What’s a business model and why is it important?
Although the term “business model” is frequently used, many business leaders still struggle to explain the business model for their own products. In ICE’s annual Business of Certification workshop, we define a business model as:
A blueprint for how to deliver on your customer value proposition while also creating value for your organization, whether this value lies in achieving your mission, growing your program, and/or generating revenue.
Think of your business model as your blueprint for success.
Using the Business Model Canvas (BMC) to formulate your business model
The Business Model Canvas (BMC) tool (see Figure 1) was first introduced in the popular book, Business Model Generation (Osterwalder & Pigneur, 2010). The canvas breaks down the business model into nine building blocks:
- Customer Segments
- Value Proposition
- Customer Relationships
- Key Resources
- Key Activities
- Key Partners
- Cost Structure
- Revenue Streams
Figure 1: The Business Model Canvas
To get started creating your BMC, watch the two-minute video here, which orients you to the process of completing the canvas and then download a free template for the canvas. The template includes prompts to help you fill in each building block. Easy, right?
Figure 2 (below) provides a completed BMC for a generic certification program. Keep in mind this example is only a meant to jumpstart the process; you will still need to customize the BMC to your credentials and the goals your organization has set (e.g., to generate revenue, raise the visibility of the profession). We recommend that you complete one canvas for each of your credentials, since your goals and the customer value proposition may vary across credentials.
Figure 2: A BMC filled out for a generic certification program
Okay, we’ve completed the BMC. Now what do we do with it?
There are a variety of uses for the BMC.
- Because the BMC provides a high-level, but comprehensive picture of the business model, it’s a great tool for aligning board and staff on how your organization will (or does) create value.
- Think of your BMC as a reality check or a set of guard rails to use when making strategic decisions. Suppose your board wants to transform a domestic certification into a global one. You can use the BMC to guide them through an exploration of the potential challenges and opportunities of taking this step [e.g., what does the channel partner section tell us about the ease (or lack thereof) of reaching potential customers outside the country].
- Is your organization considering the development of a new product? Completing a BMC for the product will help you to anticipate potential opportunities and obstacles and identify the organization’s strengths and weaknesses with respect to this endeavor.
Once you’ve created your BMC and become familiar with how to use it, you’ll find that you frequently refer to this document in your day-to-day activities and strategic planning.
Osterwalder, A. & Pigneur, Y. (2010). Business Model Generation. Hoboken, NJ: John Wiley and Sons
Two-minute BMC overview video: https://www.youtube.com/watch?v=QoAOzMTLP5s
Business Model Canvas template: https://www.strategyzer.com/canvas
Editor’s note: The resources shared above are recommendations from the author as an individual, and just one option for leveraging the business model canvas. Several other free resources can be found online through a simple online search.