In order to facilitate understanding and discussion on this topic, it is essential to educate contributors in the use of a common framework. The Business Model Canvas is a strategic management template for depicting the rationale through which a business creates, delivers and captures value. It is a strategy blueprint with elements describing a business’ value proposition, infrastructure, customers, and finances to assist business leaders in aligning their activities by illustrating potential trade-offs.
This business model framework describes the key components that define the business’ DNA:
- Competitive advantages & value proposition. Core strategic edges that provide advantage over competitors, experiences provided to the tourists and mission-based value provided to all stakeholders. This is what sets the destination apart from others, and so the reason why tourists should go and why other stakeholders should collaborate with the destination.
- Customer segments. The target segments that the destination wants to attract, based on criteria such as geographical markets, as well as sociological and motivational profile.
- Customer relationships. The kind of relationships the business model wants to establish with tourists, how to deliver the experiences and how to engage them with the destination.
- Marketing channels. The types of channels through which the destination is to deliver the stories and other marketing contents to engage potential tourists and other stakeholders.
- Key activities & management system. The most important activities to sustain the competitive advantage through continuous improvement and executing the value proposition, as well as the platform’s management system including strategic goals, performance standards and metrics to measure the health of the business model.
- Key resources and organizational structure. The necessary assets to start operating the platform and attracting stakeholders, which encompasses human, financial, physical and intellectual resources. Every position is defined by its mission and key competences.
- Key partners. The network of partners which are necessary to deliver the value proposition, as they bring along know-how, resources and other value which are beyond the core capabilities of the business model, but should not be internalized, in order to reduce risk and costs, and to optimize operations.
- Cost structure. The balance between overheads and variable costs, determining the potential to generate economies of scale or economies of scope.
- Revenue streams. The way the business model generates income from the delivered services and products to different target clients and partners.
- Social & environmental costs. The negative impacts that the tourism business may cause in the natural environment and to the local communities. Here, we may also consider the negative impacts saved by the Tourism 3.0 approach, in comparison with the usual practices.
- Social & environmental benefits. The positive impacts that the tourism development is having both on the natural environment and local communities. They are to be measured through a series of metrics to assess the progression on the mission accomplishment.
The White Paper “Envisioning destination models 3.0” explains all this in further detail.
This article is from the White Paper “Envisioning Open Innovation in Destinations”, available for download in www.envisioningtourism.com/whitepapers