How to use the business model canvas for strategic alignment

Within each change theory strategic alignment is stressed as necessary to give people the insight and purpose they need to make autonomous decisions. So how can you go about creating strategic alignment? In this blog we will look at the business model canvas. One of the many tools available for strategic alignment. I like it a lot, because it is easy to read and understand and it still is very data driven. Most strategic documents take up a lot of pages. This ensures that not everyone who should read it does so. It also ensures multiple interpretations of the same strategy. When everything is on one page the discussions about strategy are a lot more lively and focused. The model makes it easier to adjust your strategy when the need arises. It is easy to develop a couple of models and see which version works best for you.

What is the business model canvas?

The business model canvas was designed by Alexander Osterwalder and Yves Pigneur. A business model describes the value an organization offers to various customers and portrays the capabilities and partners required for creating, marketing, and delivering this value to the customer. It also shows the relationships of these items with the goal of generating profitable and sustainable revenue streams.

It can be used in two situations:

  1. To develop focus for a new organization
  2. To analyze the strengths and strategic opportunities for an existing organization and adjust your strategy when needed.

The model consists of 9 building blocks. We will dive into each one. The value proposition and customer segments are the blocks that will take most of your time, since they are crucial for a successful canvas.

Business model canvas
  • Customer segments

  • Value proposition

  • Channels

  • Customer relationships

  • Revenue streams

  • Key activities

  • Key resources

  • Key partnerships

  • Cost structure

Customer segments

In this block you start at a macro level and zoom in once you feel you have described the macro level.

Macro level

Maybe your company has one customer segment, maybe it has more. The best way to find out is by discovering what the value you are currently delivering for your customers. It may be easy to overlook a segment, so if you are not sure go out and see for yourself. An example of multiple segments is with affiliate marketing companies you have at least two customer segments: one for the advertisers and one for the publishers (the people using the advertisement on their website). The output of this first step is one or more customer segments and the value you are currently delivering to them.

​Micro level

​This is where your persona's come in. Why do people come to your store/website? What are their problems or needs? What alternatives do they have? You link each persona to a customer segment. 

How to make a business model canvas

First things first: Making a business model canvas is not a solitary excercise. You need to involve all your stakeholders. Making a business model is an ​iterative process. You will need to collect data and insights about customers, costs, revenue and competition. You can work out a business model canvas in one on one interviews, but also in group sessions.

I personally like the group sessions for their time effectiveness. But in order to have effective group sessions you will need to prepare data and be sure your participants are prepared. How long the workshops will take depends on a couple of factors:

  • Is this the first time you will use the canvas?
  • Are people used to thinking in value propositions and customer segments?
  • Are facts about costs, revenue and competition widely known?
  • How do people feel about using a new tool?
  • How much data is available beforehand?

To give you a short recap of all of the text above, here is a short video: 

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Some last tips

It is easy to just start filling in the blanks on the canvas. When you do this the canvas will lose a lot of it's strength. I always like to use stories and visualization to make sure everyone in the room sees and knows the same things about our business. By using stories and visualization I trigger different parts of people's brains than I would by just using facts and assumptions. This way people are being pushed to use their imagination and you get intuitive and associative knowledge on top of the facts. The combination of these knowledge types make for the best outcomes. 

As said before: a good business model canvas is the result of a group effort. Not just of staff or management but by using knowledge from the entire organization.

You do not make a business model canvas once or once a year. You keep on checking and adjusting the canvas to your progress and the developments in the market. Try to formally adjust your canvas at least once every three months.

In some business model canvasses culture and values is added at the bottom of the canvas. This part is about leadership style, relationship style and values. I sometimes use these. This depends on the situation at hand.

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