Lean Canvas

The Lean Canvas is a one-page blueprint composed of 9 basic building blocks defining your startup or product. It is an ideal way to document and validate a “business plan“.

DESCRIPTION OF THE LEAN CANVAS

The Lean Canvas, described in the book Running Lean written by Ash Maurya, is the good way to create and evaluate a business model. You can use the Lean Canvas to : document the Plan A, identify the riskiest parts of your plan and to systematically test your plan.

The Lean Canvas concentrates on the way timeline affects the revenue stream of a business. It is therefore more target-specific than the BMC and incorporates both small and large businesses effectively.

The Lean Canvas is actionable and entrepreneur-focused. It deeply focuses on startup factors such as uncertainty and risk. Because it was space constrained, Ash Maurya added more elements:

  • - PROBLEM

    A problem box was included because several businesses do fail applying a lot of effort, financial resources and time to build the wrong product. It is therefore vital to understand the problem first.

  • - SOLUTION

    Once a problem has been recognized the next thing is to find an amicable solution to it. As such, a solution box with the Minimum Viable Product “MVP” concept was included.

  • - KEY METRICS

    A startup business can better focus on one metric and build on it. The metrics include the range of products or services you want to provide. It is therefore crucial that the right metric is identified because the wrong one could be catastrophic to the startup.

  • - UNFAIR ADVANTAGE

    This is basically the competitive advantage. A startup should recognize whether or not it has an unfair advantage over others.

 

There are a few other things that Ash Maurya omitted from the original Lean Canvas in an attempt to improve it. These include:

  • - KEY ACTIVITIES AND KEY RESOURCES

    Ash found out that they were more outside-focused when gauged with the entrepreneur’s needs. They had also been covered in the Solution box.

  • - CUSTOMER RELATIONSHIPS

    A deeply focused startup business should establish customer relationships from the beginning. As such, these were covered in the Channels box.

  • - KEY PARTNERS

    Ash removed this category regarding the fact that most startups don’t require specific key partners when putting up because they deal in unknown and untested products. As such, it would be a waste of time trying to build such relationships.

 

The Lean Canvas is also majorly meant for entrepreneurs and not the customers, consultants, investors or advisors. It has no specific medium of implementation and you can use it first and then shift to the Business Model Canvas or either way.

 

METHODOLOGY

PROBLEM AND CUSTOMER SEGMENTS

  • Start by thinking of one type of customers and take some time to describe up to 3 problems they face. For each problem, think of how these customers address them today

  • Write down the relationships between customers and their own users/customers/partners, as this information will help you develop a better understanding of their needs and challenges

  • Refine your customer segments by defining the specific caracteristics of an early adopte

UNIQUE VALUE PROPOSITION

The Unique value proposition (UVP) defines why you’re different and worth (buying) getting attention

  • The UVP captures the essence of your product and what it represents for your target. What added value does it bring to your early adopters and how does it differentiate from current solutions?

  • A good way to write an engaging UVP that will get traction is to derive it from the biggest problem you are solving for your early adopters.

SOLUTION

Define the solution brought by your product without entering too much in the details. Write down the top features and capabilities attached to a problem.

CHANNELS

  • Choose a channel that make sense for the problems and customers you defined. Keep in mind that you these are hypothetical and that channel might change in the future when you refine/test your vision.

  • Ask yourself if these channels are : Free or expensive, Inbound or Outbound, Direct or Automated, Direct or Indirect, Retention before Referral.

REVENUE

  • A minimum viable product is not necessarily half-finished or buggy. As you intend to solve your customers’ biggest problems, your MVP should at least address them partially. If it truly brings value to your target, you should be able to charge for it.

  • Setting up a pricing strategy is very complicated, but crucial for your business to succeed. Ash Maurya recommends a single “Free Trial” plan, rather than trying entering into too much differenciation.

  • Look for alternative or similar products. Remember their prices act as references for customers.

COSTS

  • Take your costs into account, considering your delivery costs and what it it will involve to grow your business.

  • The value for your customers should well exceed the cost of acquisition .

KEY METRICS

  • The metrics showing the evolution of your products can be grouped in five categories connected to the customer’s lifecycle (Dave McClure’s Startup Metrics for Pirates - AARRR !) : Acquisition ; Activiation ; Retention ; Referral and Revenue

  • However, at this early stage, you just need to write down the activities that will drive usage of your product.

UNFAIR ADVANTAGE

  • Keep in mind that anything worth copying will be copied (Jason Cohen), especially when your business model becomes viable. Here are some advantages of unfair advantages that put you ahead of your competitors: Insider information; “Expert” endorsement; Dream team; Personal authority; Large network effects; Community; Existing customers.

  • The clearest definition of what unfair advantage can be found on Smart Bear Blog: « The only real competitive advantage is that which cannot be copied and cannot be bought. »


Sandile Shabangu

149 Startup Blog posts

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