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Lean Canvas: Definition & Principles

Instructor: Maria Airth

Maria has a Doctorate of Education and over 20 years of experience teaching psychology and math related courses at the university level.

As an adaptation of the original Business Model Canvas, Lean Canvas is designed to be a fast, easy method for start-up entrepreneurs to plan and execute business models. This lesson defines Lean Canvas and identifies its primary principles.

Lean Canvas Business Modeling

What is a canvas? In a painting, the canvas holds the entire image; if any part of the image isn't on the canvas, then it isn't seen by the viewer. If you're a gamer, you might automatically associate the word canvas with 'canvasing an area'. This instruction means that an entire area should be searched.

In both of these cases, the word canvas represents the entirety of a thing.

Now consider the word lean. Lean meats are those without excess fats. The word lean invokes images of simplicity, a lack of excess.

These images explain the basic concept behind Ash Maurya's Lean Canvas. It's a simple, one page business model designed to allow its user to visualize an entire business plan at a glance. Maurya adapted his model from Alexander Osterwalder's original Business Model Canvas, to focus on the specific environment of start-up businesses.

This lesson reviews the key principles of the Lean Canvas and details how it differs from Osterwalder's Business Model Canvas.

Key Principles

Lean Canvas focuses on start-up businesses.

Start-up businesses are high risk and high action. The traditional business model canvas can take large amounts of time to complete, and therefore isn't updated very often in a timely manner as the business environment changes.

Maurya's Lean Canvas creates a quick method for a start-up entrepreneur to blue-print his or her business in about 20 minutes. This encourages ongoing updates due to the ease of completing the canvas.

The design prioritizes actionable items, those items that lead directly to actions to be taken, and high risk (meaning areas of extreme uncertainty) factors of start-up endeavors.

So, the key principles of the Lean Canvas are ease/speed in completion, focus on high risk aspects of start-ups and prioritize actionable items related to building a business.

There are nine blocks included in Lean Canvas. Let's look at them now.

Problem

Starting with a clear and concise problem is the only way to build a successful start-up business. The problem is the reason for the business, the motivator for the product; striving for its solution is the reason the start-up exists. The problem section also includes a mention of the existing alternatives, or solutions already in existence for the same problem. To keep the lean canvas lean means that a user should only list up to three problems in this box.

Solution

The solution is the heart of the product to be offered by the start-up. Each problem listed in the previous box should have a possible solution listed in this section.

Key Metrics

Key metrics are the life line of the business. They keep track of any numbers deemed necessary to quickly get a feel for the strength and well-being of the business. Monitoring the correct key metrics of a start-up can determine success or failure.

Unique Value Proposition

The unique value proposition is a statement that clearly shows how the business is different and offers value over all other existing alternatives. It answers the questions 'How' and 'Why' customers should pay attention to the business. The answers to these questions would be listed in the incorporated section of high level concept.

Unfair Advantage

Maurya describes unfair advantage as something that's developed over time and can't be easily gained. He acknowledges that a start-up's first few Lean Canvas plans will likely not have anything to add to this box, but over time the company's unfair advantage will become clear.

Channels

Channels are simply identified means to connect with customers.

Customer Segments

Customer segments is a box that lists target customers and/or users Understanding the characteristics of an ideal user is included in this box under the subheading early adopters.

Cost Structure

The cost structure box is a large box dominating the bottom third of the left side of the canvas. In this box, the entrepreneur should list all costs associated with the business, including fixed and variable costs.

Revenue Streams

Dominating the bottom right third of the canvas is the box revenue streams allowing the user to list and monitor all avenues of revenue for the start-up.

Lean Canvas
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Notice that the left half of the canvas deals with the product itself, while the right half of the canvas focuses on marketing the product. The unique value proposition deals with both the product and marketing of the product.

The Difference

As mentioned previously, the Lean Canvas was developed from Alexander Osterwalder's original Business Model Canvas. Boxes on the canvas that were changed were done so in order to focus on the volatile needs of a start-up entrepreneur. Only four boxes were altered from the original for reasons of focusing on high-risk and actionable items.

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