Mastering Business Model Canvas: Types and Variations

The Business Model Canvas (BMC) is a strategic management and lean startup template for developing new or documenting existing business models. It was introduced by Alexander Osterwalder and Yves Pigneur in their 2010 book "Business Model Generation". The BMC is a visual chart with nine blocks describing a firm's or product's business model. However, the BMC is not one-size-fits-all, and businesses often adapt it to fit their unique needs. Let's explore some types of Business Model Canvas and their applications.

Before diving into the types, let's recall the nine building blocks of the standard BMC: Customer Segments, Value Propositions, Channels, Customer Relationships, Revenue Streams, Key Resources, Key Activities, Key Partnerships, and Cost Structure.

Freemium Business Model Canvas

The Freemium model is a revenue strategy where a product or service is provided free of charge, but money is made by charging for premium features or functionality. This model is popular among software as a service (SaaS) companies and mobile applications.

To adapt the BMC for a Freemium model, you might add a 'Freemium Tiers' section under Value Propositions and adjust Customer Relationships to reflect how you'll engage with free and paying customers differently.

Freemium Tiers

In this section, define your free and paid tiers clearly. Consider what features are included in each tier and how they drive users to upgrade.

For example, a productivity app might offer a free tier with basic features, a pro tier with advanced features, and an enterprise tier with additional collaboration tools and priority support.

Dual Customer Relationships

Since you're managing two types of customers (free and paying), you'll need to consider how you'll engage with each group differently.

Free users might receive occasional upsells or invitations to upgrade, while paying customers could have access to priority support or exclusive content.

Blue Ocean Strategy Business Model Canvas

Blue Ocean Strategy, popularized by W. Chan Kim and Renée Mauborgne, focuses on creating new market space or 'blue oceans' instead of competing in existing or 'red oceans'. To apply this strategy, you'll need to innovate on your BMC.

Consider adding a 'Market Space' block to your canvas to reflect whether you're operating in a red or blue ocean, and adjust your Value Propositions and Customer Segments accordingly.

Market Space

Describe whether you're operating in a red ocean (existing market with many competitors) or a blue ocean (new market with little to no competition).

For instance, a blue ocean strategy might involve targeting a new customer segment with a unique value proposition, like how Airbnb disrupted the hospitality industry by targeting individuals looking for authentic, local experiences.

Innovative Value Propositions

Since you're creating a new market space, your value propositions should be innovative and unique. Consider what customer needs you're fulfilling in a novel way.

For example, a blue ocean strategy for a food delivery service might involve offering plant-based, locally sourced meals to health-conscious customers, a segment not yet served by existing delivery services.

In the ever-evolving business landscape, it's crucial to adapt your business model to fit your unique needs and market conditions. By understanding and applying these types of Business Model Canvas, you can create a more tailored and effective strategy for your business. So, go ahead, experiment, and innovate with your BMC to stay ahead of the curve.