Worksheet

Business Model Canvas

Originally from an academic thesis, this simple graphical representation of a business model is one of the most popular tools for documenting (and testing) business hypotheses - and with good reason.

Visually, the Business Model Canvas is a diagram of the nine primary, interconnected parts of a business model. The left half contains four internal components (resources, activities, partnerships, and costs), while the right half contains four external components (customers, channels, relationships, and revenue). The two sides are connected by the ninth box at center, straddling both sides: the value proposition. Using it is straightforward: put into each of the boxes the core information we have about each of those things.

Despite its simplicity (or, perhaps, because of it), the BMC is one of the most frustratingly misused tools in the startup journey. Entrepreneurs seem to view it as a rite of passage, a milestone — something to complete, check off the list, and forget. But this robs it of its biggest power: tracking hypotheses.

At its core, the BMC is really just a creative way to track all the hypotheses (read: assumptions) about your endeavour. The most important of those are ones you test, and the invalidated hypotheses represent pivots. The canvas not only shows you the relationships your hypotheses have to adjacent hypotheses, so impacts are easily exposed, but it also becomes a visual record of your journey over time — with each version of the canvas being like a page in a flipbook.

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Originally from an academic thesis, this simple graphical representation of a business model is one of the most popular tools for documenting (and testing) business hypotheses - and with good reason.

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