Could you list all of the key building blocks you need to develop, manage, maintain, market, and sell a product on a single sheet of paper? With the business model canvas, you can! Using the business model canvas approach is a great way to force yourself to focus on the most strategically important elements of your product. As the name suggests, the typical use case for this tool is to outline the fundamental building blocks of a business, but it also can work really well for a product.
Today we’ll show you how the business model canvas works and how you can use it to come up with a high-level product strategy.
What is a Business Model Canvas?
As you can see from the sample example below (thanks, Strategyzer.com), a business model canvas is a one-page summary describing the high-level strategic details needed to get a business (or product) successfully to market.
The categories or buckets contained in a canvas can be customized. But most will look similar to the one here—covering such key areas as:
- The product’s value propositions (what it does and promises)
- Customer segments (who it’s for)
- Key activities (the steps the team must complete to make it successful)
- Key resources (what personnel, tools, and budget the team will have access to)
- Channels (how the organization will market and sell it)
- Customer relationships (how the team will support and work with its customer base)
- Key partners (how third parties will fit into the plan)
- Cost structure (what it costs to build the product as well as how to sell and support it)
- Revenue streams (how the product will make money)
If you think about it, that’s a fairly comprehensive set of building blocks you’ll need to think through for your product before you begin developing it. There will certainly be additional factors that’ll affect your strategy, but if you can fill in these high-level details—which, as you can see, should fit comfortably on a single page—you’ll have a useful strategic guide for developing your product roadmap.
Why Should I Use a Business Model Canvas to Develop a Product Roadmap?
Okay, but why? What’s the benefit of building a business model canvas (or the, even more, stripped-down variation, the lean canvas) to guide my product roadmap?
There are plenty of reasons. But simply put, you can think of a business model canvas as a mission statement for your product roadmap. It’s a handy reference you can refer to, to make sure your roadmap always reflects all the strategic elements needed for your product’s success.
“Think of a business model canvas as a mission statement for your product roadmap.”
Our co-founder Jim Semick has a couple of great short videos explaining the business model canvas concept, which you can check out in the player below.
As Jim explains, here are a few of the benefits of using a business model canvas to think through product strategies:
1. You can use a business model canvas to roadmap quickly.
You can use this canvas approach in just a few hours (and as Jim says, you can even do it with sticky-notes).
This way, rather than trying to write out every detail about your product plan beforehand, you can just document the highlights—and then you can get rolling translating the canvas into your product roadmap.
2. A business model canvas will be more agile.
One problem with the old structure of documenting a business model—the traditional business plan—was that it was almost always inaccurate as soon as the author finished drafting it.
These meaty plans included detailed cost estimates, revenue projections going years into the future, and long-term plans for growing the staff. How could any of that remain accurate for long?
In product terms, you can think of the business plan as resembling an MRD (Market Requirements Document). It’s long, detailed, and probably mostly untrue by the time it’s done.
But because you can put a canvas together so quickly, it will much more accurately reflect your strategic thinking and your company’s current reality. And if things change, it’ll be easier than a long and detailed plan to adjust. This brings us to Jim’s third benefit…
3. Business model canvas roadmaps allow you to pivot as needed.
If you build a business model canvas to guide your business roadmap, and something happens that forces you to re-prioritize or pivot your product, it will be a lot easier to update this short, high-level document than it would be if you had some monster MRD or business plan to tear apart and edit.
With a one-page business model canvas acting as the strategic undergirding for your roadmap, you’ll always be able to quickly spot any items or plans that need updating whenever priorities change or new realities demand that you adjust your approach.
How Can I Use A Business Model Canvas to Guide My Product Roadmap?
The Alexa Example
Let’s talk through a hypothetical example, using Amazon’s Echo device (“Alexa”) as our guide.
Imagine that as they were talking through what belonged in the “Revenue Streams” bucket of the business model canvas, Amazon’s Echo team came up with three sources of revenue to start with:
1) Selling Echo devices.
2) Using the device to sell other stuff as customers ask it to connect to the Amazon marketplace. (“Alexa, please add laundry detergent pods to my shopping cart.”)
3) Licensing Echo’s proprietary speech-recognition technology to other businesses.
Now, if the Echo product team put these on their business model canvas, they’d know that they need to make room for budget, time, and resources on their product roadmap for all of these revenue streams.
Another Hypothetical Example of the Business Model Canvas: Channels
Or think about the Channels bucket in the business model canvas. If your team was building out a canvas, maybe you’d have several ideas for reaching customers:
1) The in-house sales team.
2) Affiliate partners.
3) Word-of-mouth advertising from users.
It’s easy to write. But how are you going to translate that “word-of-mouth” strategy into an actual plan?
Maybe you’ll need to budget time and resources for developing things right into your product that make it easier for users to share their experiences with friends, such as a handy tool to help them tweet about it. Maybe you’ll even want to include an “Invite a friend” feature that lets users easier send a trial license to friends, or a couponing feature that offers some reward to a user who brings in two more users.
The point is, your business model canvas can serve as a great strategic reminder of the things you’ve determined are important enough to make it onto your product roadmap.
So you can always look back and see immediately—it’s just one page, after all—if you’re still working on all of the essential elements of your product, or if you’ve inadvertently strayed from them and gotten lost in the wrong details.
That’s why we’re big proponents of the business model canvas approach to guiding your product roadmap.
Do you have an opinion about using the business model canvas approach for developing and documenting your product’s strategy? Feel free to share them in the comments section.