The business model that Xiao Bai should understand: the canvas of business model in actual combat

Lead: Business model canvas is a tool for us to analyze business models, just like writing articles requires word and making tables requires Excel. Without this tool, we can achieve it in other ways, but most people use the results obtained after a lot of trials and tribulations, and the business model canvas is the most widely used business model analysis tool in the world.

Business model describes the basic principles of creating value, transmitting value and obtaining value. We need a unified language to describe, evaluate and change a business model intuitively. This language is the business model canvas (hereinafter referred to as "canvas"), which can simply describe and manipulate business models and create new strategic choices. Without this language, it is difficult to systematically challenge a certain business model assumption and successfully create a new model.

? If you have read part of the first 26 issues and are interested in the business model, it is strongly recommended that you spend about 20 minutes reading this nearly 6,000-word article, which will definitely raise your understanding of the business model to another level. This paper will mainly elaborate the business model from five aspects: canvas introduction, business model type description, business model design, business model operation in enterprise strategy and business model design process.

First, introduce the business model canvas.

If you want to do a good job, you must sharpen your tools first. This part mainly introduces each module of canvas tool and how to use it. Canvas is mainly composed of nine modules, namely: CS (customer segmentation), VP (value proposition), CR (customer relationship), CH (channel access), R$ (revenue source), KA (key business) and KP (important cooperation).

? 1.CS (customer segmentation): mainly describes the target group or structure that the company hopes to obtain and expect services. The ways of customer segmentation mainly include: mass market, niche market, customer groups seeking common ground while reserving differences (multiple market segments with different needs), diversified user groups (new user groups), multilateral platforms (two or more independent customer groups) and so on.

Customer segmentation needs to consider the following questions: who are we creating value for and who are our most important customers;

The conditions for subdividing customer groups include: new demand leads to new supply, new distribution channels need to be established, new customer relationship types need to be established, the profits generated need to be significantly different, and new customer groups are willing to pay for new improvements.

? 2.VP (Value Proposition): It mainly describes what value products and services can create for different customer groups, which is the core reason why customers choose one company instead of another. These reasons include: innovation, performance, customization, ultimate service, design, brand, price, cost reduction (time and money), risk reduction, convenience and availability.

The value proposition needs to consider: what kind of value we want to convey to customers, which one we want to help solve in customer problems, what needs we need to meet customers, what product portfolio or service we need to provide for different customer groups, etc.

? 3.CH (Channel Access): It mainly describes how the company establishes contact with customers and delivers value proposition to customers. The functions of communication mainly include: let customers know more about the company's products or services (enhance visibility), help customers evaluate the company's value proposition (optimize business through evaluation), let customers buy products or services (increase the purchase rate), pass on the value proposition to customers (spread), and provide after-sales support for customers (after-sales);

Channel access needs to consider the following issues: how do our customers want to contact us, how do we establish this connection, how are our channels (free channels and partner channels) formed, which channel is the most useful, which channel has the lowest cost, how do we combine these channels with our daily work and so on.

? 4.CR (Customer Relationship): It mainly describes the types of customer relationship established by a company for a certain customer group. From maintaining customer relationship through personnel to interacting with customers through automated equipment, it is mainly driven by the following motives: developing new customers, retaining old customers and increasing sales.

Customer relationships to be considered: what kind of relationships our customers want to establish and maintain with us, what relationships we have established, what are the costs of these relationships, and how these types can be integrated with other modules in the canvas;

The main categories of customer relations are: private service, exclusive private service, funded service, automated service, community, and creating with customers;

? 5.R $ (income source): mainly describes how the enterprise obtains cash income from the customer group. The income source is mainly divided into one-time payment from customers and continuous income;

Sources of income: what are the reasons why customers are really willing to pay the bill, what are the reasons why customers pay the bill, what are the payment methods currently used by customers, what are the payment methods that customers prefer to use, and what is the proportion of each income source in the total contribution;

The main ways to create income sources are: asset sales, royalties, membership fees, leasing, licensing fees, brokerage commissions, advertising fees, etc.

? 6.KR (core resource): mainly describes the most important assets needed to ensure the smooth operation of a business model. These resources are the core resources for enterprises to create and provide value, gain market, maintain customer relationship and establish customer channels;

Core resources: what core resources are needed for value, distribution channels, customer relationships and income sources;

Core resources are mainly divided into material resources, knowledge resources, human resources and financial resources.

? 7.KA (critical business): mainly describes the most important things that need to be done to ensure the normal operation of a business model. Each business model has a series of key businesses, which are important actions necessary for the successful operation of enterprises;

Key business issues mainly include: what key businesses are needed for value proposition, distribution channels, customer relations and revenue sources;

Key businesses mainly include the following categories: production activities, solutions, platforms, etc.

