The Business Model Canvas

First, there are customer segments, which define the different groups of people or organizations a business serves—or will serve. Second, value propositions enter the picture, which describe the unique benefits and solutions the business will offer each customer segment. Third, there are channels, which outline how a company will deliver its value proposition to customers—for example, online or via retail stores.

For the fourth component, you've got customer relationships—a critical element (not that any of the others are any less so) that explains how a business interacts with customers—for example, self-service or through personal support. Fifth are revenue streams. These identify how the business earns money from each customer segment. The sixth component is key resources, which lists the assets—which could be physical, intellectual, human, and/or financial—that it will take to create value.

For the last three (traditional) components, you’ve got key activities, which cover the essential tasks a company has to perform to deliver its value proposition; key partnerships, which include external organizations, suppliers, or partners that help the business function, and—last, but not least—cost structure, which details the expenses involved in operating the business.

Sustainability is the final component on (or in) some versions of the BMC, and it’s all about how sustainable your offering is overall, to the environment, to the social good, and so on.

A vital thing to remember when you’re using the BMC is to make customer validation a priority, so be sure to test your assumptions early on by engaging real users.

Watch as CEO of Experience Dynamics, Frank Spillers explains how to use the Business Model Canvas:

The Business Model Canvas (BMC) is a fast, flexible, and visual way to map out a business, while a traditional business plan is a detailed and text-heavy document that outlines every part of a business in depth.

The BMC focuses on nine key elements—like customers, revenue, and partnerships—and sometimes a tenth (sustainability), and it helps teams brainstorm, test ideas fast, and adapt. Not for nothing, then, do startups and innovators use it to pivot quickly without needing to rewrite long documents.

A traditional business plan includes detailed financial projections, market research, and long-term strategies. Investors and banks often require it for funding, and it takes time to write and isn’t easy to change.

The key difference is that a BMC is lean and action-driven, while a business plan is comprehensive and structured. So, it’s best to use the BMC for big-picture thinking and quick iteration, while a business plan may be better when you’re seeking investment or long-term planning.

Take our Service Design course, featuring a template for service blueprints.

The Business Model Canvas (BMC) is valuable for brands and teams because it helps them visualize, test, and improve a product or service quickly. It keeps ideas clear and focused by breaking them into key parts, like customers, value, and revenue. For designers, the BMC is helpful for seeing the big picture and spotting weak points early, and another massive benefit is how it makes collaboration easy because everyone works from the same simple, one-page tool. Changes happen fast, without any need to rewrite long documents.

What’s more, the BMC connects product design with business goals, and teams can align on customer needs, pricing, and marketing before launching, a vital “safeguard” that helps prevent costly mistakes later.

For services, the BMC helps map out user experiences, partnerships, and delivery methods and ensures the service stays useful and profitable. How valuable the BMC is for 21st-century products and services is all but impossible to overstate, not least since it saves time, improves teamwork, and helps designers build products and services that succeed (and therefore saves money and reputation, too, since they’re brands that are more likely to do well).

Watch as CEO of Experience Dynamics, Frank Spillers explains how to use the Business Model Canvas:

UX/UI designers can use the Business Model Canvas (BMC) to make sure their designs support business goals when they map out key elements like customer segments, value propositions, and revenue streams, and—from that—they’ll be able to understand what the business needs are and how users interact with what the brand’s offering them.

For example, if the revenue stream depends on subscriptions, designers can focus on a smooth sign-up flow and upgrade options. If the value proposition is convenience, meanwhile, designers can simplify navigation and reduce friction.

Another great benefit the BMC offers in the “department” of aligning decisions with goals is how it also helps designers collaborate with other teams—and they can align their choices with marketing, sales, and product strategy. From using the BMC, UX/UI designers can make sure that every design choice—from button placement to user flows—supports both user needs and business success, so keeping the business profitable while they make better user experiences that give users what they’re after in a design, and delighting them enough to convert into loyal brand supporters.

Watch as CEO of Experience Dynamics, Frank Spillers explains how to use the Business Model Canvas:

The Business Model Canvas (BMC) helps teams identify and understand their target users by breaking down customer segments and value propositions—and so spurs brands on to define who their customers are and what problems they need to solve.

From mapping out customer segments, teams group users by shared traits, like age, behavior, or needs—something that makes it easier to create detailed user personas that reflect real customers.

Watch as Author and Human-Computer Interaction Expert, Professor Alan Dix explains important points about personas:

The value proposition section connects in a direct way to these segments, and it helps teams match products or services to user needs and get it right. If a company serves both students and professionals, for instance, then the BMC shows how each group gets value in different ways. This process is another effective guardrail to help brands not make the mistake of designing for “everyone” and instead focuses on real users—and so, it helps teams prioritize features, messaging, and user experiences that matter and reflect in long-term success as the products and services they design, develop, and release fit real customer needs and drive engagement.

Take our Service Design course, featuring a template for service blueprints.

Yes, if you’ve got an existing product or service, you can analyze and improve existing products or services with the BMC—and a huge benefit lies in how it gives a clear, one-page view of how a business operates, and so makes it easier to spot weak areas and find new opportunities.

From reviewing the customer segments, teams can check if they’re serving the right audience or if new customer groups exist. Then the value proposition section helps them see if the product still solves real problems or if it needs an update. Another plus is how the BMC also highlights inefficiencies. So, if a business spends too much on key resources but gains little in the way of revenue streams, it can adjust its pricing, cut costs, or improve offerings.

For services, meanwhile, the BMC helps businesses refine customer relationships and delivery channels. So, for example, if users struggle with support or usability, teams can improve these areas without guessing and taking redesign missteps. The BMC is a powerful tool for making smarter decisions, keeping products and services relevant, profitable, and user-friendly—no matter if the brand is just about to come into being, is a fresh startup, or has been “up and running” for some time.

An example of a brand that’s achieved this is Netflix, which began as a DVD-rental service and successfully adjusted to a new market landscape when content streaming replaced the old model of renting DVDs. Netflix “revisited” its model of convenient rentals with one of on-demand streaming and self-produced content and shows to delight audiences to the point that it’s a major household name and industry heavyweight.

Take our Service Design course, featuring a template for service blueprints.

One big mistake when filling out a BMC is being too vague—as in, instead of clearly defining customer segments, a designer or stakeholders write “everyone” or “all users,” which makes it hard to target the right audience.

Another mistake is focusing too much on the product and ignoring the business side. For example, teams might describe features, which is all right, but forget to explain how the product creates value or makes money.

Some businesses make the “fatal” error of not testing their ideas—they fill out the BMC based on assumptions instead of real customer feedback, leading to poor decisions, rather like building an escalator to nowhere because you fail to connect what you want to send up to the people you think want it and it misses the mark completely because they’re not at that place to receive it.

Another common issue is ignoring key partnerships, and many businesses fail to list important suppliers, collaborators, or distributors that help them scale. Last but not least, some teams treat the BMC as a one-time exercise instead of updating it regularly, a big faux pas because markets change, as does the tech involved, and the BMC should evolve with them.

Watch as CEO of Experience Dynamics, Frank Spillers explains how to use the Business Model Canvas:

Osterwalder, A., & Pigneur, Y. (2010). Business model generation: A handbook for visionaries, game changers, and challengers. Wiley.

This book, by Alexander Osterwalder and Yves Pigneur, introduced the Business Model Canvas (BMC), a visual framework for developing, assessing, and improving business models. It is widely used by entrepreneurs, startups, and corporations. Based on insights from hundreds of practitioners the book provides a structured yet flexible tool for innovating and strategizing business models.