Build Your Lean Canvas
Introduction
In this article, we will answer the questions of what is Lean Canvas, and how to create one. The Lean Canvas is a powerful tool that helps you describe your business smartly only by looking at the key points of your business, such as your target customers, the problem, the unique value you provide, and the solution.
The Lean Canvas allows us to take a business idea to the next detail level when starting from scratch. It’s a nine-box worksheet that enables us to explain and envision our business effortlessly. It is an excellent tool for transforming our business concept into these nine critical components of running a successful business.
It’s time to get your initial business idea to the next level with the Lean Canvas. Let’s get started.
Create a Business That Works
When we decide to start a business, the first approach is usually to create a business plan, as we need a business plan to have a proper business. Most of the business plans comprise at least 20 pages of documents and include complex financial spreadsheets.
Using the traditional business plans, we want to see the profit and loss of our business and how much money we will make to develop the business. However, in high-tech startups, it’s pretty hard to expect the business to go with the plan since many factors could disrupt the project in the future.
The real challenge should be to build evidence that will allow us to reduce the risk of the business, and this is where the Lean Canvas comes into play. Ash Maurya invented the Lean Canvas to help us decrease the risk in the early stages of our business by focusing on the essential elements. Unfortunately, traditional business plans have the opposite effect, since we prefer to substitute risks with false accuracy while constructing one.
In this article, we focus on the method and technique of the Lean Canvas that will allow you to remove primary risks from your business in an expeditious, iterative manner. You’ll not build the business yet. Instead, you’ll systematically take the guesswork out of the idea and understand much about your business.
Ash Maurya, the inventor of the Lean Canvas approach, also published the book Running Lean, an excellent introduction to lean startup and how to use these techniques to iterate from idea to a plan that works.
The Lean Canvas
Here is the lean canvas.
The idea of the Lean Canvas comes from Alexander Osterwalder’s Ph.D. work on creating a lightweight tool to define any business that exists and categorize them based on fundamental dimensions. So the basic question was, what are the fundamental dimensions of a business?
Understand Your Customers
The first step is to understand the problem of your market well. How to understand the problem your target market is experiencing.
In this part, we first identify the customers, their typical behavior, their problem, and their experience with that problem. Then, following the relevant boxes of the Lean Canvas stepwise will help you quickly answer these questions and create a prototype of your business.
There is an order of filling out the boxes in the Lean Canvas because the boxes we think of first where we build the evidence have the highest impact on other boxes. Let’s start with the first box.
1. The Problem
The first box you need to think about is The Problem. Here you answer the question of “What problem are you trying to solve?”. It may be an existing problem that people are experiencing today. If so, it’s easy to communicate the issue in a way that the market can effortlessly recognize.
Or, the problem may not exist today and is initially not apparent to the people. You may have a visionary business idea that will emerge soon, and people may not be aware of it yet. Here, you need to be more careful about the problems that will arise in the future.
You can also think of their desires. It may not be a problem, but it can make the current situation better. Today there are lots of consumer products in the market that solve desires rather than underlying problems.
2. Customer Segments
The Customer Segment box is where we look for an answer to the questions “Who has that problem?” or “Who is going to have that problem?”. Customer segments are the group of people who have or going to have a similar situation and problem. They all commonly describe their problem or concern and share almost the same experiences.
Segmenting customers is helpful when establishing your communication strategy before taking your product to the market. It helps you understand the voice of the customer and use that voice in your communication. If not, you also need to teach your voice to the customer, bringing unnecessary extra effort.
Try to establish your communication with the problem, not the solution. Because the market first needs to be aware of the problem to resonate with your solution.
Early Adopters
Early adopters are the people who are most likely to adopt a new solution. Therefore, they are essential in your communication strategy because the whole customer segment will not adopt your solution.
Within your customer segment, look for the people who are ready to try new things. For example, they think it’s cool to be the first to use a new product because they will get the benefits first. Think about their behavior in your communication strategy, and include them in your messaging, especially if you will have pre-launch marketing.
