What is Business Model Canvas? Importance and Examples

What Is a Business Model Canvas?

Have you heard of the BMC or business model canvas before? It’s a handy one-page framework for mapping out the critical parts of your business idea.

A business model canvas refers to a short summarized report including the basic details of the strategy for introducing any product or service to the market. 

The contents of the canvas can change based on the type of business and market. However, some components are broadly identified. Since the canvas is generally short and in the form of a summary, it is likely to be a visual representation. 

A business model canvas offers a chart describing a company’s or the product’s value proposition, functionality, infrastructure, customers, and finances. 

Alex Osterwalder created the BMC to help visualize and plan businesses. It breaks things down into nine building blocks: value props, customer segments, revenue streams, resources needed, partnerships, and costs.

Creating a canvas gives the big picture of how everything interconnects. It’s great for brainstorming each piece and gaining clarity. What resources and partners do you require? How will people hear about you and make purchases?

We like that the BMC makes abstract concepts tangible. You can draw out your idea on a page and start validating assumptions. It also helps evolve your model over time-based on feedback. We revised ours tons pre-launch via customer research.

We recommend giving the BMC a shot, whether starting fresh or running something already. It takes some thought but provides a foundation for planning operations and revenue.

What Forms a Business Model Canvas?

The parts of a business model canvas are primarily strategic and aspirational. They must refrain from attempting to portray fine details of a company’s overarching goals. 

Ideally, the canvas should describe a broad image of the customers and the product, including the value proposition. Essentially, the canvas acts as an outline of how the product will benefit the customer.

Notably, the canvas must describe how the business could generate the maximum profit from the marketplace, i.e., how the product aims to make money. 

There will be a description of various pathways through which the product would be distributed in the marketplace and sold. 

The canvas should also identify individuals and groups that could affect the product’s success.

Companies must also document the activities happening within the business internally and the budgets, resources, and individuals required. 

At last, businesses must include a summary of all the expenses at every stage of the product development, i.e., production, circulation, marketing, and sales.

The full summary is typically on a single page and some schematic. Hence, each element of the product’s story must be dealt with concisely. 

The entire outline is a refined work to the basic requirements of the product. This step is critical because the canvas must accurately describe various interlaced themes.

Why Should You Use a Business Model Canvas?

There are many reasons, but you could imagine the business model canvas as a mission statement for your product roadmap. Use product roadmap software for a better experience!

It is a handy reference point to ensure that you always stay on track and achieve all the strategic goals described in the roadmap.

Quicker and easier roadmaps

The canvas approach generally takes only a few hours. 

Hence, by this method, rather than writing every intricate detail about the product beforehand, you can just mention the highlights and then start translating the canvas to the product roadmap.

More agility

A major drawback of the old way of documenting business models was that it became almost inaccurate as soon as the author had finished drafting it.

The plans generally included detailed cost estimates, revenue projections going far into the future, and even long-term plans on how the staff could grow. 

Obviously, these things can remain accurate for some time, but only for a bit longer.

In product terms, the canvas can be understood as a business plan resembling the MRD – long, detailed, and mostly untrue by the time you finish it.

But only because you can put the canvas together so quickly does it become much more accurate while reflecting your strategic plans and the company’s current status. And if anything changes, it will be easier than adjusting a long and detailed plan.

Room to pivot as needed

Suppose something happens during the development process that forces you to re-prioritize or pivot your product. 

Updating this short, high-level document will be much easier than updating a long, exhilarating MRD or some business plan to tear apart and update.

With this one-page business model canvas as a guide to your business roadmap, you can always spot any plans that need updating quickly.

You will have to update whenever the priorities of the company change or some new data comes to light that demands a different approach to what you were doing till then.

What Are Some of the Business Model Canvas Examples?

Let’s look at the business model canvas example of McDonald’s.

McDonald’s Business Model Canvas 

McDonald’s key partners: delivery providers Uber Eats and door dash, suppliers

McDonald’s key activities: payment processing, delivery, innovation, and implementation, product sale

McDonald’s value proposition:

For buyers: quick and affordable food, service with consistency in quality

Franchisees have become more successful than the brand itself.

McDonald’s customer relationships: 

Social media, customer, and community services

McDonald’s customer segments: 

Buyers: it is for the people who wish to buy products like fries, burgers, etc.

Franchisees: restaurants that want to increase their profit using MacDonald’s name

McDonald’s cost structure:

Salaries, marketing, payment processing, and administration and operations

McDonald’s revenue streams: 

Royalties, license fees, and rent fees

How Can a Product Manager Use Business Model Canvas?

The role of a product manager is crucial in introducing the product to the market. How the product manager chooses to use the business model canvas can play a pivotal role in what the product looks like, the timeline of its release, and how the audience receives it. 

Sometimes, you may replace the traditional business model canvas with a ‘product canvas,’ and it may also be that you may contain the latter in the former. 

Either way, it is up to the product manager to use those terms and what purposes they ought to serve.

The canvas acts as a thorough guide on the product for a product manager.

It contains the costs, budget projections, resources projects, product releases, sales planning, and many other key aspects.

Therefore, it is a robust document to help the product manager keep the product on track. They must also use product manager tools to guide them. 

A canvas requires a lot of background work. Hence, how much the product manager values the document is easily said.

In any complex or intricate development process where multiple dependencies may be active, and resources may be limited, the business model canvas serves as an idea for providing the right direction and making correct decisions. 

The canvas may also help the PM take notice of any time constraints and the pressure to meet any deadlines. 

Competing priorities having only a subtle difference between them can be looked into just a glance using the canvas as a reference. 

People with short attention spans and people who can be easily distracted may find the canvas extremely useful without being overly burdened by all the pressure.

Hence, for a product manager, the canvas forms a universal language in product development and helps find solutions to problems and resolve all misunderstandings. 

The workforce in the company can look into the canvas and analyze how their roles and responsibilities affect the final product delivery.