The Lean Canvas is one of the best structures to achieve successful product iterations, but if you don’t know how to use it then it won’t be nearly as effective.
In this guide, we will define a lean canvas and show how to use it, explain the lean methodology, and discuss the advantages of going lean. If you like this guide and are interested in other similar template guides, check out our most recent ones on the MoSCoW analysis and design thinking.
Lean Canvas Definition
What is a Lean Canvas?
The Lean Canvas is an adaptation of the traditional business model canvas that is optimized to consolidate a plan focused on maximizing user value. By deconstructing traditional business plans into their most important assumptions & values, the Lean Canvas takes a direct approach to diagram a business idea.
The Lean Canvas is an adaptation of the business model canvas that is optimized for the “lean startup methodology”, a technique that is crucial in understanding the possibilities of the Lean Canvas.
What is the Lean Methodology?
Lean methodology and the lean canvas are intertwined, and the lean canvas operates on many key propositions that the lean methodology emphasizes. For this reason, it’s crucial to understand the Lean methodology in order to grasp the applications of the Lean Canvas.
The lean methodology is the idea that drives the unique value of the lean canvas. The lean methodology is defined by a couple of simple guidelines:
- Focus on value to the customer
- Eliminate things that don’t directly provide value (aka waste)
- Iterate with cyclical improvements
These three elements are the building blocks of the Lean methodology and focus on maximizing customer value while also minimizing waste. Within each cycle of improvements, teams should seek to increase the amount of value they can offer to customers without huge amounts of resources being wasted on non-valuable features.
Value is king and is always being maximized.
The lean methodology was created and implemented by Toyota in the middle of the 20th century thanks to Ash Maurya, and since its inception, the lean methodology has been shifted to focus more on software development than its traditional product focus. Software development is a sector that benefits greatly from thinking about customer value and waste and is a natural use case for the lean methodology.
Now that we have a good understanding of the lean methodology and its application through the lean canvas, let’s talk about how to best use the lean canvas.
Leak Canvas Use Guide
Before you start using the Lean Canvas, it’s important to break down all of the important elements that go into creating a productive canvas. Here is an overview of every component that makes up the lean canvas.
Problem
The first box defines the problem you’re hoping to solve. Having a shared understanding of the problem is a key step to developing a sustainable solution.
Some important questions to ask in this section could be:
- What is the problem you’re looking to address?
- Who does it affect?
- How does your solution specifically address the problem’s root?
Solution
The solution section is where the actual solution is fleshed out in more detail. Here, it’s important to think about the unique positioning of the solution in regards to the problem and the customer.
Some important questions to ask in this section could be:
- What does your product/service accomplish?
- What does it do?
- How does it provide a unique solution?
Key Metrics
In order to develop sustainable change, there needs to be metrics in place to monitor progress and guide success. The key metrics section is where these are detailed and where you think about what it will take to be successful.
Some important questions to ask in this section could be:
- What are the Key Metrics to your success?
- How will you measure what is successful and what is expected?
Value Proposition
The value proposition is a key intersection where the solution overlaps with the customer. This is where the solutions you propose must both fulfill your unique value proposition and meet the specific needs of the customer.
Some important questions to ask in this section could be:
- What is your unique value proposition?
- What makes your solution special relative to the ecosystem of ulterior solutions?
- How do you stand out?
Advantages
When completing the advantages section, think about the unique ways that your business is prepared to solve the problem at hand, and how your specific resources & abilities may help you on the journey.
Some important questions to ask in this section could be:
- What makes your solution/team uniquely equipped to tackle the problem?
- What is your competitive edge?
Channels
The channels portion refers to the methods that you will reach both your existing customer and potential new users. This refers both to the current solution and also the business in general.
Some important questions to ask in this section could be:
- Which channels of communication will you use to drum up noise around your solution?
- How will you get people’s attention?
