Lean canvas is a one-page business model template that helps entrepreneurs, intra-prenuers and startups begin decomposing their business model quickly and efficiently. It is a visual tool that forces you to think through the key elements of your business model, such as your target market, value proposition, and revenue model. It can fully replace a 30 page business plan in helping you answer the most important questions for your business model. The Lean canvas is part of Ash Maurya’s Continuous Innovation Framework which constitutes an essential building block to our method for starting and growing your business.
About Lean Canvas
resource - lean stack website
The Lean canvas can be really simple and really useful, however depending on how you fill it in, it can also be misleading and it can send you in different directions causing a waste of time or even missing out on great opportunities. There is a huge value in the sections and questions on the canvas, the brevity of it and the simple layout help keep it short but the real value is in the information that you provide and as such, it is possible that things go wrong. Why is that?
The innovator’s bias is hard at work within all of us. Our ability to rationalise our reasons is very powerful and in the case of Lean Canvas, both the innovator’s bias and our rational skills work against us. I learned this the hard way but you don’t have to. Read on to find more.
In the text below I will outline the main steps and my high level advice about filling in each box. There is however much more to know about the meaning of the questions and how to understand and process your answers. If in doubt I would recommend finding an experienced Lean Stack coach to help you do it right.
There is a historical confusion around the order of the questions. This is due to the first two sections having changed order once or twice as Ash was developing the tool. My advice here is that if you have a problem in mind, you can start with the problem box and
then move to the customer box. They are inherently connected though and you can’t go wrong if you start with the Customer box instead. The underlying thought has to be that the problem, as you see it, may not be the problem that your customers see. But also that your understanding about your customers can also evolve over time so that box can change too.
If you want a definite answer I would say it is more important to identify the customer segments that you will need to talk to in order to validate your problem or discover a related problem that’s worth solving.
If you are part of a team, try not filling in the canvas as a group to avoid groupthink. Fill in your canvases individually and then bring them together into one. This technique is known as diverge/converge and can be very useful in many other cases when working as a team. This will result in more ideas and potentially more canvas variants of your business model. The canvas variants can be as a result of slightly different problems or different customer segments. Avoid using one canvas if you have identified very different customer segments. While you should aim to build your product for one segment first, in the early days you won’t necessarily know which segments will be best, so keep developing separate canvases for your different customer segments.
When you complete your canvas for the first time it is far from being done. You will need to come back to it, refine your answers and adjust them based on your learnings. This may feel like a chore so I recommend establishing an accountability partner or attending a start-up boot camp like the one Ash Maurya runs or my 90 days start-up school.
Think about who are the people who experience the problem you are aiming to solve. But also think about who is going to pay for your solution. For instance, we started developing LeaveWizard with the employees and line managers in mind because we have witnessed the pain they feel when dealing with leave management. However, we soon discovered that they are not the people who pay for our solution. Those people were HR or Office admins and often Directors in the business and they had slightly different requirements. Avoid making the segments very wide. Often people think “anyone can use our product” but while that might be true, it is not very useful for your rollout strategy. You need to focus on smaller segments which get really narrow when you identify your early adopters. Your early adopters will need to be those who feel the problem the most and are ready to pay and perhaps wait for a few months for a solution. If possible you can identify and list your early adopters- e.g. by name.
The most important thing to remember here is that this is your current understanding of the problem. It is not uncommon to start with one understanding and end up building a solution to a very different problem. It is good to start with your understanding but be certain that it will change. It is very rare for someone to guess the problem right without talking to customers hence the low success rate of startups. There’s an endless list of examples of successful businesses that have started with one problem and ended up somewhere else - Groupon, Flickr and Instagram to mention a few.
The section of the canvas I find most intriguing is what comes next - Alternative solutions. This is so easy to get wrong but is crucially important for setting you on the right path. There are two main reasons for getting this wrong. Say you’re building an expense automation tool. It is easy to assume that your main competitors are other expense automation tools. And this is OK but what might be more useful is to look at the problem your tool is solving and then expand by figuring out what other solutions are doing the same job - e.g. spreadsheets. You are likely to find that most people solve their problem by using spreadsheets. It is not perfect but it’s free. And here comes the second trap. While it is useful to understand that your biggest competitor are spreadsheets, it is almost useless to try and say that in public because spreadsheets are free or almost free. This means you will be asking people to replace a free solution with a paid one and we all know that the hardest price change is from $0 to $1.
To keep each piece short I will end this first part here and continue with Unique value proposition in the next article in these series on Lean Canvas. In the meantime, if you’d like a chat or need help understanding some of these concepts, please get in touch.
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About the author
Plamen is a LeanStack coach and an experienced Software Delivery consultant helping organisations around the world identify their path to success and follow it.