Last November, while working as an interpreter at a business conference, I got introduced to the concept of a “business plan canvas.” I found this concept to be quite intriguing, not only for the start-up businesses that it is used in, but also for any other smaller business structure that, unlike large multi-national organizations (MNOs), cannot afford founding a legal entity dedicated solely to innovation, their mission being to develop and test new product and service concepts.

What is a business plan canvas (BPC)?

The concept of business plan canvas was initially developed by Alexander Osterwalder1. It is a lean, one-page strategic management template that is used to put together the key aspects of a new product or service.

What gave rise to this entrepreneurial tool?

In the old days any new product or service (i.e. basically any new innovation) had to be preceded by a business plan. This fairly detailed document (at least given that it was about something that did not exist yet, and that most of the projections were based on assumptions) was seen as a key precondition in order for this idea to even get considered. These were the old days.

In recent years Silicon Valley and other start-up regions have taught MNOs a lesson. Within no time start-ups, with their drive that is often rather a push for innovation managed to turn entire industries upside down. CEOs of MNOs travelled to Silicon Valley in order to learn what drives this innovation. They learnt about lean, flexible, dynamic structures that promote intrinsic motivation and hence innovation. As a result many MNOs have set up separate legal entities as innovation drivers.

Which information is collected in a BPC?

On a single page, a BPC summarizes ‘infrastructure’ items like key activities, key resources and the partner network. ‘Offering’ lists the value proposition, i.e. the reason why this product or service provides value to customers. The section on ‘customers’ gives an overview of market issues, channels and customer relationships. ‘Finances’ has information on revenue streams and the cost structure. The idea is to try out the idea to see if it works, and if it does to have a business plan for funding, etc. following at that stage.

Why use a BPC when you are NOT a start-up?

Simply put: Because we need to keep innovating in order to retain customer loyalty. SMEs often do not have the resources (neither personnel nor financial) in order to set up dedicated entities. And neither can nor should they rest on their laurels. A BPC is a lean and easy-to-use way of challenging yourself as an SME, or an interpreter or translator. It allows you to test ideas for new products or services without investing too much time or money.

In addition it can also be a source of motivation for your team and/or employees. SMEs could even use ideas raised as part of their Kaizen (or other continuous improvement processes) scheme in order to ‘test’ them in reality. Any employee that sees his idea being tried out will feel appreciated, and therefore motivated, which again can be the source of the next great idea. And best of all, if combined with customer feedback, it can be increase customer loyalty, too. At the end of the day it is every entrepreneur’s goal to keep adding value.

In a global competitive landscape it is only by adding value that is of interest to customers that we can have – and keep – happy, loyal customers. So let us challenge our products, services and ourselves!

¹Osterwalder, A. (2010). Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers, John Wiley & Sons.

You can download the template for a BPC from the following website:
http://www.businessmodelgeneration.com/canvas/bmc (accessed on 18 February 2016).