Lean Canvas: The Perfect Business Picture
What truly drives a lean startup is the feedback loop or the build-measure-learn principle. And in startups, the most significant goal is finding a business model that can help in executing the product that will gain validated learning.
A business model or a lean canvas can be started by writing your hypotheses on your business model template and along the way, validate them against reality. This validation can help in identifying errors in the hypothesis, easily creating corrections.
But how can you document these hypotheses?
1 – Customize and categorize
Writing them down in worksheets may be easy. But customizing your worksheet and categorizing your hypotheses are truly a different matter.
There are different categories on how you can customize your worksheet. These are:
- Product Hypothesis
- Customer Hypothesis
- Channel/Pricing Hypothesis
- Demand Creation Hypothesis
- Market Type Hypothesis
- Competition Hypothesis
These categorizations will be used depending on your type of project. Since it’s categorized, it would be easier for you to think about questions that needs answers on the different aspects of your business, from the product to the market.
These hypotheses can also be simplified by outlining them. By identifying your problem (What), who are the customers or consumers that has the problem (Who) and how to solve the problem and reach the product to the market (how), it’s easier to get down to business.
2 – The Lean Canvas
A business model, compared to a business plan, is more accessible and readable. Since it only consists of a page, information is easily understandable, unlike business plans that usually have more than twenty pages. The business model, though brief and has a single diagram, this diagram depicts one’s business.
Different business models have been proposed but Alex Osterwalder’s approach to business model is simpler and easier to understand when it comes to having a lean startup. It’s called business model canvas. This canvas approach captures the vital components of a business model, emphasizing more on finding the problem and solution rather than focusing on customers and relationships. This kind of model is ideal for business that venture in applications.
This lean canvas is further tweaked to automatically track the evolution of one’s business. Created by Rob Fitzpatrick, this model captures the “4 steps of ephiphany” type of hypotheses. Although very useful, it didn’t include cost/revenue blocks that are vital in a business model.
There are different ways to go about these models, redesigning them can also be done to perfectly fit your venture. It is important that the model helps in identifying and focusing on helping your business. Different blocks can be added or removed on your lean canvas depending on your business. Here are a few of them:
- Focus on the problem (1) , will help you fully create a product that is unique and would address to this problem. This block helps in assessing what product is needed and what consumers want.
- Your lean canvas can also have a block on customer segments (1) , wherein you are able to assess who are your consumers. This can also possibly be further segmented to help you narrow down your market, creating a more unique product and a more committed market.
- The Unique Value Proposition (2) block answers the primary reason why your product is unique and why it is worth buying. It helps in assessing and validating your product.
- The Solution (3) block is where the minimum viable product (mvp) is defined and how it can demonstrate the uniqueness and worthiness of the product.
- The Channels (4) block is where you put down channels, free or nor, you can use to be able to reach the market.
- Cost structure (5) is the list of fix and variable costs. This will help in seeing how much expenditures or risks there are in this venture.
- Revenue streams (5) is the list of your incomes. This will help in seeing how you set your pricing and revenue model.
- A block on Key metrics (6) can also be considered. This is where you measure and describes actions users or consumers take to create revenue.
By using the business model, it is easier to create and sustain products, giving you an edge than those who stick with business proposals.