Alex Osterwalder describes the nine core elements of a business model, and how they relate to each other. These nine core elements form the strategy for how a company will create, deliver, and capture value for itself and its customers.
Nine Core Elements of a Business Model
address nine important questions to describe the business model. With that it starts with the customer segment; who are you targeting? And then you ask yourself, what sort of value am I creating, so you are going to describe the value propositions. Then you asked, well how am I reaching this market? You are going to describe the channels to reach those customers.
Once you’re in business with them the next block is well, what kind of relationship and I going to establish? Is it transactional, is it long term? Then of course when you know who you’re targeting, what you’re delivering, and how you’re delivering, you need to ask well, what are these customers willing to pay for it? So you are going to talk about the revenue streams.
we like to call this first five components the front stage of how you are creating value. Then comes the backstage, you’re going to ask yourself, okay I know who I’m targeting and what I’m delivering, how am I going to do it? So you talk about the key resources, assets, and factories, and brand and so on. How are you going to do it, and of course key partner, who are you going to work with to do that? And that basically gives you the cost structure. So at the end if you answer these nine questions, you have the equation of how you are going to earn more money than you are spending.
You’re going to describe all the essential pieces to the blueprint of your strategy.