What is the Lean Canvas?

Ash Maurya created the Lean Canvas as an adaption of Alex Osterwalder‘s Business Model Canvas. And he describes it in his book “Running Lean – Iterate from Plan A to a Plan That Works“.

As it focusses on the problem/solution/customer, it is ideal for thinking about ideas and innovation. Yet it also takes account of other key aspects such as costs and revenue streams, as well as viability (key metrics, early adopters, alternatives), etc. Helping us bridge the gap we often find between innovator/ideator and business sponsor.

If you’re interested in how the Lean Canvas developed from the Business Model Canvas then I recommend reading this external article.

Let’s explore what its components, starting with the problem/solution pair.

The Problem / Solution Pair

Most ideators naturally start with a simple statement of a problem and their view of the solution. And that’s where we’ll start our description of the lean canvas.

Noting the problem (progress sought)

Whilst the canvas is non-proscriptive, I suggest that the problem is best described in terms of our updated view of value. That’s to say, we list the progress that the beneficiary is seeking to make (the progress sought). And that progress being sought can be non-functional as well as functional.

What do I mean by this? Well, we (as a beneficiary) are constantly seeking to make some progress in our lives. We rarely wake up and think I need to buy X…without having some progress we are trying to make in mind for buying X. I get breakfast as I’m hungry (functional). I go to the cinema as I want to have some enjoyment (more non-functional).

Progress offered (the solution)

Over in the solution box, we describe how we will help the beneficiary make that progress as the solution. Along with two qualifiers. Firstly, are we offering to help the beneficiary make additional progress than they are currently seeking? As well as if we are not offering to help beneficiary with some element of progress they are seeking.

In the first case we are covering the case that the beneficiary may not realise they want to make that progress yet. And the later case reflects that we don’t need to offer to help with everything. This reflects cost conscious beneficiaries as well as disruptive innovation (the true meaning).

Existing Alternatives

In the problem description, we also look at how beneficiaries can make the progress they are seeking today. And non-consumption, i.e. doing nothing, is a valid option (borrowing from Christensen’s Jobs to be Done theory).

This helps us get perspective by triggering a range of questions. Such as is the progress being sought compelling enough? Are the alternatives already good enough? Have we found a way of offering better progress than is currently possible (this is the first part of my updated definition of innovation).

Both of these boxes fit into the left side of the Lean Canvas as you see in Figure 3.

Knowing the Customer

Over on the right side of the canvas we find information about the customer (or beneficiaries if we use our service-first language).

Segmentation

We try and identify the customer segments that our progress offered will appeal to.

But we need to be careful here. Segmentation immediately brings up thoughts of classic divisions – male vs female, single households vs those with children, age spans, etc.

What we know from Christensen’s work is that segmentation is better seen through the lens of the job-to-be-done. That is to say the progress being sought. In his book, “Competing against luck“, he gives an example of increasing milkshake sales at a fast food place. The segmentation is not so much age based, rather, in the morning the progress being sought is to make a boring commute more enjoyable (thicker milkshakes). In the afternoon the progress being sought is parents making connections with their children after school (move the milkshake machines to the public area and kids can chose and pour themselves – with the help of parent).

Once we’ve clarified our beneficiary segments,it’s useful to identify which will be our early adopters.

Early Adopters

If you’ve read my article on Innovation Diffusion then you’ll recognise this early adopter term from Rogers’ Adopter Types. Early adopters are “around 13,5% of your target market …they will wait for your innovation to get some market hold before adopting.  And often we think of these as leaders/thought influencers”.

Identifying the characteristics of these adopters helps you find your foot place in the market. It shows there are some customers (or at least that you have thought about it, and where you might get some market share). And helps you identify what your initial message needs to be. We might even leverage network topology, i.e. find influencers etc.

Let’s move on to the Unique Value Proposition and high-level concept segments.

Unique Value Proposition and High-Level Concept

Just as (poor) existing solutions push customers to seek new solutions, our unique value proposition should pull them to us. What’s unique about your solution? Why is it a compelling solution that pulls customer towards hiring you instead of the existing alternatives?

And in this segment of the Lean Canvas, we try and give a quick comparator to help frame our solution: the high-level concept. Or “we are the X for Y”.