Customer Segments
The customer segments section addresses the different profiles of customers that your solution targets. This is essentially your target market or principal user. If you don’t have an idea about who your principal user might be, consider filling out a persona map.
Some important questions to ask in this section could be:
- Who is your solution targeted towards?
- Who is your ideal customer?
Cost Structure
The cost structure section is where you start to think about the logistics surrounding your specific solution. In order for it to be successful, there must be measures in place that ensure it has boundaries and guidelines.
Some important questions to ask in this section could be:
- What is the pricing model of your solution?
- Will people pay for your product/service, and if so, how much?
Revenue Streams
The revenue streams section is the final part of the lean canvas and is a similar portion to the previous cost structure. In this section, it’s important to think about what different sources of revenue will look like for your business and how they will create a profit.
An important question to ask in this section could be:
- How will your company create revenue and make a profit?
Lean Canvas vs Business Model Canvas
The Lean Canvas and the Business Model Canvas share many similarities and use cases. Partially this is because the lean canvas is modeled after the business model canvas, but also because their purposes are very similar. Below we will highlight some of their similarities and differences.
The biggest difference between the Lean Canvas and business model canvas is that the lean canvas is essentially a less complete, more basic model of the traditional business model canvas. It tries to simplify the details and sections of the business model canvas as much as possible in order to optimize the process for small businesses and startups.
The business model canvas is targeted more towards established businesses that are contemplating new plans and are already validated in their operations, where the lean canvas is more about getting new ideas off the ground.
The lean canvas focuses mainly on problems, solutions, customers, and key propositions, which demonstrates its alignment with startups and brand new ideas. This canvas was designed with entrepreneurs and startups in mind rather than stakeholders and executives.
These differences are critical to understanding the positioning of these two templates, but also demonstrate the related goals that they share. While they are unique in their own right, they serve very similar functions for the entrepreneurs and companies that choose to use them.
They both target specific customers and enable the creation of a streamlined business model that is accessible for anyone. It is this similarity that connects the two, while they each have their distinct advantages.
One of the biggest similarities between these two templates should be quite obvious, and it’s their structure and goals. These templates are mostly the same, only differing in a couple of key areas. Instead of thinking about key segments, customers, and resources, you replace them with problems, solutions, and metrics.
Hopefully, this section provides a solid understanding of how the Lean Canvas and business model canvas differ and are similar.
Lean Canvas Advantages
If you are used to preparing business models and aren’t quite sold on the Lean Canvas, here are some of its most distinct advantages.
Simplicity
Using a Lean Canvas is one of the most efficient ways to create a business model, and one of the reasons for this is the simplicity it offers. The Lean Canvas breaks down all of the most important parts of a business model and organizes them into a couple of simple categories.
The organization of the template makes it so anyone can quickly pick it up and use it effectively, something that cannot be said about a traditional business model.
The ability to organize and quickly use the lean canvas makes it super powerful and gives it the advantage over more traditional business model canvases.
Usable Online
Online whiteboards are some of the most versatile visual collaboration tools, and allow entire teams to collaborate on the lean canvas in real-time.
This online accessibility means that anyone can easily access the canvas, collaborate on it, and reference it whenever they need it. The accessibility paired with the ability to share boards with anyone makes using a lean canvas on an online whiteboard one of the best ways for any team to construct a powerful business model.
Visualization
We have talked about how simple this canvas is, but this simplicity is tied to the visualization that using a lean canvas comes with. Instead of using a long, text-based business model, teams are able to collaborate using palatable visual elements which makes understanding and collaborating much easier.
These visual elements are critical to the success of the lean canvas and make it super easy to use for any size team, and people of any experience.
Conclusion
The Lean Canvas is more than just a business model. It represents the future of preparation, consolidation, and efficiency for businesses everywhere. If you enjoyed this guide make sure to check out all of the other template guides we have on Fresco, including our other guides to Kanban’s, Customer Journey Map, and Virtual Workshops.
