Introduction to the Business Model Canvas for Diversified Corporates

The Business Model Canvas, first introduced by Alexander Osterwalder, is an invaluable tool for designing and analyzing business models. For corporations with a wide range of diversified business units (BUs), such as Google, creating a comprehensive business model requires a nuanced understanding of each unit's unique value propositions and user needs.

Understanding the Business Model Canvas for Google

Google, as a multi-faceted corporation, operates through various BUs, each with its own distinct value proposition and customer segments. For instance, the Google Search division focuses on providing users with effective search results, while the Advertising division targets advertisers looking to reach target audiences. Rather than attempting to create a single business model that encompasses all these units, it is essential to develop separate models for dissimilar BUs.

Separate Business Models for Different BUs

The key challenge in designing business models for such a diversified entity lies in delineating the value propositions clearly. Instead of considering the entire corporation as a single unit, the focus should be on the value proposition itself, which is the core of a business model. Each business unit (BU) should have a unique value proposition that aligns with its specific customer needs.

For example, the business model for the Google Search division is centered around providing high-quality search results to satisfy user queries. In contrast, the Advertising division’s business model revolves around auction-based ad placements to target specific customer segments. While these units are part of the same corporation, they represent distinct value propositions that cater to different customer needs.

Creating a Business Model Canvas for Each BU

Creating a canvas for each business unit is not only an effective way to visualize the unique aspects of each unit’s operations but also aids in identifying potential synergies. Rather than blending the outcomes to create a single, misleading model, each BU should be treated as a separate entity with its own strategic aims and business objectives.

For instance, when creating a canvas for the Google Ads division, the focus would be on the interactions between advertisers and the platform, including mechanisms for ad placement, targeting, and performance metrics. In contrast, the Google Search division would focus on user interactions, search algorithms, and result relevance. These separate canvases help in understanding the distinct dynamics of each BU.

Avoiding Misrepresentation Through Separate Models

One of the critical advantages of using separate business models is the ability to accurately represent the reality of each BU. By avoiding a blended approach, organizations can gain a clearer understanding of the individual strengths and weaknesses of each unit. This clarity is particularly beneficial for decision-making and strategic planning.

Moreover, separate business models allow organizations to tailor their strategies more effectively. Each BU can focus on its unique value proposition and target audience, leading to more efficient resource allocation and better performance outcomes. For example, while the Google Ads BU might focus on enhancing its auction algorithms, the Google Search BU can concentrate on improving its search ranking algorithms.

Shared Resources and Synergies

While it is essential to maintain the distinctiveness of each business model, it is also possible for BUs to share resources such as capital and management expertise. This shared access can be leveraged to advance different strategies, but it is crucial to ensure that these resources are applied effectively across the different business models.

For instance, a diversified corporation might share a central pool of talent, allowing different BUs to leverage expertise in areas like data science, marketing, or product development. However, it is important to balance these shared resources with the unique goals of each BU to avoid diluting their core value propositions.

Conclusion

In conclusion, when developing business models for a diversified corporate entity, it is essential to focus on the individual value propositions of each business unit. By creating separate canvases for each BU, organizations can gain a clearer understanding of the unique dynamics at play and make more informed strategic decisions. While shared resources can enhance operational efficiency, it is critical to maintain the distinctiveness and focus of each business model to maximize their potential.

For organizations like Google, this approach is not only a best practice but also a learning opportunity. Embracing the nuances of each BU’s value proposition can lead to more innovative and effective strategies, ultimately contributing to the corporation's overall success.