? 8.KP (Important Cooperation): It mainly describes the network of suppliers and partners needed for the smooth operation of a business model. There are many reasons for a company to establish important cooperation, and important cooperation often plays a cornerstone role in many business models. Important cooperation is mainly divided into the following four categories: strategic alliance between non-competitors, strategic cooperation between competitors, establishing joint ventures for new business, and establishing supplier-buyer relationship to ensure reliable supply;

The main considerations for important cooperation are: who are our key partners and suppliers, what core resources we have obtained from our partners, and what key businesses our partners have participated in;

The main motives for establishing partners are: optimization and scale effect, reducing risks and uncertainties, and obtaining special resources and activities;

? 9.C$ (cost structure): mainly describes the total cost of operating a business model. The cost structure mainly has the following characteristics: fixed cost, variable cost, economies of scale and scope. It is true that cost minimization is the pursuit of enterprises, but low-cost structure will be particularly important in some business models, because it can be divided into cost-oriented (cost minimization) and value-oriented (less attention to cost and more attention to value).

The cost structure mainly considers the following questions: what is the most important fixed cost in the business model, what is the most expensive core resource and what is the most expensive key business;

? When you print a canvas or draw on a whiteboard, you can use post-it notes or markers to draw and discuss all the elements together, so that you can give full play to the value of the tool. This is an operational tool that can help you understand, discuss, create and analyze. It is the commercial canvas of Apple ipd and itouch.

Next, let's talk about the common business model classification.

Know yourself and know yourself, and you will win every battle. This part mainly explains the types of common business models in the market now. Please read the last article for the introduction of specific types, with detailed descriptions and case descriptions.

? Split business model: the activities of enterprises are divided into three different types, namely, customer relationship management, product development and infrastructure management. Each type has different economic, competitive and cultural rules. These three types may exist in the same company, but ideally, they exist in independent entities to avoid conflicts or unnecessary ups and downs.

? Long tail business model: selling a small number of products, it is committed to providing quite a variety of products, each of which sells very little.

? Multi-platform business model: connecting two or more independent but interdependent customer groups. Common modes include: bilateral market mode, digital business mode and ATM mode.

? Free business model: at least one key customer group can enjoy services for free, and the financial support for non-paying customers comes from another group in the reform model. Common modes include razor mode, revenue sharing mode and additional mode.

? Open business model: create and obtain value through cooperation with external partner systems. Common modes are: open source mode, crowdfunding mode and crowdsourcing mode.

Next, let's talk about common business model design methods.

As designers, we must constantly explore all kinds of possibilities, know how to create brand-new designs and discover undeveloped areas. The designer's job is to challenge the boundaries of thinking, create new choices, and ultimately create value for users. This requires us to imagine things that don't exist. Next, we will show the design methods of six business models in detail: customer insight, conception, visual thinking, modeling, storytelling and scenarios.

? Customer insight: Customer perspective is the guiding principle of business model design, which determines what values, channels, customer relationships and income sources we choose. However, the real challenge of innovation lies in understanding customers deeply, rather than simply asking them what they want. If you are still designing with an organization-centered business model, you'd better think about why this backward design method is still in use. Here, you can use "Empathy Diagram (Customer Portrait)".

? Conception: It is one thing to generate new business model ideas, and it is another to design a brand-new business model. We need a creative process to generate a lot of ideas and successfully find out the best ones. The process of conception includes: forming a team (diversification), researching (determining key issues), developing (which aspects can be innovated), selecting standards (determining core standards), and building models (selecting 3-5 innovative models from the standards, and then discussing with canvas);

? Visual thinking: We use visual tools such as pictures, sketches, structures and sticky notes to construct and discuss various meanings. Because the business model is a complex concept composed of many modules, and there are complex relationships between modules, it is difficult to understand a real business model without drawing it.

? Modeling: Like visual thinking, modeling can concretize abstract concepts and help to explore new ideas. The model can be a sketch, a commercial canvas with rich details, or a business model verified on the spot. It represents many strategic choices by drawing a large number of (rough and detailed) models. Its purpose is not to describe the specific implementation, but to explore the new and absurd by adding and deleting some elements to each model.

? Storytelling: New innovation models may be difficult to describe and understand. Conflict is a possible reaction of people to unfamiliar models. Therefore, the most important thing to describe a new business model is to serve customers with these conflicts. Storytelling is an effective way of communication. A good story can catch the audience's ears. With the powerful explanatory power of commercial canvas, storytelling can make the audience temporarily put aside their doubts about strange things, which not only makes the business model vivid, but also makes the future look within reach.

