4.2 Putting knowledge into practice

In this video, you're going to learn how to use the popular tool called Business Model Canvas. This tool is made of nine blocks, and it's useful to write on different coloured virtual post-its like the ones that you can see here. Here, the post-its connect themes across the blocks using the same colour. To start working on this Business Model Canvas, we refer to the example of Starling Bank and we import elements that we have already analysed.

The value proposition and customer segments were the two building blocks of the Value Proposition Canvas. We import from the Value Proposition Canvas a selection of elements. So if you look at the post-its in blue, they relate to the design of the service, whereas the post-its in orange refer to the way the bank relates with its customers, how their questions and answers are managed.

Now, we start filling in block by block. We start on the Customers area on the right, filling in the last two blocks, Customer Relationships and Channels. If we look at the Customer Relationships, we see that the app conveys most of the services. So the relationship with customers is based on an automated service, but it's also possible to have online assistance. There's a direct channel which is delivered through the website, the app, and through the call centre. And again, you see we're using two different colours to highlight these different themes.

Now, we move to the left side, focusing on the Infrastructure area. There are three blocks here. The first one is Key Activities. This block refers to what the bank does to deliver its value proposition. For instance, it has to guarantee 24-hour accessibility to its banking services, as well as provide customer service online and on the phone.

How can the bank do that? Basically, it needs resources. These resources are listed in the block called Key Resources- so IT systems, HR, and also developers and specialists in banking services. Finally, the bank has decided to partner with the other app developers to provide additional services as listed in the block on Partnerships.

The Partners' apps are related to borrowing money, savings, and insurance, and they complement styling services. In Partners, you can also include key suppliers. After we are finished with this area, we move to the financial viability area, which is at the bottom of the Business Model Canvas. The cost structure refers to the infrastructure area and the revenue streams to the customers area right above it.

We fill them in by analysing the costs of the resources the bank is using and the partnerships it's established. And on the other side, we analyse the revenue streams from customers. So for instance, the bank will have a cost for offering the customer service. Revenues come from the overdraft fees and the debit card usage, but Starling gets revenues from the partner apps when they are used by the bank's clients.

As you can see, the colour used for the Partner Apps matches the colour used in the Key Partners block. We have been filling in block by block. But in reality, the work on the Business Model Canvas is an iterative process. For example, if we think about customers needing to deposit cash in the bank, this service can be designed block by block, as seen in the green post-its related to that service.

So if you look at the Customer Segments block, you see the customer needs to deposit cash. We also populate the Value Proposition block, as this is done by a partnership with the Post Office. And this then also appears in the Key Partners block. So you can see how the Business Model Canvas enables you to create and show relationships across the different areas from customers to resources and key partners, moving through to value proposition.