What is Lean Canvas? (9-Step Process)

When you have an idea for a great product, the typical process is to create a business plan, spend weeks or even months filling in all the information and data, and write a 60-page document to submit for review.

But you can do it in a different, leaner way. Lean simplifies this process of creating a business plan into a lean canvas.

Why is Lean Canvas?

Features of Lean Canvas:

  • Produce a business model with a simple framework, only one sheet of paper
  • Quick to produce, compact, and can sort out your idea in minutes
  • Ideal for brainstorming

Lean Canvas Purpose:

To brainstorm and share your idea with people so that you can identify the rocky, high-risk areas of your project and provide input for the next step of validation work.

Who makes Lean Canvas?

  • The initiator who generates the idea is the user of the Lean Canvas, and after he makes the Canvas, he gathers relevant people to share and brainstorm ideas with him.
  • If the idea is generated by a team co-creatively, everyone comes together to brainstorm and complete the Lean Canvas.

When to use Lean Canvas?

After an idea is created, you need to sort out the business model of the idea and determine if the product is worth doing.

How to Create a Lean Canvas?

There are nine steps to creating a lean canvas, as shown in the nine-panel diagram below.

Lean Canvas

Step 1&2: Problem & Customer Segments

Matching the problem with the customer group is the core of the whole canvas because the product is designed to serve a particular type of customer and solve their specific problems. If this analysis is precise, doing the following steps well is helpful.

For each target group of customers, list the one to three most important problems they need to solve, i.e., the most painful points. If these pain points are not unfortunate enough, sorry, your product does not need to exist.

List alternative solutions to the problems, i.e., how customers are solving them now that they don’t have your product. For example, I have done project management tools products. Then before my product was launched in the market, there are already many project management tools, and customers could choose these tools but also use Excel. Your product must solve the currently existing solutions that can not solve the problem to have the value of existence.

Next, analyze the target customer. Pay attention to the following two points.

  1. To distinguish between customers and users, because customers and users may not be a group of people, the customer is the person who buys the bill. The user is not necessarily. For example, in children’s education products, the customer is the parent, and the user is the child.
  2. To break down the target customer group and identify early adopters.

Step 3: Unique Value Proposition

In one sentence, explain why your product is worth your attention and buying and what makes it different. The unique selling point should be directly related to the pain points of your customer base.

Step 4: Solution

List the three most important features of your product. Don’t list the features you offer that no one else does to make you look good. It would help if you provided a few things that no one else does but that solve a pain point.

Step 5: Channels

Solve the problem, then how find customers for your product. Channels are divided into inbound channels and outbound channels. Inbound channels include blogs, SEO, eBooks, white papers, webinars, public websites, etc.

Outbound channels include SEM, new media, direct phone calls, SMS, etc.

Step 6&7: Revenue Streams & Cost Structure

It can be challenging to do financial analysis at first, but revenue and cost are essential parts of the business model. You don’t need to make long-term projections but rather the project in front of you.

With cost analysis and revenue analysis, you can calculate how long it will take, the expenses, and the staffing to reach the break-even point, which is the starting point for your product to start making money. This provides the basis for you to decide on a business model.

Step 8: Key Metrics

With revenue and costs in place, it’s time to plan for some key metrics to help us determine if the product is in progress. Be aware that many of the data metrics you are familiar with are our data analysis metrics for products that have completed the discovery phase.

The appropriate key metric for the discovery phase is the “Pirate Metric Set” invented by Dave McClure, as shown below.

Pirate Metric

Step 9: Unfair Advantage

What advantages do you have that are exclusive to you and cannot be easily copied and surpassed? For example, proprietary channels, intellectual property, government connections, established brand names, etc.

What Should You Know When Doing the Lean Canvas?

  1. The Lean Canvas aims to help us think about the core elements of our business model rather than making a pretty business plan to report to our superiors.
  2. Don’t fill up all the squares to fill up the canvas. There can be gaps where we need to do our homework next.
  3. Since the modern world is changing rapidly, doing a Lean Canvas is not about doing a 5-10 year development plan, which is generally unattainable and mostly stays on paper. From experience, it should be controlled within three years of a lean vision.
  4. The first canvas can not be broken down into customer groups because you still need to think clearly about customer groups. Soon you find that your product has multiple types of customer groups for a customer group to expand to do a lean canvas.

The Next Step After Creating a Lean Canvas

What is the next step after the Lean Canvas is done? Instead of making the product of the canvas, the following steps are taken, as shown below.

Validation with Lean Canvas
  1. Eliminate a few canvases in the brainstorming process.

The team may need to give up on some customer groups because the product can only serve some customer groups. Focus is important. The customer groups that are dropped and the corresponding business model is also dropped, and these canvases are not used as input for the next step.

  1. from the business models of the few remaining customer groups, identify the riskiest areas
  2. Start the Lean Startup validation journey on the riskiest areas of each canvas

Regardless of any innovative product in any industry, there are only three types of risks.

  • Product risk: whether the product is the right one to make
  • Customer risk: whether the product can be sold to customers
  • Market risk: whether the business model is viable or not

The time to validate the risk is still being determined, and we need to design a series of experiments to make this validation process as short as possible. The result of the validation is a viable business model.