The Business Model Canvas; is it the right tool?

In the last three years, the Business Model Canvas created by Alex Osterwalder and Yves Pigneur has received significant exposure and wide usage among entrepreneurs aiming to develop new business ideas. The concept of the canvas as per Mr. Osterwalder is to help entrepreneurs see the big picture and visualize their business strategy hence it is not a tool to go deep into the business operational issues. In an interview with Alex during the recent book launching of its Arabic version held in Qatar University in collaboration with Silatec and Qatar Business Incubation Center (QBIC), I had the chance to ask him about one important point; that I don’t see enough focus in the canvas on addressing competition which I believe is significantly important for new and current entrepreneurs to consider when developing new business ideas or transform their existing businesses. The main objective of generating a business model is to describe how your business can have a competitive advantage and how it can be sustained and this requires a good competition analysis.

Alex actually responded cunningly to the question and agreed with the need to study and analyze competition but this could be done using additional tools. I have to disagree here and say that particularly competitive research should be an integral part of business modeling. The main purpose of having a business model is to describe how a company will compete in the marketplace on a non-price strategy by creating differentiated value proposition, resources and operations, differentiated cost structures and revenue models. An entrepreneur may not be ‘Bill Gates’, ‘Steve Jobs’ or other creative and highly innovative business gurus, however we certainly can have that extra mile or step to contribute in a business idea that can make it differentiated and consequently successful. We need to see what others are doing, how they do it and do it quite distinctively and more significantly interesting to our clients or see the areas and gaps that we can fill better than others.

Business Model Canvas (BMC) has 9 building blocks and I believe that it is a good tool but there is a need to address competition in each of its block in order to have a sustainable competitive advantage.

(Content Credit: Mr. Ahmed Abounahia, MBA)