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  • An organization's business model can be described with nine basic building blocks.

  • Your customer segments, your value proposition for each segment, the channels to reach customers.

  • Customer relationships you establish, the revenue streams you generate, the key resources and key activities you require to create value.

  • The key partners and the cost structure of the business model.

  • But it's not sufficient to just enumerate the nine building blocks.

  • What you really want to do is to map them out on a pre-structured canvas.

  • This is what we call the business model canvas,

  • a tool that helps you map, discuss, design, and invent new business models.

  • Let's briefly go through the nine building blocks, starting with customer segments.

  • These are all the people or organizations for which you're creating value.

  • This includes simple users and paying customers.

  • For each segment, you have a specific value proposition.

  • These are the bundles of products and services that create value for your customers.

  • The channels describe through which touchpoints you're interacting with customers and delivering value.

  • The customer relationships outline the type of relationship you're establishing with your customers.

  • The revenue streams make clear how and through which pricing mechanisms your business model is capturing value.

  • Then, you need to describe the infrastructure to create, deliver, and capture value.

  • The key resources show which assets are indispensable in your business model.

  • The key activities show which things you really need to be able to perform well.

  • The key partners show who can help you leverage your business model.

  • Since you won't own all key resources yourself, nor will you perform all key activities.

  • And once you understand your business model's infrastructure, you'll also have an idea of its cost structure.

  • So, with the business model canvas, you can map out your entire business model in one image.

  • This works for start-up entrepreneurs just as well as for the most senior executives.

An organization's business model can be described with nine basic building blocks.

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