The Lean Canvas is a business modeling tool created to help deconstruct a startup idea into its key and most risky assumptions. Deeply influenced by the lean startup methodology, the Lean Canvas is a tactical plan to guide entrepreneurs from ideation to success. Ash Maurya developed the methods as an adaptation of Alexander Osterwalder’s Business Model Canvas, the most used modeling canvas in the world.
The Lean Canvas comprises nine building blocks, just as the Business Model Canvas. However, these blocks have titles and purposes modified logically on Lean Canvas, beginning with your customer’s problem. Let’s understand better how this modeling system works.
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How to make a Lean Canvas
Creating a Lean Canvas is a streamlined way to outline a lean business model by capturing the essential aspects of a product idea on a single page. Based on the lean methodology, this approach helps business startups focus on solving core customer problems effectively. Here’s a step-by-step guide on how to make a Lean Canvas, integrating the necessary components for a clear overview:
- Identify the Problem: List the top three problems your target customers face. Focusing on fundamental issues keeps your product idea relevant and customer-centric. This ensures that your lean business model is built around solving pain points that matter;
- Define Your Customer Segments: Describe specific people or customer groups who will benefit from your product. Being detailed in this area, including key demographics, behaviors, and needs, helps pinpoint your early adopters and ensures your business canvas is well-targeted;
- Unique Value Proposition: Craft a concise statement explaining why your product stands out. Your canvas model should highlight how your solution better meets your customers’ needs than alternatives, capturing their attention and demonstrating the core benefit;
- Solution: Outline the features of your product or service that solve each identified problem. Focus on a minimal set of viable features that deliver on your unique value proposition, ensuring a lean business approach without excess complexity;
- Channels: Define how you’ll reach people and deliver your product. Channels might include social media, direct sales, partnerships, or other customer-preferred pathways. Selecting the proper channels helps make your business canvas actionable and practical;
- Revenue Streams: Specify how your product will generate income. Consider multiple sources, like subscriptions, direct sales, or advertising, to provide a broad overview of potential revenue in your lean business model;
- Cost Structure: Identify significant product development, marketing, and distribution costs. A clear understanding of your cost structure aids in creating a financially sustainable lean methodology approach;
- Key Metrics: Determine the metrics to assess success, such as customer acquisition cost, engagement rate, or customer retention. Selecting metrics aligned with your goals provides insight into whether your critical assumptions about the lean business hold;
- Unfair Advantage: Describe any unique strengths or assets that set you apart, such as exclusive partnerships, proprietary technology, or specialized skills. Your business canvas should highlight any advantage that can protect your position in the market.
By filling out these sections, you create a one-page business canvas with an accessible, shareable overview of your idea. This Lean Canvas can be an effective tool for anyone reading through or evaluating your plan, allowing quick adjustments for business growth.
Why use the Lean Canvas?
It is vital for any kind of entrepreneur to put their ideas on paper, so every stakeholder can be aware of the goals and threats of the project. That’s the best way to make everyone think of solutions and accomplish the aimed results. But this process needs to overcome two challenges:
- Translate your thoughts into some language. It is complicated to clearly and assertively translate what’s in our minds into words. Often, the opposite takes place: everything gets even trickier when concepts must become something concrete and visible;
- This translation can take time. Traditional business plans usually take weeks — sometimes even months — to elaborate. This may become a waste of time and energy, especially when we consider that the market and the scenario where your business is can change in a few days. When we think of an unexpected crisis, it can transform drastically.
The purpose of Lean Canvas is precisely to solve both problems. This method is based on practical principles and uses a simple, user-friendly visual language, which allows entrepreneurs to test their hypotheses more efficiently.
How does the Lean Canvas work?
Download the Lean Canvas Template. Here, you will find all the information you and your team need to visualize and analyze in a single canvas, eliminating unrelated and irrelevant details. The focus here is to avoid waste — of time, energy, processes, and money — as the Lean Startup methodology encourages.
