If you had been following our Innovation posts where we use the business model canvas to breakdown businesses, you might have always wondered how the business model canvas for a lean business scales up to that of a full business. We also had that question so we decided to explore linking the business model canvas to various business functions, in order for us to fully comprehend what it means.
Value Proposition
The value proposition is considered the most top level summary of what the business is. Therefore, this should be under the Chief Executive Officer, or the Business Strategy Department. While the Marketing team also would have a say in this, the value proposition is the heart of the business just like how the Chief Executive and Business Strategy brings everything together.
Customer Segments
In a corporate business, segmentation should be jointly owned by the Marketing Department, Consumer Insights Department, as well as Business Strategy Department, as there is a high level view of the customer and certain decisions would have to be made on the specific customer segments to target.
Customer Relationships
For customer relationships, the high level view would be driven by the Marketing Communications Department, as it would maintain the general relationship with the customer.
To target specific customers, the Sales Department would be the primary team developing these personal relationships.
Channels
Channel selection should be done by the marketing department, in order to achieve the broad go-to-market objectives of the company.
The execution of channels would usually be done by the Supply Chain Department and Operations Department, depending on the mix of channels chosen.
However, in this age, there is also online channels available. This is when the Digital Marketing Department arises to manage these channels.
Key Partners
Away from the external facing functions, key partners would usually be managed by the Corporate Communications Team, who consistently keep partners engaged. In businesses without a dedicated Corporate Communications Team, the Business Strategy Team should own this function.
The Sales/Procurement department might also be the right team to engage these key partners depending on whichever side the company is on.
Key Resources
For key resources, there is a variety of functions which govern this.
For human capital and labour, the Human Resources Department is definitely the one in charge.
For resources related to technology and infrastructure, we have the Information Technology Department in charge.
For financial-related resources, we have the Finance Department in charge and if there is no Real Estate department, the Finance Department also owns the aspect of leasing and ownership of commercial space.
Key Activities
The key activities will likely vary based on the business which is in question. While key activities should be carried out by the Operations Department, organisations are becoming more decentralised and constantly spreads out the key activities across various departments.
Cost Structure
The cost structure of the organisation should be helmed by the Finance Department, but as a partner to the various departments. Everyone plays a part in the cost structure but the owner of the costs should be finance.
Revenue Streams
The revenue streams usually stems from the pricing strategy as well as opportunity identification and the Business Strategy Department should clearly be in charge. The Finance Department can track the revenue streams to manage the profit and loss of the company, however the onus is on the Business Strategy Department to consistently look for new opportunities to increase the revenue streams.
How Many Teams Should There Be?
While you first start a business, you may find yourself doing everything, you might eventually want to scale up and see which functions are required by the business. As a general guide as covered, these are the functions in a business:
- Chief Executive Office + Business Strategy (To plan for the business.)
- Marketing + Consumer Insights + Sales (To manage customer-facing aspects of the business.)
- Supply Chain + Operations + Procurement (To run the external operations of the business.)
- Finance + Human Resources + Information Technology (To enable the internal operations of the business.)
While the functions can be combined in other ways too, the key is to understand your evolving business needs, as well as the skills of your team to ensure that your business runs smoothly.
Now that you have read the breakdown of how each department comes together in the business model canvas, are you more intrigued to run your own business in the future? Let us know in the comments below!
Are you interested in exploring business ideas? Please drop us a note at businessmodel@tanweixiang.com.
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Image Credits: Photo by Raspopova Marina on Unsplash
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