We are the X for Y

Are you the Amazon for Healthcare, the Uber for Reading, etc? This type of framing gives a quick familiar reference for people.

Here are two really interesting articles on this concept of X of Y. Actually one refers to the other. The first is by Michelle Rial and is called “Is your Startup Idea Already Taken“. In that article, she looks at what are the Uber, Tinder, BirchBox and AirBnB of a large variety of segments. WAG!, for example, is the Uber for dogs.

The second article is a commentary on Rial’s article by Andrew Chen. And is titled “‘Is your startup idea taken’ – and why we love X for Y startups“. He looks at why this comparison is so compelling, but also some of the challenges when using it. I particularly like his final point:

But don’t forget, there’s a reason why “Uber for X” startups have mostly failed — you need to lead with the customer value, not with what is easily described within the startup community.

Is your startup idea taken – and why we love X for Y startups, Andrew Chen

In doing an X of Y comparison, we can identify where some competition might come from. And so now is a great moment to look at the unfair advantage segment.

Unfair Advantage

In this segment, you should look at what unfair advantages you have. That is to say, the barriers to others entering the market. Or, put another way, the things you have that cannot be easily copied or bought.

If we find we have no unfair advantages, then we find a warning signal. Can we build/gain something to protect ourselves from, for example, fast followers. These are competitors that don’t have the original idea but quickly copy. We might look at patenting the idea if there were value and possibility there (and we were not too concerned about being a patent troll). Or we might identify other unfair advantage opportunities.

Now we’ll jump to four segments that may be lower on the priority list for our idea creator. But higher on any business sponsor’s priority.

Key Metrics / Channels

We’re nearly at the end of our exploration now. And completing this part of the Lean Canvas are two segments: Key metrics and Channels.

Key Metrics tells us how we know if we are succeeding. We shouldn’t include too many metrics otherwise we are just measuring rather than succeeding. But we should pick ones that let us know quickly if we are on the right path. These are probably less important if we are using the tool iteratively to tease out an idea. However, they are interesting to know.

Channels cover how we take our offering to our customer. It is in here where you might define key partners if they are involved. And also fold in our knowledge of network effects, adopter types, and Maloney’s 16% rule (need to change message and medium after 16% adoption)

And now we finally get to the bottom line.

Cost Structure and Revenue Streams

Completing the Lean Canvas segments are segments for cost structure and revenue streams. I’ve often seen ideas in ideation that you can tell are commercially unviable. But I would propose for ideation purposes these two segments are useful to get an insight, but a heavy emphasis should not be placed on them initially. Otherwise, you risk stalling ideation as ideators worry about these aspects; and business risks focussing on them.

What is the right order to fill in the Lean Canvas Model?

When using this tool iteratively across a crowd I would suggest there is no correct order. Instead, two moves can be made – breadth and depth. And I’ll look at those shortly.

However, some users are more comfortable if there is a proposed order. And two orders are commonly found in the literature. Let’s look at those.

2012’s “Running Lean” Order

The original, 2012, “Running Lean” book proposed the order shown in Figure 11. Starting with the problem, then customer segments, and then unique value proposition, the solution is 4th and so on.

Four years later, a new proposed order was presented.

2016’s “Scaling Lean” Order

Based on experience between 2012 and 2016 Maurya updated his view. In his book, “Scaling Lean – Mastering the Key Metrics for Startup Growth” he gives a new proposed order. And you can see this in Figure 12.

The major change is swapping the order the problem and customer segments are filled in. As well as swapping the order of unfair advantage and channels.

2021’s Flexible Iterative Approach

I propose there’s an alternative iterative approach. Through making what I call depth and breath updates. It reduces the pressure on ideator and induces a collaborative approach (sharing the development across teams/experts). I discuss this over in my article “Evolving Winning Ideas – using the lean canvas iteratively“.

Wrapping Up

So, that’s the Lean Canvas.

I use it to help ideators evolve an idea to a better description of an innovation. And I propose that is best done by iterating over the lean canvas. Which appears to reduce pressure on ideators by allowing them to work in a framework. As well as supporting collaboration. And bridging the gap between ideators thoughts/expression and business sponsor language.

However, it doesn’t help us understand the complexity of executing an innovation in an enterprise. For that, we look elsewhere.