Updated: Jul 25
The business model canvas is a powerful tool to get a quick sense of how a business works. It can also be used to show how businesses can create social good.
This is the introduction to a broader series on how to use a social business model canvas to create purpose driven businesses, also known as social enterprises.
You can continue the conversation by joining Social Economy Connect. Social Economy Connect is a free mutual support platform for practitioners, social entrepreneurs, co-op members and developers and third sector supporters to discuss issues and solutions with a focus on social outcomes in the economy.
Strategy Made Simple: Keep it simple.
About the Author:
Matthew Rempel is a social enterprise development coach, with a focus on marketing. He helps social enterprises focus in on the core values of their business, and present them in clear language for their customers and clients. He has connected and interviewed many social enterprise leaders in his hometown of Winnipeg, Manitoba. He is also a lifelong nerd, and will gladly use analogies from games and movies to explain complex topics.
Hello, I’m Matthew Rempel with strategy Made Simple and today we are going to be talking about the business model canvas and how it can be used to create a social business. First things first, the business model canvas is a tool that you can use to outline what a business is, how it should function and how the pieces fit together. It’s not meant to be a detailed analysis like a business plan, but instead it’s kind of in between step between a napkin sketch and that formal business plan. So here’s what a business Canvas typically looks like, based on the tools by Osterwalder and Pigneur in business model generation. You can see that there are nine distinct sections. In this series, we’re going to be looking at each section individually and focusing on a case study of a social enterprise or some other social organization to flesh out a canvas and show you how each piece fits together. We’re going to start with the value proposition with an extra video on how to create social value. customers, relationships costs, revenue, channels, partners, activities, and resources. Again, I’m going to go over each of these sections in far more detail. But just so you have the canvas in mind, so you know what the whole is. The value proposition is why would people buy from you? What value are you providing to them? And what benefits are they receiving from doing business with you using a cafe as an example,
a value proposition would be say that you are satisfying their hunger, or that you’re giving them a place to work that is outside of the home or office. When we’re talking about social value, it could be as simple as providing a place of employment for people who are marginalized out of the workforce. Or it could be something environmental, where your practices are reducing the harm on the environment through the use of compostables or recyclables. Then your customers: who is buying from you. In the case of a cafe, it’s probably the local neighborhood population or people who are traveling through. Within customers, you’ll have a difference between your regulars and the one off buyers. And in the relationship section is where you would describe that relationship. Do you have an in depth regular style relationship? Or is it a drive thru where people grab their coffee and then they’re gone? We will look at the channels. How do people find out about you? And how do they purchase from you? Do they see a sign as their driving past? Or do you have an email list where you send to all of your regular customers? Then we’re going to talk about costs and revenue. How much does it cost for you to provide a cup of coffee? And how much can you sell it for? What kind of extra value increases the revenue and what kind of costs are associated with providing that value? Then we’ll be talking about the partners you have in your business. In the case of a coffee shop, this is the roaster, the supplier. This is also any other company or organization that you hold a long term relationship. It’s the people who help you provide the value to the other organizations, the other businesses that help amplify or build up to your business. We’re going to talk about the activities that your business takes the activities are the things that you do from day to date, they are going to include things like roasting, brewing, preparing baked goods, and selling them at the point of sale. This is most often confused with the value proposition, so make sure you understand the difference. And again, we’re going to go over it in a later video. And finally, what resources do you have available. This is going to include things like the real estate that you own, or the machinery. This is also going to include the staff expertise. Resources are the bits and bobs, the assets that you have that enable you to do the work that you’re looking to do.
Over the course of this series we’re also going to look at different kinds of business models and how they can be used. From the simple product or service to the more slightly more complicated platform or marketplace kind of business models. as we’re going through the business model canvas. One of the big things we’re going to be looking at are the connections between the sections. As they self reinforce, you build up a stronger business, a more resilient business that is more aligned in its efforts. As you’re drawing out your business model canvas, don’t be too specific in what you’re writing in each box, you want it to be more generalized. So instead of saying, a particular individual, as a customer, say, a particular segment of customers. Instead of saying “Shelly, the 35 year old local soccer mom”, you would say, “active parents from the ages of 30 to 45”. The Business Model Canvas is just made for a sketch of the business. It’s not outlining each of the operations. So if you want to get into that detail, you can go do a business plan. That’s fine. That’s not what this tool is for. However, as you’re writing up a business plan, having a sketched out Business Model Canvas can help you know what sections are important and how you want to flesh those out. throughout this series, I’ll be using a slightly modified version of the Business Model Canvas where I include sections on where do you provide social value? Where is the social value created? And what externalities or negative side effects are you going to try to prevent? Also, as a part of this business model canvas exercise, I’ll be asking how what possible unintended side effects are there? And how can you either amplify them if they’re positive, or mitigate them if they’re negative.
So why bother modeling a business? Why bother having a business model? It is the foundation of a business. If you don’t know the model, if you don’t know how you’re creating, capturing and/or selling value, then you don’t know how your business works. So you might be asking, why does modeling matter? It matters… It matters because modeling shows you where the gaps in your knowledge are. If you don’t sketch it out. If you don’t draw it or write it, however your brain works, you won’t know where the open ended questions are. Where the uninformed risks might sit. It matters because if you don’t have a model written out, sketched out, drawn out, however you want to do it, then you don’t know where the gaps in your understanding are. If you don’t even know where the missing pieces are, how are you supposed to fix it? It’ll also provide a visual for your team, so everybody can be on the same page. Everybody will know where their spot in the business is. It’ll also provide a visual for your supporters, partners and team members to push back. They’ll be able to see the hole and ask pointed questions to ask, “Is this an assumption?” “How do we know this?” Those kinds of questions will challenge your assumptions and if you don’t have a team to do that, I would suggest you find somebody to ask those questions of you. Show them your business model. If you’re unable to explain your business model with the business model canvas, then go back, clarify what your business is, and how it is supposed to work. As of right now, this is going to be a multi video series so look out for more to come. I’ll include a link to the next video once it goes live. And if you have any questions, please feel free to tweet at me:: @MatthewRempel, send me an email at: Matthew@strategymadesimple.ca or join me at Social Economy Connect. It’s a place for us to discuss social business issues and how we can do social impact through business in a better way. It’s also a place to get support through challenges. So if that sounds of interest to you, I’ve left a link down in the description so you can come and join us. Thank you for watching. If you’ve appreciated this video, please share it with somebody else. And as you draw up your business model canvas, keep it simple.