Business model

The Lean Canvas: how to fill it in and what should be taken into consideration

When launching a marketplace or any other startup, founders should start by gathering the hypotheses of the business model into a document known as a Lean Canvas. Yurij Riphyak, Managing Partner of online platform Youteam, tells about how to get into the mindset for approaching this often daunting task. He operates a website that facilitates the hiring teams of software developers and design professionals, as well as offering consulting services on launching startups.

Another article on the topic: How to apply the Lean Canvas methodology to Santa Claus' operations, as an example.

The difference between Lean Canvas and Business Model Canvas

The Business Model Canvas and the Lean Canvas are two canvases, specifically designed to map out business models.

The Business Model Canvas was created first and aims to solve the issue of Business Plans continuously becoming outdated as soon as they are developed. Founders were spending a disproportionate amount of time on creating and maintaining these plans, which doesn’t make sense for a time-poor, resource constrained founder. Then Alexander Osterwalder, an analyst, imagined a plan that is written not by managers, but by designers, people with visual thinking abilities.

The ‘Gestalt’ is a psychological concept focussed on our ability to acquire and maintain meaningful perceptions in an apparently chaotic world. Canvas is a gestalt of a business model, when all the principal components of the strategy are gathered on one sheet of paper.

The Business Model Canvas was developed mainly for offline companies to facilitate planning the execution of next phases, typically for the next quarter or year. But unfortunately, this canvas could not be directly applied to startups because some of the boxes of the plan remained empty (the project had no partners or distribution channels were unclear). This is why product development strategist, Ash Maurya, designed a simplified version of the Business Model canvas calling it the Lean Canvas.

The Lean Canvas is a Business Model Canvas adapted for startups at the very early stage of their lifecycle. It provides founders a first opportunity to  document the business model of their future startup, which will then be constantly evolving. It is useful for everyone involving in bringing the new product or service to market, i.e. business owners, potential investors, and partners.

The layout of the Lean Canvas is as follows, and all you have to do is to fill in the boxes in the order nominated below:

At the initial stage, the main task is to begin to scope the first MVP-candidate that can be shown to early customers. This should be designed to test all product, market, customer and technological hypotheses. For the purpose of this article MVP-candidate is synonymous with MVP, however, MVP-Candidate a better description because you may not choose:

  • A suitable solution to a problem or;
  • Problem-Solution pairing which will lead to an attractive market opportunity.

Using the Lean Canvas to define hypotheses for MVP

Once our initial concept has accurately been captured in the canvas, the next step is to focus the Problem and Solution boxes of the canvas, which should contain a maximum of three pairs of problems and solutions to those problems. We can then begin to think about how best to test  and/or implement early versions of these solutions and in doing so create functionality lists within MVP Maps (a separate tool).  

The Lean process involves iterating the solution to the problem the product is aiming to solve on the basis of feedback from the Customer and/or supply chain. A lean strategy typically involves developing the minimum feature set in order to show it to customers, receive feedback on the product hypotheses in question and planning the next move accordingly. Hence the Lean process is highly iterative and driven by market feedback and risk mitigation.

The Lean Canvas is a part of this philosophy narrowing our focus on only to what needs to be done to get to the next MVP.

Example of how to fill in the Lean Canvas

how to fill lean canvas

Blocks should be filled in one by one in the following order:

  • Customer(s) and the Problem(s)
  • Unique Value Proposition
  • Solution(s)
  • Channels
  • Cost structure and Revenue Streams
  • Key metrics in Lean Canvas
  • Unfair advantage

The next article on the topic: How to apply the Lean Canvas methodology to Santa Claus' operations, as an example.

Header photo: carloscastilla / Depositphotos.com

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