Using the Business Model Canvas to Guide Doctor of Pharmacy Students in Building Business Plans

Course Description

The course Community Pharmacy Practice Management II is a required two credit hour course in the first semester of students’ third year of pharmacy school at Virginia Commonwealth University. The course is taught simultaneously at three locations: in person on the Richmond campus and virtually from the University of Virginia and the INOVA campus in Church Falls, VA. Since it was launched in 2010, the class size has averaged 100 students, with approximately 70% of students being taught on the Richmond campus. The objective of the course is for students to develop the necessary competencies to design and manage pharmacist services in community pharmacy practice settings, although the course competencies are equally applicable to other practice settings, including health systems and ambulatory care. Entrepreneurship competencies²² attained in the class include strategic planning, decision-making, creativity, innovation, divergent thinking, risk management, service design, practice management, communication, teamwork, and marketing.

Learning outcomes are achieved through assigned course readings, quizzes and tests of reading material, exercises to analyze and apply concepts from assigned readings, and group assignments associated with the development of a business plan. A flipped classroom approach to teaching is used where students are assigned readings or videos and quizzed prior to class. Class sessions accompany active-learning exercises and provide an opportunity for live educator facilitation and feedback (Table 1). The flipped classroom approach allows students to work at their own speed and on their own time to learn content. Class time is used to master skills through group collaborative projects and discussions for the purpose of better and deeper learning. It provides the educator with more flexibility in adapting the material to the needs of students, with more class time spent on unscheduled topics or student questions. The professor’s role in the class is primarily as a guide and a coach. Each week, the general structure of the class consists of before class, in class, and after class activities (Table 2).

The capstone of the course is a business plan project for an advanced practice pharmacy service or program. The overarching goal of the project is for students to develop the mindsets and skill sets to change pharmacy practice, one innovative project at a time. By the end of the course, the goal is to have students think like pharmacists whose careers and livelihoods depend on the success of their employers and practice setting.

The design and delivery of Community Pharmacy Practice Management II has evolved through trial and error. Earlier iterations of the course used a lecture-based format in which students submitted a completed business plan at the end of the semester. This format yielded business plans of uneven quality based on assessments by faculty members and practicing pharmacists involved in the course. Some were good, meeting the standard of work expected of a professional (Appendix 1). Others were disappointing, suffering from reoccurring problems that were summarized in a handout to students on the most common problems to avoid. This list included issues such as poorly written and vague descriptions of business plan elements; ignoring or inadequately addressing major sections of the plan (eg, stakeholders); communicating in generalities instead of specifics; inconsistencies between sections of the plan, including contradictory information and different fonts and writing styles; not visiting the actual location where a program is to be offered; failing to find simple details that can easily be collected via a phone call or internet search (eg, local competitors for the program; costs of radio, TV, and newspaper advertisements), magical thinking in which students made unrealistic assumptions about how the world works (ie, that people will throw money at a poorly thought-out pharmacy idea), and boring the reader with a plan that is neither persuasive nor compelling. Sharing this list every semester helped students avoid these problems and made them a less common occurrence. 

Other pharmacy educators have identified similar challenges in teaching students about business.^16,23 Those educators highlighted the fact that most pharmacy students have little background or training in business, which makes it difficult for them to quickly grasp basic business terminology and concepts and students often require significant remediation in this area. Indeed, some students understanding of pharmacy practice and life in general was also limited. Student inexperience frequently hindered their appreciation of the need to learn the topic or the complexity of businesses that were centered on patient care. Teaching the topic is further complicated when it is not adequately integrated with other parts of the curriculum, eg, advanced pharmacy practice experiences (APPEs,) and when class size makes it difficult for faculty to provide extensive personal feedback. Consequently, a significant gap must be traversed by faculty members tasked with teaching business and entrepreneurship.

Zone of Proximal Development

The gap between what students know and what they need to know is called the zone of proximal development.²⁴ Vygotsky’s zone of proximal development (ZPD) framework describes an educator’s role in teaching topics that a student is unable to learn without assistance. According to Vygotsky, people acquire new knowledge and skills either on their own or through the assistance of others. People may be able to learn some things on their own, but they may require help in traversing the ZPD when it comes to more complex tasks and topics. According to Vygotsky’s framework, the educator’s role is to guide learners as they move through the zone of proximal development by providing supportive activities, also known as scaffolding, with the goal of achieving independent competence.

