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business-model-canvas skill

/skills/business-model-canvas

This skill helps you design and analyze business models using the Business Model Canvas to evaluate ideas and communicate strategy.

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---
name: business-model-canvas
description:
  Design and analyze business models using the Business Model Canvas framework.
  Use when evaluating startups, planning new products, pivoting existing
  businesses, or understanding how companies create and capture value.
---

# Business Model Canvas - Strategic Business Design

Visual framework for developing, documenting, and iterating on business models.
Created by Alexander Osterwalder, used worldwide by startups and enterprises.

## When to Use This Skill

- Evaluating new product or startup ideas
- Analyzing competitor business models
- Planning business pivots or expansions
- Communicating strategy to stakeholders
- Identifying gaps in current business model
- Due diligence on investments or partnerships

## The Nine Building Blocks

```
┌─────────────────┬─────────────────┬─────────────────┬─────────────────┬─────────────────┐
│                 │                 │                 │                 │                 │
│  KEY PARTNERS   │ KEY ACTIVITIES  │                 │   CUSTOMER      │                 │
│                 │                 │     VALUE       │  RELATIONSHIPS  │    CUSTOMER     │
│  Who helps us?  │ What do we do?  │  PROPOSITIONS   │                 │    SEGMENTS     │
│                 │                 │                 │  How do we      │                 │
│                 ├─────────────────┤  What value     │  interact?      │  Who do we      │
│                 │                 │  do we deliver? │                 │  serve?         │
│                 │ KEY RESOURCES   │                 ├─────────────────┤                 │
│                 │                 │                 │                 │                 │
│                 │ What do we need?│                 │    CHANNELS     │                 │
│                 │                 │                 │                 │                 │
│                 │                 │                 │  How do we      │                 │
│                 │                 │                 │  reach them?    │                 │
│                 │                 │                 │                 │                 │
├─────────────────┴─────────────────┴─────────────────┴─────────────────┴─────────────────┤
│                                           │                                             │
│              COST STRUCTURE               │              REVENUE STREAMS                │
│                                           │                                             │
│              What does it cost?           │              How do we earn?                │
│                                           │                                             │
└───────────────────────────────────────────┴─────────────────────────────────────────────┘
```

## Building Block Details

### 1. Customer Segments

Who are you creating value for?

| Segment Type     | Description                       | Example                         |
| ---------------- | --------------------------------- | ------------------------------- |
| **Mass Market**  | No distinction between customers  | Consumer electronics            |
| **Niche Market** | Specialized, specific segments    | Luxury goods                    |
| **Segmented**    | Slightly different needs/problems | Bank retail vs. wealth          |
| **Diversified**  | Unrelated segments                | Amazon: retail + AWS            |
| **Multi-sided**  | Interdependent segments           | Credit cards: merchants + users |

Questions to answer:

- Who are our most important customers?
- What jobs are they trying to get done?
- What pains and gains do they have?

### 2. Value Propositions

What value do you deliver to the customer?

| Value Type          | Description                          |
| ------------------- | ------------------------------------ |
| **Newness**         | Satisfying previously unmet needs    |
| **Performance**     | Improving existing product/service   |
| **Customization**   | Tailoring to specific needs          |
| **Getting it done** | Helping customers complete a job     |
| **Design**          | Superior aesthetics or experience    |
| **Brand/Status**    | Value from using a specific brand    |
| **Price**           | Similar value at lower price         |
| **Cost Reduction**  | Helping customers reduce costs       |
| **Risk Reduction**  | Reducing risks customers face        |
| **Accessibility**   | Available to those who lacked access |
| **Convenience**     | Making things easier to use          |

