A business model explains how a venture works as a system: how it creates value, delivers that value, and earns or otherwise captures value in return. This lesson introduces the purpose of a business model and the questions entrepreneurs use to assess an idea.
Alexander Osterwalder and Yves Pigneur define a business model as the rationale for how an organization creates, delivers, and captures value. Definitions vary, but in practical terms a model describes how a venture will be funded, what value it offers to stakeholders, how its offerings reach end users, and how income is generated.
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Business model
A description of how an organization creates, delivers, and captures value.
Desirability, feasibility, and viability
Desirability concerns customer demand; feasibility concerns the ability to deliver; viability concerns financial sustainability.
Value proposition
A statement of how an offering helps a particular customer with a need, problem, or desired outcome.
Customer empathy map
A tool for exploring a target customer's context, thoughts, actions, pains, and gains.
Social business model canvas
A canvas adaptation that makes mission, beneficiaries, social impact, and related business elements visible.
Quiz questions
Which four blocks does the lean canvas use in place of customer relationships, key activities, key partners, and key resources?Answer: Problem, solution, key metrics, and unfair advantage.
What does an unfair advantage represent in the lean canvas?Answer: A strength that is difficult for others to copy or acquire.
Which elements does the value proposition canvas examine on the customer side?Answer: Jobs to be done, pains, and gains.
In a social venture, how can beneficiaries differ from customers?Answer: Beneficiaries are intended to receive social benefits, while customers may be the people or organizations that pay.
What is an important limitation of the business model canvas?Answer: It does not cover every external threat or issue, such as regulation and competition.
Based on Entrepreneurship by Michael Laverty, Chris Littel (OpenStax), licensed CC BY 4.0. Adapted into a summary, flashcards and quizzes.