The lean canvas model was created by Ash Maurya to offer aspiring entrepreneurs a concise and actionable business plan. He drew inspiration from the business model canvas developed by Alexander Osterwalder. Unlike the latter, the lean canvas focuses specifically on startups.
According to Ash Maurya, a lean canvas helps customers deconstruct their business idea and challenge the possibly faulty assumptions. It helps entrepreneurs look at their potential product critically and make well-thought-out decisions based on facts rather than their gut feeling or anecdotes.
Lean Canvas Elements
The lean canvas consists of 9 boxes. Each box explores a particular facet of your business idea. I will describe each element in this order, although Ash Maurya claims there is no correct way of filling in the canvas.
Basically, the order depends on your individual starting point. For example, if you have developed an app, you already have a solution, so it makes sense to start at item number 4 (Solution). If you have not yet developed the app, you may want to start with customer segments or problem. Only you know what is right for your business.
1. Customer Segments
You do not want to waste valuable resources marketing to people who will never be interested in your product. Thus, you should narrow down your audience as much as possible based on criteria such as age, gender, geographic location, interests, etc.
If you have identified multiple distinct audience segments, create a separate lean canvas for each such segment. To help your product take off on launch day, determine the early adopters: people who evince an exceptional interest in your proposition and, thus, are more likely to try an unfamiliar product.
To fill in this box, ask yourself a question: What customer’s problems are you addressing with your product? Knowing the problems helps your team stay focused and apply their efforts in the right direction to develop the right product.
Here it can be helpful to consider the alternatives your potential customers use to circumvent the problem. Let’s say you want to create an events app that matches people’s interests with the events happening near them. Alternatives to this app may be city posters, website banners, word of mouth, etc.
3. Unique Value Proposition
In what way do you propose to solve the customer’s problem, and what makes your solution unique? Word it in a way that sounds enticing to potential investors and consumers of your product. A good option here is to use a high-level concept, aka a quick and easy catchphrase that best captures your proposition. For example, the website Dogster was originally described as “Friendster for dogs.”
It’s time to find a solution. Note how small this box is. Brevity truly is the soul of wit, and so you must be very concise and specific when thinking of a solution to your problem. To keep things simple, think of an MVP (a minimum viable product) that would meet the customer’s needs.
5. Unfair Advantage
Is there something about your product that not only makes it better than existing alternatives but also is not easy to replicate? For a new product to be viable, it is not enough to have a unique value proposition – it must also have a unique competitive edge. Examples would be highly trained employees, innovative technology, access to valuable data, etc.
6. Revenue Streams
How do you expect to make money off the product? Are you just going to sell it? Will it be a one-time purchase or subscription-based? Do you plan on having any paid add-ons or even a whole different proprietary version? These are all helpful questions to consider.
7. Cost Structure
This is the box for all expenses required to bring your idea to life. Here it’s important to be thorough and include everything: materials and maintenance cost, employees’ salaries, taxes, rent, licensing fees, etc.
8. Key Metrics
Metrics are measures of your product success. They let you know if you are on the right path and keep your business accountable before the stakeholders. For a small startup, it may be helpful to focus on one metric at a time: number of subscribers, clicks and downloads per week, sales, etc.
Now that you know your audience ask yourself: where are you most likely to reach them? Are they likely to prefer online or offline channels? If the answer is online, should you pour your resources into social media or email marketing? Will they appreciate a fancy website?
The Benefits of Lean Canvas
A lean canvas is only one page long, so it is easy to fill in and adapt, which is especially fitting in a fluid and fast-paced startup environment. As a result, it is easier for startups to stay agile in their decision-making, quickly recover from failures, and make immediate, meaningful changes to their operations.
Oftentimes, startups have few resources and only one chance at survival. The lean canvas encourages entrepreneurs to be strategic in a way they distribute those limited resources. For example, by filling in the customer segments and channels, businesses do not lose time and money marketing to the wrong people on the wrong platforms. As a result, they save resources for other, more helpful goals.
Beginner entrepreneurs can be extra-ambitious in their approach. They may want to include features that nobody asked for just because they want their brainchild to be perfect. The lean model, again, prompts businesses to focus on solutions that the customer really wants and needs.
It is not easy to develop and launch a new product. The lean canvas allows startups to narrow their focus and, thus, develop a product that is both anticipated and unique. Here you can find more canvas examples to help you on your business journey.
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