee-cup company Nextpresso" width="600" height="202"/><p class="caption">Detailled marketing. Business Model Canvas Nextpresso</p></div><div class="captionImage left" style="width: 600px;"><div class="captionImage left" style="width: 600px;"><span style="font-size: 11px; line-height: 19px;">If you want to know what operating concepts your organization has for different Product Market Combinations (PMCs), this Customer Relations Landscape Map can be of service. It is typically conducted by organizations operating in segmented markets, e.g. retail banking, where concepts for wealth management relations are very different from concepts for standard retail banking relations.</span></div><div class="captionImage left" style="width: 600px;"><span style="font-size: 11px; line-height: 19px;"><br/></span></div></div><h2/><h2/><h2>Analyzing the channels</h2><p>If you want to analyze, in addition to standard PMCs, through what channels your value propositions are delivered to your market segments, the ‘Channels Landscape Map’ can be of service. With this matrix, organizations can get better insight in <em>how</em> they deliver value.<span style="font-size: 11px; line-height: 19px;"> </span><span style="font-size: 11px; line-height: 19px;"> </span></p><div class="captionImage left" style="width: 600px;"><img class="left" src="http://www.bizzdesign.com/assets/BlogDocuments-2/_resampled/resizedimage600315-Business-model-canvas-channels-landschape-map.png" alt="Business Model Canvas Channels made for Nextpresso" title="This Business Model Canvas channels was made for the virtual coffee-cup company Nextpresso" width="600" height="315"/><p class="caption">Channels. Business Model Canvas Nextpresso</p></div><p> </p><p>This Channels Landscape Map may be extended by mapping the Channels on different phases a customer is in (e.g. orientation, comparison, purchase, usage, complaint)</p><h2>Presenting your business model</h2><p>Communication to various stakeholders in your organization requires view mechanisms and various presentation options. BiZZdesign Architect provides many presentation options which we will discuss in a next posting.</p><h2>Conclusions and next steps</h2><p>We described types of analysis and we zoomed in on analysing the Business Model Canvas. Analysis of business models answers the question why and how a venture is, or will be, viable and valuable. Based on questions that represent perspectives on analyzing business models, the Nextpresso case shows different possibilities for conducting analysis. Tooling is a useful aid in business model analyses, making calculations and communication easy. Feel free to share in your thoughts and suggestions on alternative analyzes from your practice.</p><p><span style="font-size: 11px; line-height: 19px;">BiZZdesign organizes </span><a style="font-size: 11px; line-height: 19px;" href="http://www.bizzdesign.com/training/business-model-management/">training on Business Model Innovation</a><span style="font-size: 11px; line-height: 19px;"> in London (UK), Brussels (BE) and Amersfoort (NL – </span><a style="font-size: 11px; line-height: 19px;" href="http://www.bizzdesign.nl/training/business-model-management/">see our Dutch website</a><span style="font-size: 11px; line-height: 19px;">). More about BiZZdesign’s Business Model Management services and a reference to recent webinars on this subject can be found </span><a style="font-size: 11px; line-height: 19px;" href="http://www.bizzdesign.nl/consultancy/business-model-management/">here</a><span style="font-size: 11px; line-height: 19px;">.</span></p></div></div>