Business Model Canvas in Project Management
Introduction to the Business Model Canvas
In project management, the Business Model Canvas should be used to visualise the project on one page in order to present it clearly and thus create a successful end product. To do this, a worksheet is divided into different areas: On the right are the external factors, such as customers; on the left are the internal factors, such as the company itself; and in the middle are the interfaces. The company's services provide a benefit to the customer, which can be represented there.
For each area of the worksheet there are key factors that need to be considered for a successful creation of the Business Model Canvas, as they form the basis for the creation. They act as a common thread.
Key factors of the Business Model Canvas
1. Customer Segments
This key factor is about the customer - who they are and how to develop the best strategy to attract and retain them. The question is what strategy is needed to get the customer to accept an offer. First, the company needs to analyse the potential customers to find out who they are. The customer's age, background and income are important factors. It is also important to consider whether it is a one-off purchase, a regular purchase or a subscription, as these will appeal to different customers. This can create different customer groups that require different strategies. It is also important to identify which of these groups are the most valuable and generate the most revenue in order to focus accordingly.
2. Value proposition
This key factor is about why the customer should buy a product from this company in particular. What benefits and added value does the company promise that will convince the customer and thus contribute to the company's success? To answer these questions, it is crucial to formulate the offer as precisely as possible. This means explaining to the customer exactly what you have to offer, what the product's special features are and which of these are particularly important to the target group. You will also need to determine the price of the offer. You also need to work out how your offer differs from that of your competitors. What is the best way to stand out from the crowd, e.g. with a unique design? It is important to answer the question of the unique selling proposition and to clarify what makes the company unique and why the customer should buy there.
Once you know exactly which product you want to sell to which target group, you can turn your attention to how you are going to get it to the customer. This means thinking about the channels you will use to make customers aware of the product and how you will sell it. These channels can be both online and offline, either through your own distribution channels or through partnerships with distribution partners. Some channels work better than others and some are more cost effective. To find out which channels work best, you can conduct a survey of your target audience. This is a better way to engage customers and find out which medium they would respond most positively to a product.
The use of social media channels is particularly suitable for targeting younger people. Targeted online advertising campaigns can be used to attract the attention of the young target group. If you want to target older people, you can use more traditional channels such as magazines or other print media.
The question, however, is how to ensure that the customer actually buys the product after the advertising. It is crucial to make the purchase process as easy as possible to avoid potential abandonment. A smooth and intuitive user experience during the purchase process can help lead the customer to conversion and ultimately the sale.
4. Customer Relationships
Once customers are using a product, it is important to keep them for the long term as this is more cost effective than acquiring new customers. This can be achieved through excellent customer care, high customer satisfaction and regular contact. There are several attractive approaches. Personal customer service is particularly valuable, whether through a hotline or a dedicated contact person. This ensures that questions are answered at all times and that the customer is personally informed and advised about products. Although many processes in online retail are automated, it is important to provide good online support and send regular updates via email or social media to maintain customer contact. In addition, discounts can be offered to prevent customers from switching to a cheaper provider. Customer loyalty can also be promoted by creating a community where people can meet and exchange ideas. Alternatively, collaborations can be established, such as a fashion house developing an exclusive collection with influencers. These approaches should not be considered in isolation, but can be combined to create strong customer loyalty.
5. Revenue streams
For a business to remain successful, it is important to generate revenue. To do this, it is necessary to consider how revenue can be generated and how this can be done most effectively. One option is to sell the product directly, but subscriptions or licence fees are also possible. The choice depends on the product, but also on the customer. How much is the customer willing to pay?
To avoid cluttering up the Business Model Canvas, only the most important revenue streams should be shown, so that you can understand the margin.
6. Key Resources
The question is what resources are needed to ensure the success of the business. This could be a sufficient number of employees with the necessary skills, but also start-up capital to grow and remain profitable, technical or physical resources such as premises or machinery for production.
This point will be dealt with quickly as it can be easily deduced from the points already discussed.
7. Key activities
Building on the steps already identified, the strategic activities to increase the value proposition and thus the product success can now be worked out. How can you remain successful, create and offer further added value, reach other markets and thus win more and more customers without neglecting the good customer relationship?
