How To Use The Lean Canvas Framework As A Startup Tool

If you’ve ever thought about starting a business, you might have reconsidered as soon as you learned more about what a business plan entails. Thankfully, in the last twenty years there’s been a great deal of innovation around how to more efficiently and effectively summarize and visually present your idea for a new business.

Beginning with the Business Model Canvas (BMC) developed by Alex Osterwalder—a visual representation of the key aspects common to most business plans—business people and academics have developed a range of strategies for different niches. For startups, one popular option is the so-called “lean canvas model,” the structure of which keeps some of an entrepreneurs specific needs in mind.

The Lean Canvas framework can be a particularly powerful tool for startups because it helps entrepreneurs map out the risks in their business model, and helps them to adapt as they gain new information. As you read on below, you’ll learn about how the Lean Canvas framework came to be, and you can start to think about how it might work for your company.

What’s a lean startup?

Let’s start with the word “lean,” where does that come from when we’re talking about business?

The term “lean start-up" can be attributed to Eric Ries, dating back to the 2000s. Speaking with The New York Times in 2010, Eric said he was inspired by the “lean manufacturing process” made famous by Japanese factories over several decades. That process was focused on getting rid of anything—work or investment of resources—that did not add value for the customer.

The emphasis here is on a fast pace of development, work done by small teams, and a constant drive for iteration, improvement, and refinement. All of this builds off of so-called “agile” methodologies used in software development.

With a lean start-up, the focus is on the customer, not the product. If you’ve heard the words “pivot” or “minimum viable product (MVP),” you’ve already felt the influence of the concept. Rather than focus on a lot of up-front investment in a product, a lean start-up works the other way around.

The focus is on developing an MVP, in other words a product with the minimum number of features needed to please some group of consumers. With that done, the company will then continue to develop and tweak the product, checking how the market responds and making changes accordingly. There are plenty of examples of companies that developed this way, with Facebook being one of the biggest among them.

In general, a start-up is aimed at figuring out a scalable business model that makes a profit. A lean start-up is able to maintain its flexibility, and to respond quickly to any feedback it gets from the market, positive or negative.

What’s a Business Model Canvas (BMC)?

You can’t understand a Lean Canvas without first understanding a BMC, which is already an improvement on a traditional business plan.

Only the Soviets and venture capitalists expect you to have a five-year plan. That, according to Steve Blank, a professor and another evangelist of the “lean” approach to start-ups, is what makes an old-school business plan a problem for start-ups.

While a typical business plan includes a five-year forecast for the financial outlook of the business, it’s based on a lot of built-in assumptions. The point of a lean start-up is that it can adapt based on the data that comes in from the market, the information it gets directly from its customers.

Such a business needs a different kind of plan. If a business plan is a bulky, rigid document, a BMC aims at something else. It’s meant to provide all the relevant information about your business idea, seen from a high-level perspective, in a format that’s easy to understand.

At its simplest, a BMC is meant to show, in one simple diagram, how the business in question will create value for its customers and for itself. The BMC has nine blocks all neatly arranged so that you can look at the whole model on one page. They are:

• Key Partners
• Key Activities
• Key Resources
• Cost Structure
• Revenue Streams
• Value Propositions
• Customer Relationships
• Channels
• Customer Segments.
  

So, what’s a lean canvas framework?

So, what is a Lean Canvas framework and how can you leverage it for your start-up? It’s an adaptation of the BMC focused on risk. As you read on below, think about how the elements it adds to the BMC can help you understand your business model.

First, you can take a look at a worked-out example in this video:

The Lean Canvas framework was developed by Ash Mayura as an adaptation of the BMC circa 2010. Mayura’s goal, as he puts it in a blog post describing the development of the framework, was to make something that was focused on being actionable while also being built for entrepreneurs. His aim was to create something that could serve as a “tactical plan or blueprint” that an entrepreneur could use as they navigated the difficulty of starting a business.

The trick? Focus on what’s most risky about a given business. The result, was that Mayura added four boxes:

• Problem—Mayura argues that most failed startups don’t fail to build what they set out to, they just build the wrong thing. If you don’t understand the problem you’re solving, you won’t be able to succeed.
• Solution—Understanding the problem means you’re likely in a good position to offer the solution. Mayura adds that he made this a small box to challenge entrepreneurs to focus on simplicity and on developing an MVP.
• Key Metrics—Drowning in a sea of useless data, rather than focusing on the right key metrics, is a risk for many startups.
• Unfair Advantage—another way of referring to competitive advantage or barriers to entry. Mayura points out that, for a lot of start-ups, this box might start out blank (but it shouldn’t stay that way).

To achieve his lean key focus area vision, Mayura nixed four boxes from the BMC:

• Key Activities
• Key Resources
• Customer Relationships
• Key Partners

Conclusion

With all this in mind, you’ll be well prepared to use the Lean Canvas framework to better articulate your vision for your business. Instead of just seeing nine boxes to fill in, think about how the design of the framework can help you leverage it as a tool. Done right, it should not only help you plan, but continue to improve, iterate, and adapt as your business grows.