In one line: A one-page template of nine building blocks that shows how an organization creates, delivers and captures value. Engineers can use it to see where their product fits in the business.
Core idea
A product succeeds only if the business around it works. The Business Model Canvas, developed by Alexander Osterwalder and colleagues [1], lays a business model out on a single page, so that a team can discuss, test and change it as a whole rather than in scattered documents. It is free to use and has become a common language in startups and corporate innovation groups alike.
How it works
The canvas has nine blocks, which naturally fall into four groups:
| Group | Blocks |
|---|---|
| Customers | customer segments · customer relationships · channels |
| Offer | value propositions |
| Infrastructure | key activities · key resources · key partners |
| Finances | cost structure · revenue streams |
- Fill it with sticky notes, not prose. The canvas is meant to be revised.
- Read it left to right: what it takes to deliver (partners, activities, resources) and what it costs, against who is served (relationships, channels, segments) and how they pay.
- Test the assumptions. Each block is a hypothesis about customers, partners or costs until evidence supports it.
- Zoom into the offer with the Value Proposition Canvas.
In practice
For engineers, the canvas answers questions that rarely come up in design reviews:
- Who actually pays for this product, and through what channel?
- Which partners are critical, and which activities must we be excellent at?
- What drives the cost structure that our design choices are locking in?
Sketching the canvas for your own organization, or for a challenge project, often shows that the engineering problem is only one block of a larger system.
Questions to ask yourself
- Which block of my organization’s business model does my work most affect?
- Which assumption on our canvas has the least evidence behind it?
- How would our model change if a key partner disappeared?
Connections
- Zoom in on the offer: Value Proposition Canvas. Industry context: Porter’s Five Forces.
- Strategy and portfolio: Business Strategy, Product Planning. Service models: Products and Services.
- Capabilities exercised: Vision, Connecting Across Disciplines, Communicating and Advocacy.