### 3. Channels

How do you reach and communicate with customers?

```
Channel Phases:

Awareness → Evaluation → Purchase → Delivery → After-sales
    │           │           │          │           │
    ▼           ▼           ▼          ▼           ▼
  Ads        Website      Store     Shipping    Support
  PR         Reviews      App       Install     Training
  Social     Demos        Sales     Access      Updates
```

| Channel Type | Examples                               |
| ------------ | -------------------------------------- |
| **Direct**   | Sales force, website, owned stores     |
| **Indirect** | Partner stores, wholesalers            |
| **Owned**    | Physical stores, website, app          |
| **Partner**  | Distributors, affiliates, marketplaces |

### 4. Customer Relationships

What type of relationship does each segment expect?

| Relationship Type       | Description                          |
| ----------------------- | ------------------------------------ |
| **Personal assistance** | Human interaction during/after       |
| **Dedicated**           | Specific rep for individual customer |
| **Self-service**        | No direct relationship               |
| **Automated**           | Simulated personal via automation    |
| **Communities**         | User communities and forums          |
| **Co-creation**         | Customers help create value          |

### 5. Revenue Streams

How does each customer segment generate revenue?

| Revenue Type        | Description              | Pricing       |
| ------------------- | ------------------------ | ------------- |
| **Asset sale**      | Selling ownership rights | Fixed/Dynamic |
| **Usage fee**       | Pay per use              | Per-unit      |
| **Subscription**    | Continuous access        | Recurring     |
| **Lending/Renting** | Temporary access         | Time-based    |
| **Licensing**       | Permission to use IP     | Per-license   |
| **Brokerage**       | Intermediation fees      | Transaction % |
| **Advertising**     | Fees for advertising     | CPM/CPC/CPA   |

### 6. Key Resources

What assets are essential to deliver the value proposition?

| Resource Type    | Examples                                |
| ---------------- | --------------------------------------- |
| **Physical**     | Facilities, machines, vehicles, POS     |
| **Intellectual** | Brands, patents, data, proprietary tech |
| **Human**        | Expert staff, sales teams, engineers    |
| **Financial**    | Cash, credit lines, stock options       |

### 7. Key Activities

What must you do to deliver the value proposition?

| Activity Type        | Examples                                     |
| -------------------- | -------------------------------------------- |
| **Production**       | Manufacturing, designing, delivering         |
| **Problem Solving**  | Consulting, training, custom dev             |
| **Platform/Network** | Maintaining platform, matching supply/demand |

### 8. Key Partners

Who are your key partners and suppliers?

| Partnership Type       | Motivation                       |
| ---------------------- | -------------------------------- |
| **Strategic alliance** | Non-competitors working together |
| **Coopetition**        | Competitors partnering           |
| **Joint ventures**     | New business development         |
| **Buyer-supplier**     | Reliable supplies                |

Partnership motivations:

- Optimization and economy of scale
- Reduction of risk and uncertainty
- Acquisition of resources and activities

### 9. Cost Structure

What are the most important costs?

| Cost Type              | Description                     |
| ---------------------- | ------------------------------- |
| **Fixed costs**        | Salaries, rent, utilities       |
| **Variable costs**     | Materials, commissions, hosting |
| **Economies of scale** | Cost advantages from volume     |
| **Economies of scope** | Cost advantages from variety    |

| Model Type       | Focus                            |
| ---------------- | -------------------------------- |
| **Cost-driven**  | Minimize costs wherever possible |
| **Value-driven** | Focus on value creation          |

## Analysis Framework

### Step 1: Define Customer Segments First

Start with who you serve:

```
Primary Segment:
├── Demographics: [Age, location, income]
├── Psychographics: [Values, interests, lifestyle]
├── Behaviors: [Usage patterns, buying habits]
└── Needs: [Jobs to be done, pains, gains]

Secondary Segments:
├── [Segment 2]
└── [Segment 3]
```

### Step 2: Articulate Value Proposition

For each segment, define the value:

```
Value Proposition Canvas:

Customer Jobs          Product/Service
├── Functional         ├── Features
├── Social             ├── Benefits
└── Emotional          └── Experience
        ↓                    ↓
Customer Pains     →   Pain Relievers
        ↓                    ↓
Customer Gains     →   Gain Creators
```

