January 7, 2012 by startupengineering .

Business Model Generation by Osterwalder and Pigneur, with its nine-bucket “business model canvas,” sits on the work tables at virtually every startup working at Flashpoint, and at desks and worktables and night tables around the globe, wherever people are dreaming up or implementing startups. The canvas is easily misconstrued as a template – something like a form you need to fill out if you’re writing a business plan in business school. Using it that way is a waste. It’s really more like an anatomy chart. You can think of human systems in terms of what we need to survive as living beings – systems for locomotion, for energy, for defense, reproduction, sensing, etcetera. These systems are what define us. Companies are constituted out of the systems labeled in the business model canvas in exactly the same way: they need customers, relationships, activities, a value proposition, and the five other systems in order to BE companies. Steve Blank provides a nice overview of the state of the art of using the canvas for startups here.

Anatomy Chart[1]

Business Model Canvas

Key Partners

Key Activities

Value Proposition

Cust. Relationship

Cust. Segment

Key Resources

Channels

Cost Structure

Revenue Structure

When you encounter a person, millennia of evolution leap to your aid in figuring out what’s going on. You know what people are, you’ve got norms in mind for physical, mental, emotional, cultural, and lots of other realms: this one’s a big friendly cop who doesn’t seem very bright, that’s a quick-witted, shady competitor, he’s a potential date, she’s an executive deciding whether to hire you – we don’t need a canvas to help clarify essential human attributes and size people up.

But we usually encounter companies a little bit like the proverbial blind men touching different parts of an elephant. Apple makes products you like, Starbucks seems to be everywhere, Google’s stock keeps going up, Budweiser reminds you of having fun, Enron is (was) smart and unethical, etcetera.

Without the canvas, we assess companies, and startup ideas, based on partial information. Worse, we habitually labor under the mistaken impression that what we know is all we need to know to make a wise judgment. What I know about Apple (the products are cool and the stores busy) is all I need to know to make a decision about buying Apple stock. What I know about my startup idea (everyone I talk to agrees that it sounds like a great idea) is sufficient to moving forward. The canvas helps out by ushering us out of idle imagination into creativity.

With the canvas you can start imagining what’s possible. Animals generally need a form of locomotion. Lots of forms are possible – legs, wings, tentacles, flippers, but each form has implications for the rest of the animal – where they live, how they avoid danger, find food, how big they’ll be. Likewise, companies generally need a form of communicating with customers — what should mine have? Emailing, knocking on doors, sending catalogs, social media, locating in malls – each option comes with a set of implications for all the other company systems. It’s the implications together with the reminder to touch every important base, that makes the the canvas helpful in imagining a potentially real company.

[1] By Naked human male body front anterior.png: Mikael Häggström Frau-2.jpg: Rainer Zenz derivative work: Lamilli [CC-BY-SA-3.0 (www.creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons