If you want to best develop your startup idea, you certainly need to know what the Lean Canvas is and how it works, a tool created as an adaptation of the Business Model Canvas and tailored precisely to the needs that arise in the early stages of creating a startup.
This guide is designed precisely to answer any doubts on this precise topic.
What is Lean Canvas and why is it important for startups
The Lean Canvas, as mentioned earlier, is a framework for defining the business model that was created in response to a limitation manifested by the Business Model Canvas, which was deemed ill-suited to accompany the embryonic development of a business idea. It was devised by Ash Maurya, within his book entitled “Running Lean.
This tool makes it possible to develop a startup idea and accelerate the startup’s growth by identifying risks and opportunities. The underlying approach is the so-called Lean Startup approach, focusing on the problem-solution combination, then the product-market combination, and finally on scalability.
The Lean Canvas is considered important for startups, first and foremost, because it gives them the opportunity to focus on the core elements of the business. Not only that, it also allows key assumptions to be identified right away and thus tested while minimizing waste.
Lean Canvas vs. Business Model Canvas
The main difference between the Lean Canvas and the Business Model Canvas is related to when these two frameworks are used, which-be very careful-are not one a substitute for the other, but rather complementary
While the Lean Canvas is to be used in the very early stages of a startup’s life cycle (i.e., when the startup is still just an idea, lacking feedback on its actual potential), the Business Model Canvas becomes useful at the point when you need to shape the project and organize it in a way that creates value.
As you will discover in a few lines, moreover, the two frameworks also differ in some of their components.
The key elements of the Lean Canvas
The Lean Canvas consists of 9 blocks. The components that distinguish the Lean Canvas are the same as those of the Business Model Canvas, except for 4:
- “Key partnership” is replaced by “problem” to be solved;
- “Key activity” is replaced by “solution.”
- “Key resources” is replaced by “key metrics.”
- “Customer relations” is replaced by “unfair advantage.”
Like the Business Model Canvas, the Lean Canvas must be compiled following a specific order:
- Problem: What is the problem to be solved? Try to be as specific as possible.
- Customer segments: which people experience this problem and when? Identify your typical customers and define Early Adopters, i.e., the very first users.
- Solution: what do you propose to solve the problem? Define a clear and simple solution for each problem.
- Unique value proposition: why should people choose your product or service specifically? To answer this question, you must understand how your offering is better than your competitors’.
- Revenue streams: how much will your customers have to pay and in what way? Pay special attention to setting the sales price.
- Unfair advantage: are your products/services unique and not replicable? Find the factors that give you the ability to maintain a competitive advantage over your competitors.
- Channels: which channels will you use to sell? Identify all the channels useful for getting in touch with your customers and choose the ones that best fit your business idea.
- Key metrics: what will determine the success or failure of your startup? Identify the most relevant metrics to monitor performance.
- Cost structure: what will be the costs you will incur? Specify the costs, especially those that will be concentrated in the short term.
How to Apply Lean Canvas to Your Startup
To apply the Lean Canvas to your startup you need to ask yourself three basic questions:
- Have I identified a problem in the marketplace that is worth finding a solution for?
- Have I created something that my customers want?
- How do I accelerate the growth of my startup?
Begin by compiling the Lean Canvas with some starting assumptions and then use feedback and information gathered from the target market to validate the assumptions or, if necessary, modify them.
Remember that, for proper application of the Lean Canvas, you should compile the framework as a group (you could compile it, for example, together with the co-founder or with other startuppers) so as to ensure that you gather the most ideas.
Also, remember Eric Ries‘ famous phrase:
“Using the Lean Canvas means accepting that what you know least is what you need to learn first.”
Template and practical examples to implement the model
Having said the order in which you need to fill out the Lean Canvas, there is another aspect that you need to consider: from a visual point of view, the central block of the Lean Canvas, dedicated to the Value Proposition, divides the framework into two sections: in the left one are the product-related components and all the internal factors of the startup, while on the right are all the market-related aspects and external factors.
The sectors to which the Lean Canvas can be applied are many and varied, ranging from retail to technology. With regard to the latter sector, for example, it is possible to adopt the Lean Canvas for a startup dealing with Artificial Intelligence solutions: the problem, in this case, could be related to traditional user-side interfaces, and the solution could be to find a viable way to integrate this technology into smart devices, including through collaborations with hardware and software system manufacturers. The competitive advantage, of course, would in this case be technological innovation.
Advantages of Lean Canvas over other models
There are several advantages that the Lean Canvas can offer you. Among the main ones is its clarity and simplicity.
Another great benefit of this tool is that it reduces the risk of wasting time and resources on strategies that may prove to be ineffective. In fact, thanks to the Lean Canvas, you can constantly monitor and measure the performance and results of the different strategies you implement, thanks to feedback from the market.
Mistakes to avoid when using Lean Canvas
The main mistakes to avoid when compiling the Lean Canvas are a direct consequence of what has just been said: one strength of this tool is its simplicity, and it would be wrong, therefore, to overload it with too much information. The other advantage, as mentioned, is its ability to adapt to constant and sudden changes in the market: the mistake, in this case, is not to update it consistently.
There is a third very important mistake you must avoid: so many startuppers focus all their attention on the product, neglecting what are the problems and desires of customers.
An additional element that you would do well not to underestimate, when compiling the Lean Canvas, is competitive analysis: By underestimating competitors you risk having a partial (and, therefore, wrong) picture of the market. Correctly identifying competitors also allows you to better define the differentiator of your product and your competitive advantage.
Why the Lean Canvas is outdated
Like the Business Model Canvas, the Lean Canvas is not without its critics: one of the most common accusations is related to the limited number of its components, which risks leading startuppers to neglect key parts of the business model.
To correct this and other limitations came THE B-PLANNOW BOARD®, the shared visual language created after years of testing and validation by B-PLANNOW®, which consists of as many as 23 elements (19 of which are fundamental). With this tool, even better than with the Lean Canvas, you can describe, visualize and redefine your startup’s business model.
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