### Step 3: Map Channels and Relationships

How you reach and interact with customers:

```
Customer Journey:

Discover → Research → Buy → Use → Advocate
    │          │        │     │        │
    ▼          ▼        ▼     ▼        ▼
Channel:   SEO/Ads   Website  App   Email   Referral
Relation:  Automated  Self    Self  Auto    Community
```

### Step 4: Define Infrastructure

What you need to deliver:

```
Value Delivery Infrastructure:

Key Partners          Key Activities         Key Resources
├── Suppliers         ├── Core operations    ├── Physical
├── Distributors      ├── Support            ├── Intellectual
└── Allies            └── Platform           ├── Human
                                             └── Financial
```

### Step 5: Model Economics

Understand the financial viability:

```
Revenue Streams                 Cost Structure
├── [Stream 1]: $X/unit        ├── Fixed: $Y/month
├── [Stream 2]: $X/month       ├── Variable: $Z/unit
└── [Stream 3]: X% of GMV      └── CAC: $W/customer

Unit Economics:
├── LTV: $[amount]
├── CAC: $[amount]
├── LTV:CAC ratio: [X]:1
└── Payback period: [months]
```

## Output Template

After completing analysis, document as:

```markdown
## Business Model Canvas

**Company/Product:** [Name]

**Date:** [Date]

### Canvas Overview

| Block                  | Summary                  |
| ---------------------- | ------------------------ |
| Customer Segments      | [Key segments]           |
| Value Propositions     | [Core value delivered]   |
| Channels               | [Primary channels]       |
| Customer Relationships | [Relationship types]     |
| Revenue Streams        | [How you make money]     |
| Key Resources          | [Critical assets]        |
| Key Activities         | [Core operations]        |
| Key Partners           | [Strategic partnerships] |
| Cost Structure         | [Major cost drivers]     |

### Detailed Analysis

#### Customer Segments

[Detailed breakdown of segments, their needs, and characteristics]

#### Value Propositions

[Specific value delivered to each segment, pain relievers, gain creators]

#### Channels

[Channel strategy across customer journey phases]

#### Customer Relationships

[Relationship types per segment and their cost/value]

#### Revenue Streams

[Revenue model details, pricing strategy, unit economics]

#### Key Resources

[Critical resources and their strategic importance]

#### Key Activities

[Core activities that drive value creation]

#### Key Partners

[Partnership strategy and key relationships]

#### Cost Structure

[Cost drivers, fixed vs variable, economies of scale/scope]

### Strategic Assessment

**Strengths:**

- [Strength 1]
- [Strength 2]

**Weaknesses:**

- [Weakness 1]
- [Weakness 2]

**Opportunities:**

- [Opportunity 1]
- [Opportunity 2]

**Risks:**

- [Risk 1]
- [Risk 2]

### Recommendations

| Priority | Action   | Expected Impact |
| -------- | -------- | --------------- |
| High     | [Action] | [Impact]        |
| Medium   | [Action] | [Impact]        |
```

## Real-World Examples

### Netflix

| Block             | Details                                             |
| ----------------- | --------------------------------------------------- |
| **Segments**      | Streaming viewers, content enthusiasts              |
| **Value Prop**    | Unlimited on-demand content, originals, no ads      |
| **Channels**      | App, smart TVs, website, partnerships               |
| **Relationships** | Automated personalization, self-service             |
| **Revenue**       | Monthly subscription tiers                          |
| **Resources**     | Content library, recommendation AI, brand           |
| **Activities**    | Content production, platform development            |
| **Partners**      | Studios, device manufacturers, ISPs                 |
| **Costs**         | Content acquisition, tech infrastructure, marketing |

