The document provides an overview and notes on Alexander Osterwalder's book "Business Model Canvas". It summarizes the 5 major chapters: Canvas, Patterns, Design, Strategy, and Process. The Canvas chapter describes the 9 blocks of the Business Model Canvas including Customer Segments, Value Propositions, Channels, Customer Relationships, Revenue Streams, Key Resources, Key Activities, Key Partnerships, and Cost Structure. It provides examples and explains how to view the canvas from right to left starting with the customer.

1. Business Model Canvas Notes
by Alexander Osterwalder - Available at Amazon
Definition - A business model describes the rationale of how an organization
creates, delivers, and captures value
Overview
The book has 5 major chapters – Canvas, Patterns, Design, Strategy, and Process
Each section within a chapter has some brief notes to provide an overview
Canvas
Two views of the canvas – The top is a typical example, the bottom a framework explanation
It is helpful to view from right to left - start with the customer and move
backwards throughout the company

2. Customer Segments - for whom are we creating values?
E.g. mass market, niche market, segmented, diversified, multi-sided platforms
Channels - How do we deliver our value?
5 phases of channels:
1) Awareness
2) Evaluation
3) Purchase
4) Delivery
5) After Sales
Customer Relationships - Types of relationships a company establishes within segments
Self-Service, Personal Assitance, co-creation, communities, automated services
Value Proposition - what value do we deliver to the customer segment?
Newness, performance, customization, getting the job done, design, brand/status, price, cost
reduction, risk reduction, accessibility, convenience, usability
Revenue Streams - $ a company generates from each customer segment
Subscription, sale, Leasing, usage fee, advertising,
Key Resources -what an organization needs
Physical, Intellectual, Human, Financial
Key Activities - what an organization does
Production, Problem Solving, Platform/Network
Key Partnerships - Network of suppliers and partners
Optimization and economy of scale, reduction of risk and uncertainty, Acquisition of particular
resources and activities
Cost Structure - all costs incurred
Fixed, Variable, value driven, cost driven,
Example: Apple iTunes

3. Patterns
Unbundling Business Models
There are three core business types or "canvases" that can be examined separately or
in correlation with one another:
1. Product Innovation - develop new and attractive products
2. Customer Relationship Management - finding and acquiring customers and building
relationships with them
3. Infrastructure Management - build and manage platforms for high volume, repetitive
tasks
Separate these businesses and focus on only one of the three internally (Mobile Telco, private
banking industry).
The Long Tail
Selling lose more: offer a large number of niche products (Netflix, eBay, YouTube, Facebook)
Multi-Sided Platforms
Two or more distinct but interdepent groups of customers (Google, ebay, Microsoft)
Free as a Business Model
Advertising - Free offer based on multi-sided platform (Google)
Freemium - Free basic services with optional premium services (Flickr, Evernote, Spotify)
Bait and Hook - inexpensive initial offer lures customers into repeat purchases (Gillete, Free
Mobile Phones)
Open Business Model
Create value by collaborating with outside partners (P&G, GlaxoSmithKilne)
Design
Customer Insights
Include the way you View your business model through the customers' eye
Develop a deep understanding of customers rather than just asking them what they want
"If I had asked my customers what they wanted, they would have told me 'a faster
horse'" - Ford
Know which customers to listen to and which to ignore.
Ideation
The creative process needed to design a number of new and innovative business model.
Business Model Innovation is about challenging orthodoxies to design original models that
meet unsatisfied, new or hidden customer needs
2 Phases:
Idea Generation - Quantity Matters
Synthesis - ideas are discussed, combined, and narrowed down to a small number of
viable options
Epicenters of Business Model Innovation
Resource Driven - Existing infrastructure - Amazon Web Services
Offer Driven - Create New Value - Netflix

4. Customer Driven - Customer needs, access, or convenience 23andMe brought
personalized DNA testing to individuals rather than just
professionals/researchers
Finance Driven - Revenue Streams, pricing mechanisms, or reduced costs - Xerox and
leasing copiers
MultiEpicenter Driven - Hilti moved from selling tools outright toward renting sets of
tools to customers
What If questions are starting points?
Process:
Team Composition - Diverse enough to generate fresh business model ideas?
Immersion - General research, studying customers/prospects, assessing existing
business models
Expanding - What innovations can we imagine
Criteria Selection - What are the most important criteria for prioritizing our business
model ideas?
Prototyping - What does the complete business model for each idea look like? 3-5
Business Model Innovations
Visual thinking
Visual Techniques (such as sketches, diagrams, post it notes to construct and discuss
meaning) give life to a business model and facilitate co-creation
Diagrams and charts clarify messages within reports and plans
Post-its:
People Frequently do not immediately agree on which elements should appear in a
Business Model Canvas or where they should be placed - Post-its allow for easy
exploratory discussion
1) Use Thick Pens
2) Only one element per note
3) Only a few words per note - capture the essential
Drawings - even simple stick sketches can better convey emotions and deliver longer lasting
impressions
Prototyping
Thinking tool that helps us explore different directions in which we could take our business
model
Prototypes represent potential future business models. Can be a sketch, Canvas, or
spreadsheet
"New Thinking"
There are multiple business models in and across industries
Inside-out: business models transform industries
Opportunistic thinking
Exploratory search for business models
Design focused
Value and efficiency focused
Storytelling
Storytelling helps you effectively communicate a new business model. Good stories engage
listeners.
Reasons to do so:
Introducing the new - makes story tangible

5. Clarification - illustrates how your business model solves a customer problem in a clear
way. Gives you buy-in
Engaging People - People are moved more by stories than by logic
Keep the story simple. Use either the customer perspective or the company perspective.
Stories can justify changes and challenges to the status quo
Scenarios
Scenarios render the abstract tangible. Their primary function is to inform the business model
development process by making the design context specific and detailed
2 types of scenarios:
1. Customer settings (how product/servicdes are used, what kinds of customers use them,
objectives etc)
2. Future environments in which a business model might compete - image possible futures
in concrete detail.
Strategy
Business Model Environment
Mapping four main areas of your environment:
1. Market Forces - market segments, needs and demands, market issues, switching costs,
revenue attractiveness
2. Industry Forces - Supplies and other value chain actors, stakeholders, competitors, new
entrants, substitutes
3. Key Trends - Technology Trends, Regulatory Trends, Societal and Cultural trends,
Socioeconomic Trends
4. Macroeconomic Forces - Global Market Conditions, Capital Markets, Commodities,
Economic infrastructure
Evaluating Business Models
Use SWOT in conjunction with Canvas
Business Model Perspective on Blue Ocean Strategy
Managing Multiple Business Models
Process
Mobilize - prepare for a successful business model design project
Understand - research and analyze elements needed for the business model design effort
Design - Generate and test viable business model options, and select the best
Implement - Implement the business model prototype in the field
Manage - Adapt and modify the business model in response to market reaction