8. Key partners
To successfully implement a product, you need supporters or partners to help you implement it. To do this, you need to analyse who they are and what the opportunities and risks are. This includes shareholders, but also stakeholders. In other words, all those who are financially involved, but also those who have an interest in the product, such as suppliers or distribution partners.
This point also implies that certain tasks need to be outsourced. Who takes on these tasks and how can the collaboration best be organised?
9. Cost Structure
Both income and expenses or costs are crucial to the success of a company. The lower the costs, the higher the profit. For this reason, it is essential to constantly optimise operational processes and check where adjustments can be made. The industry in which the company operates plays a crucial role. In highly competitive industries it is often not possible to raise prices excessively. In contrast, higher prices can be charged for products for which there are only a few suppliers.
To achieve this, it is important to carefully analyse fixed costs, company size and costs per customer. A thorough examination of these factors can identify opportunities to reduce costs and increase profitability. This may involve introducing more efficient processes, optimising purchasing or renegotiating supplier contracts. Similarly, the company should critically examine its size and whether any economies of scale can be exploited to reduce costs. It is also important to assess the cost per customer to ensure that prices are reasonable and that there is a balance between customer satisfaction and profitability.
Application of the Business Model Canvas in project management
Understanding the business model of a project
In order to understand the business model, a framework must be created in which it can be well elaborated, visualised and communicated. This requires, among other things, a team with the broadest possible knowledge. With the support of the team, business models can be created and compared with existing ones to get the best possible design. Failed projects can also be consulted, as documentation can help avoid mistakes that have already been made. A market and customer analysis should also be carried out, as this focuses on the customer and the value proposition. This will check whether the market exists and what the customer actually wants. This may be an existing product that needs to be improved or a gap in the market.
Once the Business Model Canvas has been created and the business model is understood, it can be presented to employees, partners or investors. It is useful to be able to make adjustments at any time and adjust the goals as necessary.
Using the Business Model Canvas to identify opportunities and risks
By concentrating on the most important tasks when working through each item, a clear presentation is created. You get to the point and see the opportunities and risks of the project. In addition, project costs can be reduced because you can see what resources are being used by external partners. The Business Model Canvas provides clarity and shows what still needs to be done or what development opportunities exist for the project. It also identifies dependencies between components, reducing the risk of something going wrong because one component stops working as it should.
Integration with other project management tools
One way of using the Business Model Canvas with other approaches would be to combine it with Scrum. In this case, the Product Owner would benefit the most, as he can generate the Product Backlog along the steps of the Business Model Canvas. In this way, he can generate individual items for a project, from which a Sprint can be created. Once the Sprint is complete, the Product Owner can prioritise the Backlog and continue to work successfully. Because the Business Model Canvas is adaptable, it can be used again and again.
Best practices for using the Business Model Canvas in project management
Collaboration with stakeholders
A stakeholder analysis should be carried out as part of the development of the Business Model Canvas, as it will make or break a lot of things; stakeholders are decision makers who should definitely be on board. Depending on their attitude to the project, they can help or hinder it. Therefore, it is important to know their needs and wishes and to take them into account as much as possible. Good communication with stakeholders is also important, depending on their rank in the analysis.
Continuous refinement of the business model
It is important to see the Business Model Canvas as a foundation and to keep trying to refine it. It is also important to document when things have not gone so well, so that this can be taken into account for future projects and planning. It is important to see the connections, because costs and resources, as well as customers and communication channels, cannot be seen in isolation. They are interdependent and affect each other.
The Business Model Canvas can also be used as the basis for a business plan to convince investors.
Incorporate customer feedback
If a company wants to be customer-focused, it needs to find out early on what the customer wants. To do this, you need to know who your target customers are and how you can offer them added value or benefits. This can be done through surveys, evaluations and market research. Is the relationship already what the customer wants, or can it be improved? This is how new customers can become regular customers.
Keeping the Business Model Canvas simple and easy to understand
To keep the Business Model Canvas simple, it is important to keep it to one page. This ensures that only the most important things are on the page and that everyone understands the concept at a glance. In particular, the nine sections ensure that complex projects become tangible more quickly. It keeps the focus on the essentials and ensures that you are not distracted by the unimportant.
This is why the Business Model Canvas is particularly suitable for companies that want to improve their customer relationships, check the potential of a project or develop new business models and use the canvas as a basis for further elaboration.