Become an expert in Business Model Lab in 10 steps

María March 18, 2019

This tutorial is designed to turn your enterprise ideas into a real business model with Business Model Lab in 10 steps. Now, there is no excuse for working towards your dreams.

Conceptual approach to Business Model Canvas

The idea of a Business Model Canvas was initially proposed by Alexander Osterwalder in 2009. This design strategy is based on nine elements: value proposition, market segments (customer), channels, customer relationship, key partners, key activities, key resources, fixed cost structure and revenue streams.

With Business Model Lab, we have maintained Business Model Canvas’ strengths and overcome the failures mentioned before.

Besides being able to create a canvas from a PC, tablet or smartphone, it allows collaborative editing. Furthermore it is possible to calculate the balance by defining the size of the markets and sources of income. This, along with the structural costs, let us to have an estimate of how good the business is.

The business model canvas is also a tool for iterative product development. It is recommended to learn from validations and update your business model accordingly. We know you can have an enormous amount of things to attend to and your business model canvas can be forgotten. So we are here to lend a hand and send you update reminders via email (this is optional).

How do I get started?

Neither download nor installation are required. You can easily access to this tool on DigitalIlusion webpage or directly at this URL: https://bml.digitalilusion.com/

It is worth stressing that its use is free and there is not user registration.

Each time you enter the PWA, a new canvas is generated. By clicking "load local canvas" tab, you can choose which business model canvas would you like to work with.

But what if it is the first time I access to this tool?

Don’t worry, by following the steps staged below you will be able to elaborate a business model canvas with this amazing tool.

STEP 1: TO FAMILIARIZE WITH TOOLBARS OF BUSINESS MODEL LAB

Business Model Lab works with two toolbars to facilitate access to everything you want to do very easily.

To begging with, there is the top bar:

From here you can directly access functions such as entering a title to the project, adding a new canvas, sharing, printing, etc.

It is recommended to give the project a title, so that, you will easily find it then. Just by clicking on "untitled project" you can change the title. Now, it will appear under the "load local canvas" menu.

So if you enter "load local canvas" menu, a list of all the canvas you have been working with will appear. Then you can select which one you want. The save will happen automatically or with a confirmation by clicking on “Save”. Please make sure your canvas is saved!

Do you want to share your canvas and make it collaborative? The action is as simple as clicking on “Share” or “Copy to clipboard”. Under the “Share” tab, a QR code will be generated so you can scan it with your smartphone! Or if you prefer, the URL will be placed in your clipboard, just by clicking “Copy to clipboard”. Easy peasy!

Furthermore, there is a function that allows you to turn your canvas into a protected one, so if you share it to another person, the shared version will be in read-only mode. A password is required to edit a protected canvas. You can set a password by entering to “set write password”.

In addition, by clicking any of the key pieces of the canvas infrastructure, the system displays a pop-up window where you can add your business data. These features will be seen throughout this tutorial.

It is time to fill out the fields. Imagine that you are not inspired. Don’t panic and have a look at examples of real cases’ model canvas. The PWA facilitates you some of them at the bottom of the screen.

Once you have a general idea, you will be able to complete each of the sections. To make it more dynamic we are going to show step by step the process of creation of Nespresso model canvas. Stay tuned and follow the next steps!

STEP 2: CUSTOMER SEGMENTS

In this section you have to answer the following questions:

• For whom do we create value? If you have a multi-sided market you will have at least as many segments as sides.

• What are our most important customers? Targeted market.

• What characteristics do our customers have? Your business model could serve segments of markets with very different needs and problems.

You will realize that if you click this element two pop-up windows will open.

On the top one you write the name of one customer, any additional information (e.g. source of information, relevant comments, etc.) can be added by clicking the bubble icon.

Whereas on the bottom one, you can add numerical data related to the number of people, organizations, etc. that will be part of your customer base.

We want your business model to be as realistic as possible, so you can apply any funnel to this numerical data (e.g. only the 20% of the total HORECA sector in Spain are willing to pay Nespresso Professional). Click plus icon to add a funnel.

It is important to fill out this section in order to take advantage of the balance that will be calculated at the end of the process.

STEP 3. VALUE PROPOSITIONS

Once the target market is identified, their needs are known and the problem is understood, it is time to define a product with value: all the elements that interact and provide benefits to the client (to all customer segments).

We will answer the following questions:

• What value do we provide to our customers?

• What problems of our clients do we help solve?

• What needs of our customers do we satisfy?

• What do we offer, we create for each market segment?

