Business Model Canvas

What it is

A one-page template that describes how a business makes money, in nine blocks. Alexander Osterwalder and Yves Pigneur developed it from Osterwalder's doctoral research and published it in Business Model Generation (2010), a book co-created with 470 practitioners. The nine blocks are customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key activities, key partnerships and cost structure. The right-hand side of the canvas describes how the business creates value for customers; the left-hand side describes what the business needs to deliver that value efficiently. Its strength is that it fits a whole business model on one sheet, so a leadership team can see how a change in one block (a new segment, a new pricing model) affects the others. The Value Proposition Canvas, already in this knowledge base, was designed by the same team as a zoom-in on two of these blocks: customer segments and value propositions. Ash Maurya's Lean Canvas (2010) is a startup variant that keeps the one-page format but swaps four blocks (key partnerships, key activities, key resources and customer relationships) for problem, solution, key metrics and unfair advantage. A PMM usually meets it at an early-stage start-up, where founders track their riskiest customer assumptions on it before the full model is worth mapping.

When to use it

• A new business line or product is proposed and leadership needs to see the whole model, not just the product, before funding it.
• The pricing or revenue model is changing, such as moving from licences to subscriptions or adding usage-based pricing, and the knock-on effects on channels, costs and customer relationships need mapping.
• A move into a new segment or channel where the existing model may not carry over, such as adding a partner channel or a self-serve tier.
• PMM joins a company or a new product line and needs a quick, shared picture of how the business works before planning positioning and launches.
• Strategy documents need a common language between product, marketing, sales and finance about what the business actually depends on.

PMM's role

The business model belongs to the CEO and leadership team; changes to it, such as a new revenue stream or a new channel, are their decision. PMM's contribution is concentrated on the right-hand side of the canvas, where it holds the strongest evidence: customer segments (from segmentation and ICP work), value propositions (from positioning), channels (from go-to-market planning) and customer relationships. PMM also flags where the model's assumptions about customers are untested. At a start-up, the founding PMM often fills in the customer-facing blocks with the founders in a single workshop; at a scaled company, PMM reviews a strategy or finance team's canvas and challenges its customer assumptions.

How to apply it

1. Pick one business model to map. Map one product line or business unit at a time. A company with a self-serve product and an enterprise product usually has two business models, and blending them hides the differences.
2. Start with customer segments. Name the segments the model serves, ideally the ones STP and ICP work already defined. Distinguish between users and paying customers where they differ.
3. Fill in the value proposition for each segment. Write the job, pain or gain each segment pays to solve, using your positioning work. Where segments differ, write separate propositions.
4. Map channels and customer relationships. Record how each segment discovers, buys and gets support, and the kind of relationship you maintain (self-serve, dedicated account manager, community).
5. Add revenue streams. Describe how each segment pays: subscription, usage, licence, services. Note the pricing model and its main metric.
6. Complete the left side with the relevant teams. Ask product, operations and finance to fill in key resources, activities, partnerships and costs. PMM's job here is to check consistency, not to own the numbers.
7. Mark the untested assumptions. Colour-code each item as proven, partly proven or assumed. The assumed items on the customer side become PMM's research and testing agenda.
8. Revisit the canvas when a block changes. When pricing, channels or target segments move, update the canvas and check what else must move with it.