Ash Maurya came up with the lean canvas a few years ago. The business model canvas is a powerful tool for many companies, and startups, to understand what they do and how to change. It’s not always that great for a startup trying to do something innovative. I was reminded of that today when I was working on a business model for a customer. Frankly I was struggling to get the business to work and reconcile what we wanted to do. We were going round in circles.
So I got out a copy of the lean canvas and started scribbling. Whether it was serendipity- or just a change of frame – everything started to come clear quite quickly. In the business model canvas the focus is often the Value Proposition – Customer Axis or the Value Proposition – Resources/Activities Axis.
Problem Focus in the Lean Canvas
In contrast the lean canvas is problem focused. The biggest box on the bard is the one that says PROBLEM. In the model I had been working on we’d been looking at how to design a marketplace. We’d focused as is the wont on the consumers problems not on the underlying problem that was the reason we felt a marketplace needed to exist.
So when we refocused everything on the problem(s) that the business side of the market faced it then became very clear that we could provide a single solution to the problem that would be acceptable in different ways to the different B2C segments. Cutting out the jargon – by changing the way that we looked at it it was super easy to make customers happy.
Everything fell into place in less than an hour because we used the lean canvas rather than the business model canvas.
So what is the Lean Canvas?
As you can see it is very similar to the business model canvas. We keep the majority of the customer facing components – revenue – channels – customers and value proposition. At the same time we also remove the components that focus on delivery of the value proposition – Activities – Resources and Partnerships.
These are replaced by four new segments
- Key Metrics
- Unfair Advantage
Ash Maurya has a great description of how the lean canvas works and you can read it here.
Problems in the Lean Canvas
Every business solves a problem for their customers. If they don’t they tend to fail. One of the major problems that startups had during the dot com boom and after was that they tended to build first and hope to get customers after. This often meant that they built something that didn’t really solve a problem for the customer. The lean canvas corrects this by putting the problem front and centre.
The starting point is the key problems that you need or want to solve. These need to be validated so that you know that the problem is a real one. Once you have confirmed with the potential customers that the problem exists, it’s not trivial, they are willing to pay for a solution and are willing to switch from whatever solution the use at the moment we are in business.
Solutions in the Lean Canvas
The next step is to look at the solutions to the problem. How can you solve the problem? This is something that the business model canvas doesn’t pickup very well. The solution is similar to the value proposition. The way I look at it the solution is more practical and technical. It is the mechanism by which the value is delivered.
If we think about the original Amazon business model for a minute. The problem was that bookshops never had enough books in them to offer a good selection. The solution was to build a website where all books were available. The value proposition was Amazon was a place where it was simple and easy to buy any book that was in print in seconds (one click purchasing).
The Unfair Advantage
I often think of this as the defensive moat. It plays back to Michael Porter and his idea of sustainable competitive advantage. Many business models can be quickly and easily copied. Computing and design skills are plentiful. What is it about the model that gives you enough of an advantage to beat the competition? It’s normally something, for an internet company, that gives you an advantage until economies of scale, scope or the network effect kick in.
A classic unfair advantage is a patent or an official monopoly. Others could include a proprietary data set or even a particular culture at the company.
The Lean Canvas and Key Metrics
Key metrics is probably the weakest component of the Lean Canvas. If I’m not starting a company using a lean methodology it’s the easiest to leave out. Using a lean approach you are data focused. Life is a series of measured experiments. How else do you measure your success than by holding the results of your experiments to some standard of progress?
Thinking right at the beginning as you start your company what you want to measure is incredibly valuable. If you are driven by a profound “why” then the key metrics enable you to always be checking that you are delivering that why even as you grow the company. I don’t think that Google had a way of internally measuring whether it lived up to it’s “Don’t be Evil” ideal (dropped this year) and its interesting to think of what would have been different if it had.