As you may have noticed, there are steps that are more descriptive and no numerical data is needed. This section is one of them, therefore, only a descriptive pop-up window will open. Any additional comment can be added by clicking the bubble icon.

STEP 4. CHANNELS

What different channels are going to use to access customer segments?

You have to do a list of the most important channels and make notes on what channel suits better for promotions, sales, etc.

It is interesting to differentiate between own direct channels (e.g. commercial team, Internet sales, own stores) and indirect partner channels (e.g. partner stores, wholesalers).

Furthermore, it is important to think all the way through the customer ‘journey’ in channel phases. We recognize the following channel phases:

• Information: How do we make the products and services of our company known?

• Evaluation: How do we help clients evaluate the value proposition of our organization?

• Purchase: How to allow customers to buy specific products and services?

• Delivery: How do we extend our offer to our customers?

• After sales: What are our policies for attention to suggestions, claims, technical assistance?

STEP 5: CUSTOMER RELATIONSHIPS

How does the customer interact with you through the sales and entire product lifecycle? Will they have a self-service assistance? Will they have a personal contact? Or even a premium support?

This is not only a matter of customer catchment, but also a matter of increasing loyalty and customer number.

For instance, as far as Nespresso is concerned, under the club Nespresso&You strategic focus of exclusivity, they added more than 10 million memberships in the world. They establish a relationship with the customer based on exclusive benefits (e.g. free delivery on 100 capsules or more, special promotions, machine warranty and 24/7 assistance).

STEP 6. REVENUE STREAMS

It goes without saying that a decision in this section means a lot to your business.

When thinking about our income generation model, the first thing we have to ask ourselves is what is the value at which our clients are really willing to pay. Also, when setting prices, they must be associated with the benefits or problems that solve.

Therefore, it is important to have an income strategy:

• Are you going to charge customers a subscription fee? Or a user fee?

• The regular income comes from publicity? Or as intermediary?

Just as with customer segments section, by clicking this element two pop-up windows will open.

On the top one you write the income source, whereas on the bottom one, there is a tab that will open a menu of strategy incomes such as subscription, sales, estimation or commission. Once a strategy is selected, you can choose the related debtor.

After selecting a debtor, the Business Model Lab allows you to add not only the price, but also the market share, variant costs and average sales per year and per capita. Don't be confused by the options menu! You can display explanatory notes overview by placing the cursor on the different elements.

Congratulations! You have just finished more than half the canvas that defines value generation. Easy, isn’t it? You only lack the elements that defines the efficiency.

STEP 7. KEY RESOURCES

Key resources means the infrastructure or the necessary means to deliver and offer value to customers. It will be your shopping list and in it you will have to include all the elements required by your company to work properly.

Key resources can be divided into the following categories:

• Physical: tangible property such as facilities, buildings, vehicles, machines, points of sale, distribution networks, etc.

• Economical: bank lending or seed funds such as The 3F’s (“family, friends and fools”).

• Human: people that integrate your business project.

• Intellectual: intangible property based on human knowledge such as a brand, a patent, etc.

STEP 8. KEY ACTIVITIES

It is important to highlight those activities in which your company must be excellent and surpass your competitors, activities that determines differentiation.

You have to answer the question below: What are the activities that really add value to the products/services that I offer from the point of view of the chosen customer segment?

With respect to Nespresso, they are proud to show off their coffees are produced entirely in Switzerland.

STEP 9. KEY PARTNERS

At this section you have to try to identify who could be your key partners in order to achieve economies of scale, to reduce the risk and uncertainty, to acquire resources and to carry out key activities.

If we focus on Nespresso example that has been shown through the entire tutorial, George Clooney becomes Nespresso global brand ambassador because of his long term partnership with the brand.

STEP 10. COST STRUCTURE

It is crucial to identify the costs that can be generated in the business model.

The cost structure is conditioned by the key resources identified, which are in turn conditioned by the activities and key partners delimited in the Canvas model.

Furthermore, it is recommended to answer the following questions:

• Are the costs well aligned with the key Value Propositions?

• what resources/activities cost more?

• Are the costs more fixed or variable?

Here, numerical data can be added. Therefore, if you have filled out the other main data, a balance result will be generated.

Has your business model presented positive results? That is a sign of success, but you should be aware of the fact that this business model also provides a strategic basis on which to raise and rethink business decisions during the whole company life cycle. So we encourage you to update your Business Model Canvas and to take advantage of this amazing tool.

This is the end of the tutorial. What is your experience with the Business Model Lab? What worked? What did not?

Please let us know!

Check out the example of Nespresso here: https://bml.digitalilusion.com/#7JRTygKb