Alex Osterwalder is the creator of the Business Model Generation canvas. It gives us a range of planning and marketing strategies for business success. Further refinement has come from this model – namely – the Lean Canvas by Ash Maurya.
The Business Model Generation canvas applied the methodologies used by Skype and Apple to attain product success, the Lean Canvas concentrated on the way our product timeline affects the revenue stream of our business.
A typical business plan will take weeks or months to create, with a Lean Canvas you can outline multiple possible business models in a day.
A single page business model is easy to share with others meaning it will be read by more stakeholders and likely updated more frequently.
The Lean Canvas
A Lean Canvas is more actionable and entrepreneur focused than the Business Model canvas. One rule before we start – never write on the canvas! Use Post-it notes!
The most frequent cause of startup failure; theres no market for our product. Put another way most startups fail because they waste time, money, and effort building the wrong product. We can attribute a significant contributor to this failure to a lack of proper “problem understanding” from the beginning.
With each Customer Segment (CS) its vital to understand the problem first. List one to three high priority problems that you CS has.
2) Customer segment
The problem and Customer Segments are intrinsically connected — without a CS you cant think of their problems – and visa versa.
Get Out The Building is a phrase coined by Steve Blanks. The reality is the solution is not in your office, its out in the streets. Interview your customer segment and really understand them on a deep level.
3) Unique Value Proposition
A value proposition is a promise of value to be delivered – the primary reason a prospect should buy from you. Why are you different and why should your customer buy from you?
Once a problem has been defined we need to find a compelling solution. A solution box with the Minimum Viable Product “MVP” concept is included. We are not going to get a perfect solution straight away.
Channels are the mechanisms for us to reach our CS. Which channels will give us enough access to our CS to give us sufficient learning? eg email, social media, CPC ads, webinars etc. Paid advertising can be the most useful here as you can be very specific with your targeting.
6) Revenue Streams
To estimate pricing and therefore revenue it can help to define the ‘minimum’ and ‘maximum’. potential prices. For a minimum price; How much is it going to cost to bring your product to market? How much will it cost you to produce it and distribute it to 1000 or 100000 people?
The easiest way is to define a maximum price is find your competitors. What they are offering and at what price?
7) Cost Structure
List all the operational costs for taking this business to market. How much will it cost to build / landing page? What is your burn rate ie your total monthly running costs? Use these costs to calculate a break-even point.
8) Key Metrics
A startup is better off to focus one or two key metrics and build on it. There will only ever be a few key actions that matter. eg For a new support ticketing system it might be; Tickets created per day.
9) Unfair advantage
This is your competitive advantage. A startup should recognise whether or not it has an unfair advantage over its competitors. A true unfair advantage is something that cannot be easily copied or bought.