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.
Use Strategyzer Business Model Canvas to visualize and design company’s business model in a
simple, structured format.
Definition of the McKinsey 7S Model
McKinsey 7S model is a tool that analyzes company’s organizational design by looking at 7 key
internal elements: strategy, structure, systems, shared values, style, staff and skills, in order to
identify if they are effectively aligned and allow the organization to achieve its objectives.
What is the McKinsey 7S Model
McKinsey 7S model was developed in the 1980s by McKinsey consultants Tom Peters, Robert
Waterman and Julien Philips with help from Richard Pascale and Anthony G. Athos. Since its
introduction, the model has been widely used by academics and practitioners and remains one of
the most popular strategic planning tools.
It sought to present an emphasis on human resources (Soft S), rather than the traditional mass
production tangibles of capital, infrastructure and equipment, as a key to higher organizational
performance.
The goal of the model was to show how 7 elements of the company: Structure, Strategy, Skills,
Staff, Style, Systems, and Shared values, can be aligned together to achieve effectiveness in a
company.
The key point of the model is that all the seven areas are interconnected and a change in one area
requires change in the rest of a firm for it to function effectively.
Below you can find the McKinsey model, which represents the connections between seven areas
and divides them into ‘Soft Ss’ and ‘Hard Ss’. The shape of the model emphasizes the
interconnectedness of the elements.
The model can be applied to many situations and is a valuable tool when organizational design is
at question. The most common uses of the framework are:
To facilitate organizational change.
To help implement a new strategy.
To identify how each area may change in the future.
To facilitate the merger of organizations.
7S factors
In the McKinsey model, the seven areas of organization are divided into the ‘soft’ and ‘hard’ areas.
Strategy, structure and systems are hard elements that are much easier to identify and manage
when compared to soft elements.
On the other hand, soft areas, although harder to manage, are the foundation of the organization
and are more likely to create a sustained competitive advantage.
Hard S Soft S
Strategy Style
Structure Staff
Hard S Soft S
Systems Skills
Shared Values
Strategy
Strategy is a plan developed by a firm to achieve sustained competitive advantage and successfully
compete in the market. What does a well-aligned strategy mean in the 7S McKinsey model?
In general, a sound strategy is one that’s clearly articulated, long-term, helps to achieve a
competitive advantage, and reinforced by a strong vision, mission, and values.
But it’s hard to tell if such a strategy is well-aligned with other elements when analyzed alone. So
the key in the 7S model is not to look at your company to find the great strategy, structure,
systems and etc. but to look if it’s aligned with other elements.
For example, a short-term strategy is usually a poor choice for a company, but if it’s aligned with
the other 6 elements, then it may provide strong results.
Structure
Structure represents the way business divisions and units are organized and includes the
information on who is accountable to whom. In other words, structure is the organizational chart
of the firm. It is also one of the most visible and easy-to-change elements of the framework.
Systems
Systems are the processes and procedures of the company, which reveal the business’ daily
activities and how decisions are made. Systems are the area of the firm that determines how
business is done and it should be the main focus for managers during organizational change.
Skills
Skills are the abilities that a firm’s employees perform very well. They also include capabilities and
competencies. During organizational change, the question often arises of what skills the company
will really need to reinforce its new strategy or new structure.
Staff
Staff element is concerned with what type and how many employees an organization will need
and how they will be recruited, trained, motivated and rewarded.
Style
Style represents the way the company is managed by top-level managers, how they interact, what
actions do they take and their symbolic value. In other words, it is the management style of the
company’s leaders.