The ZPD emphasizes three key components which aid the learning process.²⁴ The first is an educator or guide whose knowledge and skills exceed that of the learner. The educator does not need to be an expert, just more knowledgeable than the learner. The second component is for opportunities that allow interactions between people to be built into the process. Interactions can be with a professor, teaching assistants, outside mentors, and peers. These interactions provide opportunities for active learning by students. The final key component in the ZPD framework is the provision of scaffolding, or supportive activities, to aid the student through the zone of proximal development to competency. Scaffolding consists of the various pedagogy provided by the educator to facilitate learning.

The ZPD framework was used in Community Pharmacy Practice Management II to guide students in developing their business plans. The task of completing a business plan fits the framework because it is an assignment that students cannot do without assistance, yet it is not too difficult to complete given the right amount and type of guidance. Opportunities for interaction between people were built into the learning process through class assignments that encouraged conversations between peers. Other opportunities built into the course design included the assignment of a practice faculty mentor to answer questions about real-life pharmacy practice and hold periodic team conferences to talk through issues and problems. To help students achieve competency, they were guided using the business model canvas, thoughtfully selected real-life innovations around which students could build business models, and in-class exercises, all of which are described in the following section.

Business Model Canvas

The business model canvas is a tool to help entrepreneurs understand a business model in a concise and organized way.²⁰ It presents the structure of a business plan on a single page that provides a quick overview of its key components, thereby allowing the reader to quickly grasp the business initiative. The canvas can be used to accelerate the development and testing of business ideas before a formal business plan is written. Class exercises for students can be built around the elements of the plan. The original business model canvas was developed by Osterwalder²⁰ and consists of nine building blocks: customer segments, value proposition, revenue streams, channels, customer relationships, key activities, key resources, key partners, cost structure.

A variation of Osterwalder’s canvas was developed for this course for the purpose of teaching pharmacy students (Figure 1). Although Osterwalder’s model is a widely adopted framework, experience in teaching pharmacy students revealed to us that many of them had difficulty understanding fundamental ideas relating to building a business plan. Over years of experimentation and various iterations, we increased the number of business building blocks from nine to 13 to better emphasize key learning objectives and to address ideas that students struggled to grasp. The new business model canvas for pharmacists was also developed to match the major sections of the assigned written business plan, allowing it to be used as a scaffold to complete the plan.

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Figure 1.

Business model canvas for pharmacy.

The components of the business model canvas for pharmacy differ significantly from those of Osterwalder’s canvas. Only four components were similar between the two: value proposition, revenues, costs, and stakeholders (key partners). All other components of Osterwalder’s canvas were either replaced by new sections on the canvas (strengths and weaknesses, opportunities and threats, organization’s operation, and implementation) or were modifications of Osterwalder’s components (primary and secondary customers, service/product, communication plan, key activities, key resources, and channels). Despite their differences, both canvases cover all major elements of business models. The distinctions exist primarily in how the elements are named and presented to students.

The business model canvas for pharmacy has the following notable features. It contains all the elements of a business model in a one-page summary, which allows for a quick understanding of the plan’s business model at a glance. The canvas presents the building blocks of a business in separate boxes, which ensures that no building blocks are ignored or insufficiently considered. The value proposition is placed at the center of the model to highlight the fact that all elements of the business revolve around the value delivered to customers. Use of the canvas mimics the scientific process by providing a well-structured process for testing the assumptions or hypotheses of a business model. It follows a problem-based approach to building business models, with each discrete element consisting of a problem to be solved (eg, Who is our customer? What is our value proposition to the customer?). Finally, it encourages continuous iterations of the business model through customer interviews, prototyping, and small pilot tests based on the assumption that the development of sustainable business ideas is a non-linear process.