So, this modeling system is based, as mentioned above, on only nine building blocks, which are:
- Problem: When you want to sell a solution (whether a product or a service), there should be a demand, in other words, at least one identifiable problem. Every customer segment you will define has its issues, and your business’s purpose is to solve them. You are going to build your whole canvas over this building block. This section, then, must contain up to three priority problems;
- Customer Segments: Perhaps this is your first building block to establish. The first step to understanding your business will probably be to discover who your customer is. After all, you can only get to know the problems you will solve when you know the ones who face them. Thus, if there is more than one customer segment, you should develop one canvas for each;
- Unique Value Proposition: This block shows how your business differentiates from others and what value your customer will only have through your product or service and no one else. Therefore, list what makes your brand stand out — i.e., why your customer must buy from you rather than your rival;
- Solution: Now that you know what and whose the problem is, it’s time to offer the solution. It must stand for the minimum set of functionalities and features (Minimum Viable Product) that allows you to deliver the value proposition from the previous block;
- Channels: Here, you must inform the means you will use to reach your audience. That includes all marketing, communication, and distribution channels that you intend to adopt, both traditional and digital;
- Revenue Streams: Ask yourself, “How much will my customer pay for my product/service?” The price and payment system chosen are essential parts of your offer, and they can determine the success or failure of your venture;
- Cost Structure: Gather here all the costs needed to sell your product. You should list all the expenses, from research and development to monthly fees and salaries;
- Key Metrics: You must know what metrics to apply when measuring your business’s performance. That’s the only way you can monitor the team’s progress toward the results;
- Unfair Advantage: Ask your team, “What does this business/product/service have that no one else does?”. This is possibly the most challenging question in the whole canvas. The answer must be something unique in the market that cannot be copied, mimicked, or acquired. It’s a challenging but essential matter, mainly if you intend to use the canvas to attract partners and investors.
As you may have noticed, we are talking about only nine blocks, very objective. Therefore, it is about a modeling method that can be concluded within 20 minutes! Can you think of something leaner?
The Benefits of Using Lean Canvas
Besides the brevity and objectivity of this 20-minute tool, there are other advantages in using the Lean Canvas, such as:
- Focus on the solution. Unlike complicated business plans, Lean Canvas permits stakeholders to adjust their focus on problem-solving relations, making the hypotheses more straightforward;
- User-friendly design. This one-page canvas encourages all the team members to participate in developing and fulfilling ideas. Also, there is little space available — on purpose — which compels us to reduce the analysis to what is entirely fundamental, leaving aside unconnected and trivial data;
- From entrepreneurs to entrepreneurs, business people have created the method. They know the business plan is for the company owner and team — it will seldom be present to outsiders. Therefore, there is no need to waste time and energy on details and accessories.
What’s the difference between Lean Canvas and Business Model Canvas?
As Ash Maurya, the creator of Lean Canvas, said, one is not better than the other. They are just different. While the Business Model Canvas focuses on strategic business planning, Lean Canvas focuses on the customer-problem-solution relationship. In practice, the difference between the two tools is just in the four blocks, which Maurya modified in Lean Canvas from Business Model Canvas.
But this “small” change transforms the entire understanding of the business model. Maurya’s objective, which was to modify Business Model Canvas’s blocks, has been to turn it into a more user-friendly tool that didn’t need explanations from experts. One where you could simply read the titles to understand how the components are supposed to be filled out.
What building blocks have been introduced in Lean Canvas?