? Scenarioization: Like visual thinking, modeling and storytelling, abstract things are concretized, and there will be thinking about the user's usage scenarios in user insight, but by integrating our understanding of customers and describing specific and unique ways, we can deepen our understanding of business models and make necessary adjustment measures.

Below, combined with business model, talk about enterprise strategy.

There is no isolated business model. In fact, there are many opportunities and choices. We just need to find all these opportunities and choices. We introduced a language to describe, discuss and design business models. Next, we will reinterpret the strategy from the perspective of commercial canvas, release a constructive document from the existing business model, and examine the operating environment of our own business model from a strategic perspective. It is mainly divided into four strategic areas: business model environment, business model evaluation and business model perspective.

? Business model environment: The increasingly complex environment, greater uncertainty and serious market subversion all make it more important than ever to examine the environment. Understanding these changes in the environment can help enterprises adjust their business models and resolve external forces more effectively. The business model environment mainly includes four parts: market influence (market classification, demand and appeal, market problems, switching costs, income attraction), industry influence (other manufacturers, stakeholders, competitors, new entrants, alternative products and services in the supply chain and value chain), key trends (industry management trends, social and cultural trends, technology trends, socio-economic trends) and macroeconomic influence (global market situation, social and economic trends).

? Business model evaluation: Regular evaluation of business model is an important activity, which enables enterprises to evaluate the health of their market position and make corresponding adjustments. This kind of evaluation is the basis of continuous improvement of business model, and may also start a subversive innovation. Canvas can be combined with SWOT analysis to analyze the strengths, weaknesses, opportunities and risks of different modules;

? Understand the business model of blue ocean strategy from the perspective of business model: blue ocean strategy is to create a brand-new industry through fundamental differences, rather than to compete with the current industry by imitating the existing business model. The business model canvas effectively complements the blue ocean strategy through a visual "global view", and the combination of the two forms a powerful theoretical framework. The Blue Ocean Strategy puts forward four key issues to challenge an industry: those elements that seem to be taken for granted in the industry should be deleted, those elements should be greatly reduced to industry standards, those elements should be greatly upgraded to industry standards, and those elements that have never been provided in the industry should be created. Combining the above four points with the modules in the canvas will create a powerful new tool.

? How to manage a variety of business models within an enterprise: It may be particularly difficult to implement a new business model in an enterprise, because the new model will bring new challenges and the new model may require a completely different organizational culture. Integration, independent operation and divestiture are the problems that we need to consider when adopting multi-business model.

Finally, talk about the design process of business model.

Every business model is unique and has its own challenges, obstacles and key factors. The innovation of business model is nothing more than the following four kinds: meeting the sluggish real market demand, bringing new products/technologies/services to the market, improving or subverting the existing market with a better business model, and creating new markets. For mature enterprises, business model innovation activities usually reflect the current business model and organizational structure. The main motives are as follows: there is a crisis at present, to adjust/improve/defend the current model in order to adapt to the changes in the environment, to bring new technologies/products/services to the market, and to prepare for the future. Here is a basic template that can be adapted to the adjustment of any organization. This template mainly has five stages: mobilization, understanding, design, implementation and management.

? Mobilization: Prepare for organizing a successful business model design project, customize the project target framework, verify the initial business idea, plan the project, organize the team, and pay attention to the following matters: project legitimacy, interest management, cross-functional team, and guidance to decision makers;

? Understanding: To study and analyze the elements required by business model design activities requires a good understanding of the background environment in which business models are about to evolve. Matters needing attention are: drawing and evaluating the current model, looking at the problem outside the current situation, not limited to the current customer group, showing close combat;

? Design: Adjust and modify the business model according to market feedback. The key here is to create and stick to a bold new business model. Matters needing attention include: avoiding the containment of bold ideas, participatory design, the relationship between old and new models, and avoiding focusing on short-term interests;

? Implementation: To implement the business model on site, we need to pay attention to the following matters: actively managing roadblocks, continuous support from project sponsors, managing the relationship between new and old projects, and multi-channel internal communication activities;

? Management: Adjusting and modifying the business model according to the market reaction, creating a new business model or rethinking the existing model is not a one-off event, but requires a series of activities that continue to the implementation stage. The management stage includes constantly evaluating the business model and scanning environment, so as to understand the long-term influence of external factors on the business model. Matters needing attention are: management mechanism, coordination and conflict, business model combination and empty cup mentality;

Conclusion:

If you find the above contents useful and want to know more, I suggest you buy the book "New Generation Business Model" written by ostwald and Pinel. Because I don't have the ability and experience to fully explain the canvas of business model, most of the contents of this book are overviews. Thank you for reading the longest article in history. In the next issue, we will combine enterprise model, operation strategy and implementation, and business model with canvas of business model.