Business Model: "A design of the operations of a business which focuses on how revenue will be generated" (Dictionary.com)

A business model describes the rationale of how an organization creates, delivers, and captures value (Osterwalder & Pigneur, 2010)

A business model is a description of the activities that a company performs to generate revenue or other benefits, and the relationships, information, and product flows a company has with its customers, suppliers, and complementors (Malone et al., 2006)

The Business Model (BM) Canvas is a strategic management tool, which allows us to develop and sketch out new or existing business models. It is a visual template pre-formatted with the nine blocks of a business model:

1. Key Activities: The activities necessary to execute a company's business model.

2. Key Resources: The resources that are necessary to create value for the customer.

3. Partner Network: The business alliances which complement other aspects of the business model.

4. Value Proposition: The products and services a business offers. Quoting Osterwalder (2004), a value proposition "is an overall view of .. products and services that together represent value for a specific customer segment. It describes the way a firm differentiates itself from its competitors and is the reason why customers buy from a certain firm and not from another."

5. Customer Segments: The target audience for a business' products and services.

6. Channels: The means by which a company delivers products and services to customers. This includes the company's marketing and distribution strategy.

7. Customer Relationship: The links a company establishes between itself and its different customer segments. The process of managing customer relationships is referred to as customer relationship management.

8. Cost Structure: The monetary consequences of the means employed in the business model.

9. Revenue Streams: The way a company makes money through a variety of revenue flows. A company's income.

Figure 1. The Business Model Canvas with Example from Osterwalder & Pigneur

Figure 1 is an example from Osterwalder & Pigneur, 2004. A template for the BM Canvas is provided herein (Yeap, 2011c). More examples (Yeap, 2011b) of using the BM Canvas are also made available for reference purposes.

In conclusion, complementary to Invention Capital Business Feasilibity Framework (Yeap 2011a), all Invention Capital investees are expected submit their respective BM Canvas.

References:

Malone, T. W., Weill, P., Lai, R.K., D’Urso, V. T., Herman, G. Apel, T. G., and Woerner, S. L. 2006. Do Some Business Models Perform Better than Others?, MIT Working Paper 4615-06.

Osterwalder. A., 2004. The Business Model Ontology - A Proposition In A Design Science Approach. PhD thesis University of Lausanne.

Osterwalder, A. & Pigneur, Y., 2010. Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers 1st ed., Wiley.

Yeap, T., 2011a. Business Feasibility Framework, Invention Capital Publishing.

Yeap, T., 2011b. Business Model Canvas: Examples from Invention Capital, Invention Capital Publishing.

Yeap, T., 2011c. Business Model Canvas template, Invention Capital Publishing.