- Problem: Most businesses that fail at the beginning of their operations choose the wrong product to produce. They waste a lot of time, money, and energy creating and developing a product that doesn’t interest their audience;
To avoid that, sometimes it is easier to define your customers’ problems and the challenges they face that need a solution. Thus, you can develop a product that solves this problem and will not waste time creating the wrong — and useless — product; - Solution: having established the problem to be solved, you can move to developing the solution. If you compare the space provided in each of the blocks — Problem and Solution —, you will see that the second one is half the size of the first. This aligns with the idea of the Minimum Viable Product (MVP);
- Key–Metrics: this component aims to make the entrepreneur focus on the most important numbers of their business. Often, you can decide on a particular metric and practically ignore the rest because this is the foundation of your business. The objective, therefore, is to find out what these key metrics are so as not to spend time, money, and energy on activities or resources that are not essential and that, more than that, may change very shortly;
- Unfair Advantage: An unfair advantage is a factor that differentiates your business from the competition and can block your competitors’ entry or expansion in the market. In other words, it is something that cannot be easily copied or purchased. Often, new companies don’t have — or fail to identify — their unfair advantage immediately, so this block may go blank at first. However, the component encourages the entrepreneur to continue searching and working to find their unfair advantage and protect it from the competition, especially from new entrants.
Which Business Model Canvas’s building blocks have been replaced?
- Customer Relationship: This component has been substituted partly by the Channels, the Solution, and the Customer Segment. Through the channels, you determine the solution to a customer segment’s problem and keep a relationship with that segment;
- Key Partners: Although some businesses essentially depend on partnerships, this is not true for the vast majority. Especially for beginning and unknown entrepreneurs, seeking partnerships right away can waste time and energy;
- Key Activities and Key Resources: These blocks are more for outsiders to understand your business than for you to make it work yourself. In addition, the key activities will only be discovered during the operation and only after your MVP’s solution has already been tested.
As for the primary resources, some new businesses, mainly startups, no longer focus on “physical” resources. More and more, it takes fewer resources to launch a product on the market. Again, this will only become very clear with the operation’s progress.
Different tools for different purposes
Below, check out how differently both tools can be applied to business management:
- Simply put, the Business Model Canvas is more appropriate for those beginning a business — especially if it is not a startup — from scratch. On the other hand, the Lean Business Canvas aims at different activities, such as iteration, expansion, or innovation startup development, since that focuses on problem-solution relations;
- Another difference is that Lean Canvas focuses on the customer, seeking to create value by observing their problems that need solutions. To be used this way, the business model canvas needs to be combined with the Value Proposition Canvas, so you end up with two canvases instead of one;
- This way, Lean Canvas is more straightforward than Business Model Canvas, since BMC emphasizes creating and building a whole new business model. That’s why it’s so fundamental for new businesses;
- Lean Canvas, on the other hand, approaches the business as the product itself. So, the business model is not perfect yet. It is a lean framework in progress that can be iterated the same way you would with a product;
- Besides, while Business Model Canvas has been developed for and by managers, Lean Canvas has been considered an accessible tool for any kind of person, whether the entrepreneur or any other team member. That’s why the blocks have been simplified;
- For that same reason, Lean Canvas can also be used outside the marketing and management area. It is, actually, a tool that has been used by engineers, designers, and even high school students.
As may be seen, both tools are useful and efficient. As Maurya stated, there is not “the best one.” You must determine your objective regarding business modeling and choose the alternative you believe will better suit your needs.
Ash Maurya’s Lean Canvas’s Book
The creation of the Lean Canvas and many of the articles published by Ash Maurya in his blog allowed him to publish a book. The book revolves entirely around the central premise of Maurya’s Lean modeling: “Life’s too short of building something nobody wants,” i.e., nobody should waste time, money, and energy on developing the wrong product.
According to Ash Maurya in his book, the best way to achieve a product/market fit is to achieve a product/market fit. This is done based on innovative methodologies, including Lean Startup and its Lean Canvas.
Final Considerations about the Lean Canvas
It is important to remember that Lean Canvas is not a project for the entire lifetime of the company. On the contrary, it is about a method that permits experimentation. You and your team may test different combinations until you find out what the ideal business model for your venture is. Never forget: investing time in planning and experimenting is always better than building a product nobody wants.