Created by Ash Maurya, https://leanstack.com/leancanvas. Adapted from the Business Model Canvas by Alex Osterwalder. Business plans take too long to write, are seldom updated, and almost never read by others but documenting your hypotheses is key. Lean Canvas solves this problem using a 1-page business model that takes under 20 minutes to create. Use whichever is most natural to you. The most important takeaway is that you document your key business model assumptions (and learning) in a portable format that you can share and discuss with people other than yourself.
Additional to Business Modal Canvas
Problem
List your top 1–3 problems
Most startups fail, not because they fail to build what they set out to build, but because they waste time, money, and effort building the wrong product. A significant contributor to this failure is a lack of proper “problem understanding” from the start. The “Problem” is explicit, and not a derivative of something else like Value Proposition.
Solution
Outline a possible solution for each problem.
Once you understand the problem, you are then in the best position to define a possible solution. That said, the use of a small box on the canvas serves to constrain entrepreneurs because the solution is what we are most passionate about. Left unchecked, we often fall in love with our first solution and end up cornering ourselves into legacy. Keeping the solution box small also aligns well with the concept of a “Minimum Viable Product” (MVP).
Key Metrics
List the numbers that tell you how your business is doing.
Startups often drown in a sea of numbers in an attempt to bring order to the chaos of uncertainty. At any given point in time though, there are only a few key actions (or key macro metrics) that matter.
How is this a risk? Failure to identify the right key metric can be catastrophic — leading to wasteful activities like premature optimization or running out of resources while chasing the wrong goal. Initially, these key metrics should center around your value metrics and later they shift towards your key engines of growth.
Unfair Advantage
Something that cannot easily be bought or copied.
This is another name for competitive advantage, or barriers to entry often found in a business plan. Few startups have a true unfair advantage on day one which means this box would be blank.
This box isn’t intended to discourage you from moving forward on your vision but rather to continually encourage you to work towards finding/building your unfair advantage. Once a startup achieves some level of initial success, it is inevitable that competitors and copy-cats will enter the market. If you don’t have a defense against them, you stand a real risk of being made extinct by these fast-followers.
Removed from Business Model Canvas
The addition of four new boxes means we take out four other boxes.
Key Activities and Key Resources
These boxes were more “outside-in” (versus entrepreneur) focussed i.e. they helped outsiders looking in to understand what the startup did.
There was also some overlap with the boxes already added:
- Key Activities can and should be really derived from the Solution box after the MVP has undergone some initial testing/validation.
- Building products today isn’t as (physical) resource intensive as it used to be. With the advent of the Internet, Open Source, Cloud computing, and globalization, we need fewer resources than ever to get a product to market — making Key Resources align more closely with Unfair Advantage. But while a Key Resource can be an Unfair Advantage, not all Unfair Advantages are Key Resources.
Customer Relationships
Every product (no matter what you are building) should begin with a direct customer relationship (through customer interviews/observation) and then following through into identifying the appropriate path to customers given your Solution and Customer Segment. This is better captured by the existing Channels box.
Key Partners
Yes, success for some types of products is predicated on first establishing the right key partners. For example, building a global solar energy grid (platform) which has huge capital and regulatory requirements would probably require establishing key partnerships in place first. Most products, however, do not fall into this category.
Over time, partners can become critical to optimization of your business model but the risk here isn’t the lack of partners but can rather be traced back to inefficiencies in Cost Structure and distribution Channels for which those two boxes fit the bill.
