strategy

The Lean Business Model Canvas is a variation of the original “business model canvas” devised by Alexander Osterwalder (thanks to its Creative Commons BY-SA license).

Extremely simple in its design, the Business Model Canvas empowers entrepreneurs to create, visualize and test business models without wasting capital or overcomplicating their approach. Today, it?s used by startups to break new ground, as well as massive companies like GE, P&G and 3M to explore new models and keep up with the competition. It?s also the core of the book Business Model Generation (co-authored by Osterwalder and Pigneur), which has sold over a million copies in 30 languages.

THE ORIGINAL BUSINESS MODEL CANVAS

It?s said that no business plan survives its first contact with customers
– Osterwalder.

The Business Model Canvas was partially born out of this need to create more flexible plans that could be tested and changed quickly to meet customer needs. Most importantly, it standardizes the elements of business models and turns them into modules that predictably interact with and influence one another.

The Business Model Canvas is constructed out of nine building blocks ? nine blocks that equip you to think of thousands of possibilities and alternatives (and find the best ones):

• Customer segments (your audiences).
• Value propositions (the product or service you provide).
• Channels to reach customers (distribution, stores).
• The type of relationships you want to establish with your customers.
• Revenue streams you generate the key resources you have to work with (capital, talent).
• The key activities you can use to create value (marketing, engineering).
• Your key partnerships (who can help you leverage your model).
• The cost structure of the business model (what you must invest).

These nine elements are arranged to show how they impact each other.

THE LEAN BUSINESS MODEL CANVAS

There are several variations, but the Lean Canvas has gained traction thanks to the lean innovation movement.  Each tool adopts takes a different approach to the original by Osterwalder based on the to the goal or the development stage of the business idea.

One of the most popular of these alternative versions is the “lean canvas” created by Ash Maurya. I’m going to walk you through how it differs from the original and show you when and how to use it.

Lean Canvas vs Business Model Canvas

The difference between both tools lies in the alteration of the four units:

• Key Partners (Business Model Canvas) vs. Problem (Lean Canvas)
• Key Activities (Business Model Canvas) vs. Solution (Lean Canvas)
• Key Resources (Business Model Canvas) vs. Key Metrics (Lean Canvas)
• Customer Relationships (Business Model Canvas) vs. Unfair Advantage (Lean Canvas)

Who Should Use The Lean Canvas?

The Lean Canvas is designed specifically for startups; it focuses on addressing how your solution solves customer problems and what unique value you offer compared to others in the market or other possible solutions. It fundamentally challenges you to move away from the idea that you love! and start to validate it.

On the other hand, the business model canvas was created to solve the issue of business plans being uninterruptedly outdated as soon as they are in the initial stages of development. The business model is based on assessing and strategically analysing an existing business – both internally and competitors.

For that reason, it can be said that it was developed for existing companies, large or small, which already have established their presence in the market and got traction with customers.

However, startups don’t have a customer base and often no products or prototypes. So when they try and use the business model canvas, they aren’t able to fill all the boxes and the canvas remained incomplete.

The Lean Canvas includes also helps deal with uncertainty and risk. All startups are limited by time and resources. They urgently need to reduce risk and prove that their idea fits the market and customers will pay money for it. Of course, the hope is that then it can do this profitably.

The Lean Canvas also reflects the principles of the “Lean Startup? approach build-measure-learn.

In other words, an iterative and rapid cycle of development, testing and validating each hypothesis upon which your idea is based.