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6 Problems with the Business Model Canvas

Aug 11, 2022

The Business Model Canvas is famously the “ultimate” tool for business transformation. The “classical” canvas is however not perfect. Without knowing what it's missing, entrepreneurs make major tactical mistakes Below are a few pointers to avoid this.

1. Strategy is not taken into account

The canvas is missing is a section defining the start-up’s mission statement, to give an idea of the priorities and objectives the entrepreneur has set for themselves. No good strategy would be complete without these elements.

2. There can be more to profits than costs and revenues

Profit = revenues - costs. There is however more to the story. Timing and profit allocation rules are important, too. By adding a “profit mechanism” box to the canvas, we ensure this strategic aspect does not go unanswered.

3. It is not in the right order

When we talk about strategy, we start with WHO the business will serve, then WHAT will be sold, followed by HOW this offer will be sold to customers. Value proposition should be first in the canvas, followed by customer segments… and so on.

4. It does not show any interconnections

Though the value proposition's definition is unrestrained, the rest of the canvas exists only through the prism of that choice! While customer segments impact customer relationships, resources have little to do with partners, and so on.

5. It doesn't acknowledge the company’s role within its ecosystem

No company is born in a vacuum. Through the rise and fall of entrepreneurs and CEOs alike, communities and the environment can either thrive or be destroyed. Obviously, this does not appear in the traditional BMC.

6. External factors are absent

Business models exist only in relation to an industry, its historical context, and a multitude of other external factors. It isn’t rare for external factors to have more of an impact on business model definition than any decision from executives.

After all is said and done, here is what the updated and improved business canvas should look like.

This article is a very short summary of a longer article which you can find by clicking this link. I encourage you read it if you enjoyed the above.

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