### Airbnb

| Block             | Details                                         |
| ----------------- | ----------------------------------------------- |
| **Segments**      | Travelers (guests), property owners (hosts)     |
| **Value Prop**    | Unique stays, extra income, trust platform      |
| **Channels**      | Website, app, social, SEO                       |
| **Relationships** | Community, reviews, support                     |
| **Revenue**       | Service fees (guest + host)                     |
| **Resources**     | Platform, brand, user data, trust system        |
| **Activities**    | Matching, trust & safety, community             |
| **Partners**      | Payment processors, insurance, photographers    |
| **Costs**         | Platform development, trust & safety, marketing |

## Best Practices

### Do

- **Start with customer** - Everything flows from customer segments
- **Test assumptions** - Each block contains hypotheses to validate
- **Iterate frequently** - Update as you learn from the market
- **Check coherence** - All blocks should connect logically
- **Quantify where possible** - Add numbers to revenue and costs

### Avoid

- **Inside-out thinking** - Don't start with product features
- **Static canvas** - It's a living document, not a one-time exercise
- **Ignoring competition** - Understand competitor business models
- **Skipping validation** - Assumptions need testing with real customers
- **Over-complicating** - Keep it high-level and actionable

## Integration with Other Methods

| Method                | Combined Use                              |
| --------------------- | ----------------------------------------- |
| **Jobs-to-be-Done**   | Deep dive into value proposition          |
| **Five Whys**         | Root cause analysis of model weaknesses   |
| **Lean Startup**      | Build-measure-learn cycles for validation |
| **Value Proposition** | Detailed value-customer fit analysis      |
| **Graph Thinking**    | Map relationships between canvas elements |

## Resources

- [Strategyzer - Business Model Canvas](https://www.strategyzer.com/canvas)
- [Business Model Generation - Osterwalder & Pigneur](https://www.strategyzer.com/books/business-model-generation)
- [Value Proposition Design](https://www.strategyzer.com/books/value-proposition-design)

Overview

This skill designs and analyzes business models using the Business Model Canvas framework. It guides you through the nine building blocks to document how a venture creates, delivers, and captures value. Use it to test hypotheses, align teams, and produce a concise strategic snapshot for decisions and presentations.

How this skill works

The skill walks you through defining Customer Segments, Value Propositions, Channels, Customer Relationships, Revenue Streams, Key Resources, Key Activities, Key Partners, and Cost Structure. It applies a stepwise analysis: define segments, articulate propositions, map channels/relationships, specify infrastructure, and model unit economics. Outputs include a completed canvas, SWOT-style strategic assessment, and prioritized recommendations.

When to use it

  • Evaluating a new startup or product concept
  • Planning a pivot, expansion, or go-to-market strategy
  • Running due diligence on an investment or partnership
  • Benchmarking competitors or alternative business models
  • Communicating strategy to investors, partners, or internal teams

Best practices

  • Start with customer segments and their jobs-to-be-done before drafting propositions
  • Quantify revenue streams and key costs to validate unit economics (LTV, CAC, payback)
  • Map channels across the full customer journey, not just acquisition
  • Distinguish fixed vs. variable costs and identify economies of scale or scope
  • Prioritize 3–5 critical assumptions for rapid testing and decide next experiments

Example use cases

  • Designing the business model for an MVP and selecting the simplest revenue model to test
  • Comparing a subscription vs. usage-fee approach with projected LTV:CAC scenarios
  • Structuring a partner network and cost allocation for a marketplace launch
  • Preparing an investor-ready one-page canvas and a short risk/mitigation plan
  • Assessing which activities to outsource versus keep in-house to reduce burn

FAQ

How detailed should the canvas outputs be?

Keep the canvas concise—high-level blocks with key metrics and assumptions. Add detailed backup analysis in appendices for unit economics and customer research.

Which metrics matter most?

Focus on LTV, CAC, LTV:CAC ratio, payback period, gross margin, and the major fixed and variable cost drivers tied to your revenue streams.