In Community Pharmacy Practice Management II, each business model canvas developed by students evolved over the semester through a series of group exercises that tested initial drafts of the canvas and clarified details about the business idea (Table 3). The exercises allowed students to build their plans in stages with numerous opportunities for experimentation and educator feedback. Ideas were played with and refined in preparation for the final formal business plan document.

Selection of Business Ideas

A critical decision in the success of a business model project is the choice of a project. Projects can be assigned by the professor, generated by students, solicited from local pharmacists, or part of an established contest, such as the National Community Pharmacist Association (NCPA) business plan competition. Business ideas can be real (ie, intended to solve an actual business problem) or a simulation (ie, based on a made-up scenario). The choice requires balancing projects that are interesting to students, challenging but not too challenging, realistic but not without some structure, achievable given the students’ often limited knowledge and experience, and not too time-intensive for the professor.

Allowing students to come up with their own ideas helps them develop the important skill of idea generation, but it can lead to several problems. For many students, this task falls into the zone of proximal development and requires a lot of assistance from faculty members. Without significant help, students tend to default to their limited personal and professional experiences and often generate trivial ideas (eg, a new pill counting tray), minor improvements in convenience (eg, an additional pharmacy drive-thru window), or innovations outside of the pharmacy profession (eg, combination health food store and gym). Others suggest complex technology solutions that exceed their expertise to build and implement (eg, Siri-like voice-controlled personal assistant for medication adherence), causing them to be quickly overwhelmed and frustrated. Indecision grips other students, leading to procrastination or not offering any ideas at all.

If there is a short timeline between deciding on a project idea and submitting a business plan, it is important for students to start with an established idea so they can begin work early in the semester. In Community Pharmacy Practice Management II, students can choose from a list of business ideas that are generated by faculty members who also offer to act as mentors. Students are given the option to propose their own ideas to be vetted by the professor, but this option has never been selected. This structured method of identifying a project avoids the problem of students getting too far into the semester without having a viable business plan, and it allows advanced pharmacy practice faculty members to tackle real-life problems faced in practice. Some of the projects completed in the course include pharmacogenetic testing services at a local independent pharmacy, expansion of medical center services to local college students, creation of a financially sustainable position for a pharmacist within a local physician practice, drive-thru INR monitoring, CKD screening in a local community pharmacy, retinal screening service for underserved patients with diabetes, home blood pressure monitoring at a clinic for underserved patients, telemedicine in a family medicine practice with a collaborative practice agreement, a new faculty oncology clinic, a student-led flu immunization initiative, and contact tracing services for businesses and government entities.

Proponents of the business model canvas recommend developing an initial draft of the entire canvas instead of building it piece by piece.^19,20 The purpose is to describe an initial, big picture view of the business model, which will subsequently go through numerous drafts. The initial draft is seen as a series of hypotheses about the business model that need to be tested. For example, the primary customer for a diabetes management program might be hypothesized to be individuals from underserved communities with type 2 diabetes, but conversations with patients, payers, and providers might result in a new hypothesis that the primary customers are prescribing physicians.

The initial draft of the business model canvas of the proposed patient care service should be completed early in the semester because class activities revolve around testing and improving the initial canvas. Over the course of the semester, exercises for each element of the canvas will be completed, allowing students to reconsider their hypothesized business models and pivot to other hypotheses as needed.

Class Exercises

The actual learning from the course occurs when students test their hypotheses with in-class exercises. These exercises help students deeply consider their initial ideas for the model. The exercises also require students to provide more details for each element of the canvas, which can be used later in the final business plan. The class exercises used by student groups to build their final business plan are presented in Table 3.

Using the business model canvas and class exercises throughout the semester makes the final writing of the business plan much easier. Rather than franticly writing the plan at the last minute, students compile what they learned from the exercises and edit these findings into a document. Students are provided with the rubric shown in Appendix 1 along with examples of business plans from previous years to further communicate what is expected of them. Students adopt some ideas from previous year’s plans and add their own personal touches, typically resulting in incremental improvements in plans from year to year. This has made grading the plans more enjoyable because good plans are a pleasure to read. Although some groups still submit disappointing work, the level of disappointment has diminished compared to that in past years. The overall quality of the business plans is high enough that students are encouraged to list the completed plan on their resume.