Lean Business Model Canvas: A Step-by-Step Guide

Lean Business Model Canvas: A Step-by-Step Guide

We will discuss the Lean Business Model Canvas in this blog post, not to be confused with the Business Model Canvas. It is a system that helps businesses validate their business concept fast and efficiently. The canvas is built on Alexander Osterwalder’s Business Model Canvas, which is a popular tool for business model creation.

Lean Business Model Canvas

Nine components to the Lean Business Model Canvas:

  1. Problem (what is the issue you’re trying to solve)
  2. Solutions (the features of your product that solve these problems)
  3. Identify key metrics (what are you measuring to ensure that you are solving the problem and also winning)
  4. Unique Value Proposition (What makes you unique from your competitors or from other products)
  5. A distinctive advantage (What do you possess that makes it difficult for others to replicate what you do)
  6. Distribution channels (How do you reach your customers)
  7. Market segments (to whom do you sell)
  8. Cost structure (How much does your business cost)
  9. Revenue streams (How are you going to generate revenue)
Lean Business Model Canvas

As an entrepreneur, you can use the Lean Business Model Canvas to envision how all aspects of your business fit together and how they complement each other. Moreover, it’s a tool that can be used at any stage of the process, from confirming a business idea to scaling one.

Difference between traditional Business Model Canvas and Lean Business Model Canvas

Alexander Osterwalder developed the traditional business model canvas, a tool that helps businesses map out their value propositions, customers, channels, costs, and revenue streams. Steve Blank developed the lean business model canvas as a tool to help businesses identify and validate their business models. There is a significant difference between the lean business model canvas and traditional business model canvas. Lean business model canvas emphasizes validation, whereas traditional business model canvas emphasizes mapping out the business.

The traditional business model canvas is a useful tool for laying out a company’s value proposition and determining its profitability. It does not, however, focus on validation, which is critical for company success. The lean business model canvas is an excellent validation tool since it assists firms in identifying and validating their business models. This is the main distinction between the two tools, and why the lean business model canvas is so important for a successful company.

To put it another way, the traditional model canvas is more theoretical and strategic, but the lean business model canvas is more practical. Many business concepts fail in reality; approximately 90% of startups fail. The goal of the lean start-up process is to fail rapidly while spending as little money as possible, pivot quickly, and prove a business model early on before investing heavily in the concept.

Methodology for lean start-ups, including the Lean Business Model Canvas

An entrepreneur or startup can use the Lean Business Model Canvas to validate their business idea. In a canvas, the key elements of a business model are displayed concisely and in an organized way. In order to build and run a startup, the Lean Startup Methodology is used. Lean methodology involves measuring, building, and improving progress.

In order for the Lean Startup Methodology and the Lean Business Model Canvas to be complementary, they should be used together. With the Lean Startup Methodology, startups can build and measure progress using the Lean Business Model Canvas. Together these two tools enable startups to succeed.

Lean Business Model Canvas: Why you need to move to it

The Lean Business Model Canvas is a tool that may help businesses design and explain their business models rapidly and easily. The Lean Startup technique is a customer-centric method of designing and introducing new businesses and products, and the Canvas is built on it.

There are countless advantages to using the Lean Business Model Canvas, here are some other a few of the most significant:

1. It pushes you to prioritise your consumers.

The Lean Business Model is a business model that emphasises efficiency and also effectiveness. The customer is at the heart of Canvas. The kind of clients do you have?also, What are their requirements or preferences? lastly, What are the sources of their dissatisfaction? To create a successful company model, you must first answer these questions.

2. It aids in the simplification and also concentration of your business concept.

The Canvas assists you in reducing your company concept to its essential elements. This pushes you to concentrate on the most critical components of your company and makes it easier to explain your business strategy to others.

Lean Business Model Canvas

3. It enables you to test and confirm your ideas rapidly.

The Lean Business Model Canvas is a tool that can help you test and also validate your business model quickly. This is accomplished by beginning with a minimum viable product (MVP) and afterwards testing and refining in response to consumer input.

4. It’s adaptable and simple to use.

The Canvas is a versatile tool with numerous applications. It’s very simple to use, even if you have no previous business expertise.

Validating your concepts with Skhokho and the Lean Business Model Canvas

Skokho allows you to manage your company’s operations across numerous departments and apps, such as HR, sales, and CRM. One of Skhokho’s features is the  Goal Setting Application based on OKRs. Let’s look at OKRs and growth hacking.

Intel has been employing a performance management approach called Objective Key Results since the early 1970s (OKRs). OKRs are a method of setting quantifiable goals and also monitoring performance within them.

An OKR consists of two components: a goal and one or more key results. A goal is something you want to accomplish, and also key results are the metrics you’ll use to track your performance towards such an objective.

OKRs can assist your team in fast validating concepts; for this, we will concentrate on the top left section of the Lean Business Model Canvas.

Start with “the problem”

Before constructing their lean business model canvas, companies must first determine what challenges they are attempting to tackle and who their target audience is. Market research, surveys, interviews, and also focus groups can all be used to accomplish this. Companies can begin to develop a business model that addresses the demands of their target audience if they have a strong grasp of those requirements.

Suggesting a “solution”

A solution can be devised once the problem has been identified. This solution could be a product, a service, or a hybrid.

Product-based organisations implement their business strategy by developing a product that solves a problem for their customers.

Service-based organisations establish their business strategy by providing a solution to their customers’ problems.

Product-based organisations implement their business strategy by developing a product that solves a problem for their customers.

Service-based organisations establish their business strategy by providing a solution to their customers’ problems.

Set goals and measurements to track your success with OKRs.

Once the company has identified: (1) the problem and (2) the solution, the lean business approach recommends that they produce a minimal decent product, or the simplest form of their solution, to evaluate the business strategy. Nonetheless, you would like to know:

  • Do the problems the testers identified earlier actually exist among clients (interview users of the product)?
  • Would the proposed solution really solve these problems? 
  • Will you be able to engage with your intended market
  • if you provide them with the product or service, are clients willing to pay for the product or service
  • Can you guarantee customer satisfaction with the product or service

You will want to determine whether your minimum viable product makes sense for your business model. To determine if the business is successful, it is necessary to develop SMART targets that can be tracked on an interval basis.

Establish key objective results (OKRs) for measuring:

1. Sales figures: The revenue figures for your business are perhaps the most important indicator of success, as that will tell you whether or not you are meeting your revenue goals. A lower than expected sales figure may indicate that your business plan needs to be tweaked.

2. Customers’ satisfaction: Secondly, keep an eye on is customer satisfaction. A customer satisfaction survey will tell you whether your product or service is being appreciated. If your customers are not happy with your product or service, maybe you need to revise your business plan.

3. Satisfaction among employees: Thirdly, monitor is employee satisfaction. You can use these steps to determine if your employees are happy at work. Unsatisfied workforce could suggest the need to revise the business plan.

4. Profitability: Fourthly, this metric is also important to track. It indicates whether your business is making a profit or not.

Get Started with Skhokho OKRS

Read more about OKRs: https://skhokho.io/objective_key_results_okr_software 

Previous Blog: Maintaining Client Records

Skhokho OKR Documentation: https://skhokho.io/documentation/okr/ 

Skhokho OKR Video: 

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