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Canvas
14
Definition of a Business 
Model
16
9 Building Blocks
44
The Business Model 
Canvas  
2 
Patterns
56
Unbundling Business 
Models
66
The Long Tail
76
Multi-Sided Platforms
88
FREE as a Business Model
108
Open Business Models
3  
Design
126
Customer Insights
134
Ideation
146
Visual Thinking
160
Prototyping
170
Storytelling
180
Scenarios
Strategy
200
Business Model 
Environment
212
Evaluating Business 
Models
226
Business Model 
Perspective on Blue  
Ocean Strategy
232
Managing Multiple 
Business Models
5 
Process
244
Business Model 
Design Process
} 
Outlook
262
Outlook
Afterword
274
Where did this book 
come from?
276
References
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vas
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14
A business model describes  
the rationale of how an  
organization creates, delivers, 
and captures value
Def_Business Model
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15
The starting point for any good discussion, meeting, 
or workshop on business model innovation should 
be a shared understanding of what a business model 
actually is. We need a business model concept that 
everybody understands: one that facilitates descrip-
tion and discussion. We need to start from the same 
point and talk about the same thing. The challenge is 
that the concept must be simple, relevant, and intui-
tively understandable, while not oversimplifying the 
complexities of how enterprises function. 
In the following pages we oΩer a concept that allows 
you to describe and think through the business model 
of your organization, your competitors, or any other 
enterprise. This concept has been applied and tested 
around the world and is already used in organizations 
such as IBM, Ericsson, Deloitte, the Public Works and 
Government Services of Canada, and many more.
This concept can become a shared language that 
allows you to easily describe and manipulate business 
models to create new strategic alternatives. Without 
such a shared language it is diΩicult to systematically 
challenge assumptions about one’s business model 
and innovate successfully.
We believe a business model can best be described 
through nine basic building blocks that show the 
logic of how a company intends to make money. The 
nine blocks cover the four main areas of a business: 
customers, oΩer, infrastructure, and financial viability. 
The business model is like a blueprint for a strategy 
to be implemented through organizational structures, 
processes, and systems.
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Customer  
Segments
An organization serves  
one or several Customer 
Segments.
Value  
Propositions
It seeks to solve customer 
problems and satisfy  
customer needs with  
value propositions.
Channels
Value propositions
are delivered to customers 
through communication, 
distribution, and sales 
Channels.
Customer  
Relationships
Customer relationships 
are established and  
maintained with each 
Customer Segment.
The 9 Building Blocks
CS 
VP
CH 
CR
3
4
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17
Revenue  
Streams
Revenue streams result 
from value propositions 
successfully oΩered to 
customers. 
Key  
Resources
Key resources are the 
assets required to oΩer 
and deliver the previously 
described elements… 
Key  
Activities
…by performing a number 
of Key Activities. 
Key  
Partnerships
Some activities are  
outsourced and some 
resources are acquired 
outside the enterprise. 
Cost  
Structure
The business model  
elements result in the  
cost structure.
R$
KR
KA
KP
C$
5
6
7
8
9
18
KR
Key Resources
KP
Key Partners
KA
Key Activities
C$ 
Cost Structure
}
19
CS
Customer Segments
CR
Customer Relationships
VP
Value Propositions
CH
Channels
R$
Revenue Streams
20
The Customer Segments Building Block defines 
the diΩerent groups of people or organizations an 
enterprise aims to reach and serve
Customers comprise the heart of any business model. Without 
(profitable) customers, no company can survive for long. In order 
to better satisfy customers, a company may group them into  
distinct segments with common needs, common behaviors,  
or other attributes. A business model may define one or several  
large or small Customer Segments. An organization must make  
a conscious decision about which segments to serve and which 
segments to ignore. Once this decision is made, a business model 
can be carefully designed around a strong understanding of  
specific customer needs.
Customer groups represent separate segments if: 
• Their needs require and justify a distinct oΩer
• They are reached through diΩerent Distribution Channels
• They require diΩerent types of relationships
• They have substantially diΩerent profitabilities
• They are willing to pay for diΩerent aspects of the oΩer
Customer Segments
CS 
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