Business Model & Key Activity Canvas – Why Businesses Need One

Firstly – What is a Business Model & Key Activity Canvas? It is a tool or method used by businesses to visually represent their business model and its various components.

A business model is a strategic framework that outlines how a company creates, delivers, and captures value. It describes the key aspects of a business, including its target customers, value proposition, lead generation, sales method, client fulfillment (inputs, cost structures & distribution channels), revenue streams and the drivers of profitability.

You can find numerous sources explaining how to make a business model . One of the most popular is called ‘The Business Model Canvas’, I have been a proponent of this and have studied with one of the authors Alex Osterwalder. All of these are great for mapping the outlines of your business and figuring out the basic financial viability of your model. However, when your business is up and running, there’s a good chance you won’t return to this model unless you are contemplating a big pivot.

The Business Model Canvas is a great process for business innovation, and I would absolutely recommend this for larger companies.

What I have experienced is that for small and medium businesses (SME’s) – the Business Model Canvas is not a useful tool – they need a model that shows them:
1) how they make money and
2) how they can ensure the ongoing success of their business

What I propose is a tool that I believe is more Insightful & practical for small & medium sized businesses.

Business Model & Key Activity Canvas

I have called this the Business Model & Key Activity Canvas and it can be helpful for several reasons:

1. Clarity and Communication – A visual map can help leaders within the organisation and staff understand the business model more clearly. It simplifies complex concepts and presents them in an easy-to-digest format.
2. Identification of Key Components- By visualizing the business model and its associated activities, businesses can identify the critical components that drive their success. This includes key resources, value propositions, customer segments, distribution channels, revenue streams, and more.
3. Alignment and Communication- The map serves as a tool to align various teams and stakeholders within a company. It facilitates communication about the core aspects of the business model and ensures everyone is on the same page, working towards common goals.
4. Performance Monitoring- By having a detailed breakdown of activities, businesses can set performance indicators for each element of the business model. This enables better tracking and assessment of the company’s progress and success.
5. Process Improvement- Analyzing the detailed activities in the map can reveal inefficiencies, redundancies, and bottlenecks in the business processes. This insight empowers businesses to optimise their operations and improve overall productivity.
6. Business Planning and Decision-Making– The map acts as a valuable reference point for business planning and strategic decision-making. It enables businesses to test various scenarios and assess their potential impact before implementing changes.
7. Business Model Innovation– When businesses want to explore new business models or value propositions, the activity map can provide a starting point for designing and testing alternative models.
8. Risk Management- Analyzing the business model from a visual perspective can help identify potential risks and vulnerabilities. By understanding the dependencies between different activities, the company can develop contingency plans to mitigate risks.

The Business Model & Key Activity Canvas / © StrategyandExecution Advisors

The model does contain some similar elements to those you’d find in various business models, however, the focus on strategy and key activities makes it much more useful in all the stages of your company’s growth, when you’re continually trying to fine-tune and future-proof the financial engine of your company.

Practitioners Insights

To me this exercise of sketching out the Business Model & Key Activities was not only valuable to me first up, but also valuable in client engagements – in obtaining clarity and alignment from the leaders and the leadership team, on what was the business model (how they made money) & what were the key drivers.

The resulting canvas can be a great help in identifying strong and weak areas in the business strategy and what can be improved. The tool measures what matters – remember ‘what you don’t measure you don’t understand and what you don’t understand you cannot manage’.

Then, on an ongoing basis, through facilitation – the leadership team then collaborates to analyze the results, work out root causes and identifies the elements that are required for performance management and process improvements – which then keeps the business model improving for sustainability, efficiency, profitability & cash flow.

At the next level – the Business Model & Key Activity Canvas can be used as a living document with all the key drivers tracked with Actual versus Target sections – and Actions noted on it – which then should be used and reviewed in strategy sessions.

An article in ‘The Australian’ newspaper recently claimed that almost half of all small businesses are failing to make a profit. If only they clearly understood their business model and the key drivers and then developed & implemented actions for improvement – the result would almost certainly be different.

Need assistance in understanding Your Business Model & Key Activities for greater control over profit, cash-flow & your sanity and to help your team achieve your objectives to grow your business? Contact me at tedb@strategyandexecution.com.au to schedule a free 30-minute discovery meeting.

TED BONEL, SCALING UP COACH – STRATEGY & EXECUTION BUSINESS ADVISORS

Need assistance to help your team achieve your objectives to grow your business? Contact me at tedb@strategyandexecution.com.au to schedule a free 30-minute discovery meeting.

ABOUT STRATEGY & EXECUTION

We have been providing organisations and their leaders with facilitation support and executive education focused on strategy development and strategy execution for more than 20 years. Using business models such as Scaling Up, Exponential Organizations, E-Myth Mastery, Outthinker etc, we support organisations seeking to create or refine excellent strategies and execute them quickly and effectively.

Our expertise is based on a mixture of wide business experience, effective tools as well as a great deal of consulting and executive education. Our approach to working with clients is as unique as our specialist focus. We always seek to challenge our clients’ thinking – but equally are unafraid to roll up our sleeves and help execute the ideas we help generate. Learn more about us here or view our upcoming workshops and events.

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