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The business model canvas consists of 9 sections and in this video we're going to talk about each component and how it applies to our idea.
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Well, let's go back to my idea for a bit.
0:00
I said I wanted to build project
management software.
0:03
Now, I may think that I know how to start
a business around this idea, but
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in reality, I've probably just scratched
the surface from using some of
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the products out there.
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While that gives me good insight on the
pain points and
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what's lacking from existing solutions,
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I need to understand the business before
starting my own venture.
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By this, I don't mean that we spend a lot
of time reading, planning and
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accounting for every scenario.
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No.
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We want to spend just a bit of time
planning and
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more time actually doing things.
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A perfect tool for our needs is the
Business Model Canvas,
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developed by Alexander Osterwalder and his
team.
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As described on their site,
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the Business Model Canvas is a strategic
management and entrepreneurial tool.
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It allows to you to describe, design,
challenge, invent and
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pivot your business model.
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If that sounds complicated, don't worry.
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We're going to walk through each part.
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The Business Model Canvas takes an idea,
whether it's a new business or
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even a re-imagining of an existing model,
and
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breaks it down into nine different
sections.
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We then ask some important questions in
each section to help us
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understand our model.
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This is what the canvas looks like.
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First up, we have our value proposition.
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[SOUND] Here, we talk about our [SOUND]
idea.
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What makes it unique?
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What problems does it solve?
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In our next [SOUND] section, customer
segments,
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we're going to paint a picture of what our
different customer segments look like.
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[SOUND] Next, we have our channels.
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How do we deliver our product or service?
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Channels connect our value proposition to
our various customer segments.
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There can be multiple channels for
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a single business model and it's important
to know the characteristics of each one.
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[SOUND] Customer relationships.
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In this section, we explore our
interactions with our customers.
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[SOUND] How do we communicate with them,
make them aware of our product and
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keep them happy?
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What activities [SOUND] are absolutely
essential to running our business?
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This section lists our key activities.
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[SOUND] Similarly, we have key resources.
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What resources do we need to make sure we
complete these key activities?
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[SOUND] We also have [SOUND] key partners.
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Are there any parts of our business model
that others can do [SOUND] better?
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If so, who are these key partners and what
can they do for us?
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The bottom sections are quite important.
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[SOUND] First, we start with revenue.
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How do we make money?
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What kind of revenue model should we
explore, and
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what pricing scheme should we [SOUND]
implement?
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And last, we have our costs.
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[SOUND] What will it take to run this
company that we're proposing?
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[SOUND] That is the basic canvas and
covers all aspects of our business model.
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I'm also going to insert one more section
to this list, and
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that's an industry analysis.
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There are a lot of players in this space
and
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we can learn from what they've done and
what they're doing wrong.
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Now, the authors of the book highly
recommend using a large
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physical canvas and a bunch of post-it
notes to work through your business model.
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Each point that you come up with is jotted
down on a post-it note and
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added to the relevant section.
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This exercise serves a very useful
purpose, but
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we won't get into that just yet.
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In the following videos, you may see or
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me someone else running around sticking
post-it notes on a canvas.
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If you are working through an idea
yourself, do this too.
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I'll explain it all in due time.
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There's another crucial point I want to
highlight about the Business Model Canvas
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before we move on.
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Traditionally, when you prepare a business
model,
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it is with the intention of using it as
your operating model.
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The document, the business model that you
write, serves as your North Star,
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your guide as you run your business.
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That is not what this business model is
about.
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When you start a company,
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contrary to traditional advice You have no
idea what you're really getting into.
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The Business Model Canvas helps you search
for
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a viable business model that is known to
produce results.
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Once this business model is known, then we
can convert the model into a plan.
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What we're going to write down is nothing
but a set of hypotheses or assumptions.
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We then test these assumptions and
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validate until we find a business model
that's repeatable and scalable.
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Keywords, scalable and repeatable.
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A strategy that gains you a few customers
once in a while isn't a winning strategy.
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We're going to keep discovering, testing
and
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validating until we have a working model.
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All right.
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Let's start right away by digging into the
value proposition.
4:29
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