Early adopters are also precious in the early stages of your product because they will be with you in this first stage.
3. Unique Value Proposition
Try to define your unique value proposition as the unique solution. Again, a customer-centric approach will be helpful to describe your unique solution; think from the perspective of your customers and simulate how they would explain the value they have after their problem goes away using your solution.
When you think from the customer’s perspective, keep using their voice as well. Using the customer’s voice will also help with your messaging.
High-level Concept
A high-level concept is a brief description of what your business is about, like an elevator pitch. You can use your high-level concept to describe your business concisely when in front of an investor, a potential partner, or a customer.
Understand Your Business
This section focuses on the product you will build and the offer to your customers to solve their problems or desire. Another part of this section includes the channels you want to use to market your product and the cost structure of customer acquisition, as well as your revenue model.
4. Solution
The Solution box is where you describe your product and the solution offering for the defined problem. To better describe the solution, use the customer-centric approach that you take in the customer segment section. Include the problem description and the unique value of the solution.
5. Channels
Channels are the ways you use to get your product to the market and activate your target customers. This section also describes your strategy to get your target audience aware of the problem. To be aware of something, we must learn it. So, you also keep in mind that people need education to know that the problem exists.
If you haven’t done it yet, this section is the perfect place to create your strategy to teach your customer segment and get their attention. After getting their attention to the existing problem and convincing them of your solution, it’s time for them to pay you. Now we are talking business.
6. Revenue Streams & 7. Cost Structure
Cost Structure and Revenue Streams are the sixth and seventh boxes in a Lean Canvas. As discussed earlier in this article, we usually focus on these subjects in a traditional business plan and call them profit and loss.
However, the profit-and-loss calculation is not the top priority task of a high-tech business. Instead, the absolute risk we need to focus on is the structure of the revenue and cost. Here, you need to think about your business equation.
The business equation helps us shift from thinking about making money into thinking about the costs and revenue of the business in a mathematical method. We dive into the business equation later.
Complete The Lean Canvas
This section looks at the solution you build, the channels you’ll use to market your product, the customer acquisition cost, and the revenue model.
8. Key Metrics
When we think of the key metrics, we aim to understand the indicators that show your business works well. Therefore, the Key Metrics are the key indicators that simply show how your business is doing. When we think about a business’s performance, the first thing that comes into mind is to look at the revenue.
At the early stage of a product, especially in high-tech businesses, the revenue means almost nothing because you just started developing your product and testing the product-market-fit, and you probably run your business making no money for a while. In early-stage product development, you need to think about the key indicators that help you understand your product and customer development performance.
9. Unfair Advantage
An Unfair Advantage box is where you declare the assets you have that nobody else has and can copy. Some call it the “X factor” or the “10X Factor”.
It’s usually thought that you don’t have many things in the early stage that nobody else can’t copy. However, nearly every team has its Unfair Advantage; the experiences, talent, education, and background of you and your team. These are the assets that nobody else can copy.
Alternatively, you can leave this box blank in the first versions of your Lean Canvas. However, if you fill this box with a part of your business idea, you most likely get disappointed after simple online market research.
The best strategy here is to leave this box for later, examine your competitors well, find out what they are missing, and target the missing point as your Unfair Advantage that none of your competitors have ever seen.
The Right Order
The Lean Canvas has a fill order for better flow. And there is also order if you change a box later you fill all the boxes.
If you change the boxes two or three, it can cascade onto the rest of the canvas. If you change the boxes one or two, they probably impact boxes six, seven, and eight.
Conclusion
When you decide to shift your mind from the initial idea to the next stage of building a successful business, the Lean Canvas is a unique tool to make this transition focused on the solution. Create your Lean Canvas in under 20 minutes and spend more time building versus planning your business.
Do you still need help? Contact me and let’s create your Lean Canvas together.
