Learn how to create a one page business model in accordance with the lean model canvas originally developed by Ash Maurya.
The Lean Business Model Canvas
Today, we are going to talk about the one page business model (or lean) model canvas. The lean model canvas helps you create value for your business and differentiate it from others. It is based on Ash Maury’s “Running Lean”. According to Maurya, most startups fail with their initial ideas or Plan A. They are based on “Untested Assumptions”. Test and refine your original vision through a one page business model diagram called the Lean Canvas. By sharing your one page canvas with customers and others, you can address the market needs more effectively and with validation.
The Lean Canvas was created by Ash Maurya which is outlined in his book, Running Lean. The Lean Canvas was taken and modified from the Business Model Canvas created by Alexander Osterwalder described in his book, “Business Model Generation”
He was inspired by Steve Blank’s book, “The Four Steps to Epiphany” (http://www.cafepress.com/kandsranch). He coined the term lean canvas from Eric Ries’s classic book, “The Lean Startup”. Lean does not mean being cheap. The term lean means maximizing learning about customers per unit time in faster iterations for testing a vision
The Lean Canvas consists of the following 9 elements:
– Problem
– Solution
– Value Proposition or Mission Statement
– Competitive Advantage
– Key Metrics
– Distribution Channels
– Customer Segments
– Cost Structure
– Revenue Streams
A business model describes the value an organization provides in creating, marketing and delivering value with profitable revenue streams. The Lean Model Canvas by Ash Maurya was modified from Strategyzer’s Business Model Canvas. The elements of the lean business model canvas and creating the one page business model are described below.
The Problem
First, identify the problem. Ask yourself the following questions noted below.
What customer problem are you trying to solve?
Identify 3 problems and conduct in depth customer interviews, surveys and workshop with your target market.
Ask customers what they are looking for and what problem/need they have
Build a demo to test (i.e. Sample prototype or pilot project) eg. Philanthropitch Canada pilot project to test viability
Brainstorm a list of potential customers who will pay for the product
Tailor the product for a particular user and customer segment in mind and not everyone
The Solution
Provide a clearly defined solution for an identified need/social problem
Describe how your product, service or business model is innovative
Do you have any evidence of validation of the identified need/social problem and solution you are providing?
Evidence of validation is evidence from customers/users/target recipient community feedback to support your assumption that the need/problem exists and your solution meet that need.
Eg.
Finding lost items through an app on your phone?
Getting food delivered faster and cheaper in 15
Creating cars that run on garbage so no more fuel costs?
Cheaper and faster flights?
Value Proposition/Mission Statement
The value proposition describes the unique value of the product or brand to potential customers and is typically aligned with the company’s mission statement.
Answer the following questions when showing how your value proposition is unique:
¢ What Are You Offering (identify the product or service)
¢ The Value of Your Offering (identify the need/problem)
¢ Who will benefit from this value (identify the target customer and highlight the benefits)
¢ How your product or service is different and unique from anything on the market (outline the values)
¢ Use key words and buzz words such as “hot”, “fresh”, “performance”, “design” etc. to hook customers
Recommended reading: Positioning: The Battle for Your Mind by Al Ries and Jack Trout.
The Competitive Advantage
How is your product or service is different and unique from your competitors
You can have a competitive advantage by:
1) having a similar product with just added features and benefits: or
2) A truly unique product that fills a need in the marketplace that is not being filled?
Do you have an unfair advantage because you own:
Intellectual Property Rights (i.e. Brand, proprietary information/technology, unique partnerships, customers, copyright, patents)
Insider Information
Assets (i.e. manufacturing facilities, vehicles, point of sale, distribution)
Human Capital (i.e. scientists, skilled human resources)
Connections, network or access to a certain community, existing customers or mentors, endorsements
Financial Resources and Guarantees?
Team and governance structure
Key Metrics
What key metrics will you use to determine whether your business idea is a success?
Do you have a strategy or plan to clearly measure and evaluate the impact of your innovation?
How are you executing and validating your impact
Distribution Channels
What Distribution Channels do you have to reach customers to offer your value proposition?
¢Online ecommerce store
¢Distributors
¢Direct retail channels
¢Wholesale
¢Partnerships
09:40 – Customer Segments
Identify all your customers & market size?
« What type of customer will buy your product?
¢How are you reaching the customer segments?
¢How are the customers integrated with your distribution channels?
Getting new customers?
Marketing strategy? Market potential of your product/service?
Is the product scalable in geography, solution or across industries?
Client testimonials?
Repeat Customers?
Certain level of revenues?
Attracting investors?
Referrals?
Acquiring key resources
Aligning with key partners such as
Strategic alliances between non competitors or competitorrs
Joint Ventures
Developing relationships with suppliers
Cost Structure
The cost structure describes all costs associated with executing the business model.
Cost-driven (i.e keeping costs low such as with outsourcing)
Value driven (i.e. personalized service such as with luxury hotels)
Fixed costs (i.e. salary, rent, manufacturing)
Variable (cost dependent on volume)
Economies of Scale (i.e. lower bulk purchase lowers cost per unit)
Identify all costs in realizing your business model
Revenue Stream
The revenue streams are the cash generated from the customers.
Identify your economic and financial
model. What are the financial projections, funding plan and
roadmap to financial sustainability?
Identify all costs in realizing your business model and what will customers actually pay
Identify your pricing structure whether it’s subscription, fixed, etc.
Are they one time transactions fees? Recurring fees?
How do customers want to pay?
Subscription (i.e. gym, software)?
Usage (i.e. hotel)?
Licensing (i.e. Media, technology, Right to use music etc)?
Renting (i.e. car rental)?
Leasing (i.e. Office space or equipment)?
Outright purchase of an asset (i.e. Selling a physical product)?
Brokerage?
Advertising?
