Lean Canvas

Summary: summarize every business model you're considering in a one-pager Lean Canvas, to force you to be clear about your plans/assumptions.

Context: You want to reduce the risk of burning time/money executing a fundamentally flawed business model. You may be considering multiple/alternative business models, or a pivot.

Forces:

  • You're trying to start or grow a business
  • You're likely to focus on 1 aspect of it, and sometimes even start executing on that part, without thinking through the other key aspects of the business model that will drive its success/failure.
  • You might be considering alternative/similar business models to support your anchor aspect.
  • You're tempted to describe the business in a long narrative, as a pitch tool for investors or hiring-candidates.

Solution:

  • Summarize your business model in a 1-page Canvas, breaking out the 9 aspects noted below.
  • Make a separate canvas for each variation of model you're considering - if you have 2 options each for 3 aspects, that's 8 different canvases!
    • multiple stakeholders within a single segment's customer (e.g. enterprise user vs payer)? Usually best to put them in the same canvas (for consistency), but identify them explicitly and clarify which you're addressing in any box
    • multi-sided market/platform? Even messier, but still best to keep on one canvas.
      • if that market/platform expects to serve multiple significantly different segments on either side, things get messier. I might (a) make an n-by-m matrix (does Seller Segment X want all Buyer segments, or only Buyer Segment A?), and consider making (at least rough/partial) canvases for each cluster.
  • Once you are done, highlight the most-risky aspect for each model. Validate that aspect as quickly/cheaply as possible before doing anything else (at least in executing one of the models) (you might want to validate some assumptions before picking a model to move forward with).

Lean Startup model for documenting a Business Model for a Lean Startup. From Ash Maurya.

2010-08-15-MauryaDocumentingLeanStartupBusinessModelHypotheses

http://leanstartup.pbworks.com/w/page/47250326/BusinessModelCanvas

Background, Ash's design decisions, etc. http://www.ashmaurya.com/2012/02/why-lean-canvas/

He thinks about them (and validates them) in this order (order updated over time)

  1. Market: Customer Segments (Market Segment): Who are the customers/users of this system? Can they be further segmented? (He makes a separate Canvas for each target segment.)
  2. Unique Value Proposition: Tag-Line, Positioning Statement, Elevator Pitch: what Bad-Ass results will the customer get with your product?
  3. Problem: 3 top problems you're addressing: barriers to achieving the outcome. (Problem Interview)
  4. Product's Solution: Minimum Viable Product feature-set
  5. Product: Key Activity: user actions that drive revenue.
  6. Market: free and paid Sales Channel-s to reach people in your segment - see Start Small, Stay Small (Content Marketing)?
  7. Cost Structure: fixed and variable costs
  8. Revenue Model: Revenue Stream-s, Lifetime Value, Gross Margin, Break Even point, etc.
  9. Unfair Advantage (cannot be copied or bought) ("moat"): you might not ever have one.

Integrating into other documents for other-level decisions: Lean Stack 2012-06-15-MauryaLeanStack


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