Training course (EN)

In a painting, the canvas holds the entire image and any part of the image is missing from the canvas then this part cannot be seen by the viewer.

The Canvas Business Model was introduced by the author, consultant and entrepreneur Alexander Osterwalder, and is a strategic management plan whose the visual chart represents a business’s value, infrastructure, customers and finances. It consists of nine “building blocks” that describe in detail the status of a certain business and allows for the conceptualization of a business’s activities and status. The Canvas Business Model is a helpful tool that allows entrepreneurs to gain insight about their customers, pinpoint the value propositions that are offered through the business’s various channels, and understand how their business can make money.

The Lean Canvas is a simpler and less complete adaptation of the Business Model Canvas that focuses on problems, solutions, key metrics, and competitive advantages. According to the Lean Startup method, “build, measure, learn” is at the heart of entrepreneurship.

The major questions that the Lean Canvas Business Model aims to answer are the following:

• How is the firm doing?
• How is the business different and offers a unique value?
• How is the relationship, between the company and customers, structured?
• How are the financial aspects monitored?

  

The nine-building blocks of the Lean Canvas Business Model

  

How is the firm doing?

1.    Problem: By stating in a clear and concise way the existence of a specific problem, a business starts to exist. The problem is the reason for which the business exists.

 2.    Solution: The solution constitutes the characteristics of the service or the product that the business will offer.

 3.    Key metrics: Key metrics refer to the operational monitoring of business activities in order to track the wellbeing of a business.

How is the business different and offers a unique value?

4.    Unique Value Proposition: Value represents a central concept in business models. In the Lean Canvas business model, the creation, capture, and delivery of value are explained by synthesizing the different value contributors. For example, although an innovative technology may not have an actual value once adopted, its use by an entrepreneur can add value to a business which in turn will be transferred to the customers.

 5.    Unfair advantage: Unfair advantages can start out as values that can differentiate the position of a specific business or can be developed over time while the business grows. Some examples of unfair advantages are insider information, existing clientele, supporting community, large networks, etc.

How is the relationship, between the company and customers, structured?

6.    Customer Segment: While creating a business model it is vital to identify with precision the customer segment that a business aims to serve. Furthermore, since the needs of the clientele might vary, business models ought to take this differentiation into account in order to ensure the appropriate implementation of a business plan.

 7.    Channels: The different channels through which a business will deliver its value proposition to specific customers need to be cost-efficient and effective and correspond at the same time to the customers’ needs. These channels can be either immediate (store) or served by partner channels (internet e-shop, courier deliveries etc).

How are the financial aspects monitored?

8.    Cost Structure: Cost structure refers to the various types of expenses that a business incurs and entails the fixed costs (like rents, salaries, etc) and variable costs (costs that change in proportion to the production or service output). While designing the Canvas Business model it is essential to create a cost structure analysis in order to breakdown the various costs at all stages of business operation.

 9.    Revenue Streams: Revenue streams are the building blocks of each business and represent the cash that a company is generating. Revenue streams can be distinguished into immediate and one-off customer payments or recurring payments like subscriptions, after-sales services etc.

 

Guidelines for implementing the Lean Canvas Business Plan

-   Entrepreneurs need to identify real problems either by putting themselves in their potential customers’ shoes or by using several ways (like questionnaires) in order to get more actual information about their customers’ problems.

-  The existing alternatives to a specific problem ought to be taken into account before starting a business.

-  There must be a clear answer on how a specific product or service will meet the needs of customers and solve their existing problem by providing clear definitions of advantages, features and capabilities.

- The measurement of progress through the monitoring of the key metrics need to indicate not only how well a company is doing but also which are the underlying opportunities for development.

-  The in-depth analysis of the target audience can help in the identification of any “early adopters” who will spread the reputation of a product or service.

-   It is crucial to pinpoint an existing “unfair advantage” at an early stage in order to invest in its cultivation and conservation.

-   Communication with customers is an ongoing process and should occur before purchase (advertising, word of mouth), during the purchase (conversations), and after purchase (feedback surveys, email updates, etc.)

-   The unique value proposition should be placed only in one sentence pitch.

-  It is important to ensure that no single cost is overlooked.

-   Since revenue is the “lifeblood” of business, it should be protected, nurtured and maintained in a “healthy” mode.  

Sources

1.  Bidewell, P. and Sapsford, L., 2016. The (re) evolution of the lean startup methodology

2.  Björk, J., Ljungblad, J. and Bosch, J., 2013, June. Lean Product Development in Early Stage Startups. In IW-LCSP@ ICSOB (pp. 19-32).

3.  Blank, S., 2017. Why the lean start-up changes everything. Harvard business review.

4.  Gustafsson, A.. and Qvillberg, J., 2012. Implementing Lean Startup Methodology. Chalmers University of Technology, Gothenburg, Sweden.

5.  Link, P., 2016. How to become a lean entrepreneur by applying lean start-up and Lean Canvas?. In Innovation and Entrepreneurship in Education (pp. 57-71). Emerald Group Publishing Limited.

6.  Nobel, C., 2011. Teaching a ‘Lean Startup’Strategy. HBS Working Knowledge, pp.1-2.

7.  Rasmussen, E.S. and Tanev, S., 2016. Lean start-up: Making the start-up more successful. In Start-up Creation (pp. 39-56). Woodhead Publishing.

8.  Stagers, M., 2015. The lean startup changed everything. University Startups and Spin-Offs (pp. 15-27). Apress, Berkeley, CA.