Jun 30
Business Model Canvas & Business Lean Canvas: Communicate Your Team’s Business Idea in a Simple Way
Have you ever been involved in teamwork to discuss a business idea that you all will do?
If so, after you got your business idea, did each member think and didn’t miss out on such details as the business strategy?
Maybe most readers will be confused by my question’s meaning, but behind my question, I will show you how to describe your visual form so that stakeholders do not miss out on what strategy you have made before.
Well, to explain your business strategy in visual form, there are frameworks called Business Model Canvas and Business Lean Canvas. I’ll start from the Business Model Canvas.
The Business Model Canvas is one of the Business Canvases, which are simple templates for writing down your assumptions about a product and then tracking their changes over time. There are many Business Canvases, for example the problem canvas, the product solution canvas, and the business model solution canvas (Product Management for Dummies), as well as Business Model Canvas and Business Lean Canvas. However, I will only talk to you about the Business Model Canvas and Business Lean Canvas.
Business Model Canvas
Alexander Osterwalder is the person who first developed the Business Model Canvas (BMC) in 2008, and he has also written this book on BMC.
Challengers (2010)
BMC is a business canvas that contains a business model, used to describe, visualize, assess and change it in a shared language. This BMC summarizes as well as connects business aspects such as production, and distributors to consumers.
With a business canvas, you can find out what to consider in building a business model for your product idea that can be applied and profitable.
All summaries of business aspects are summarised into 9 BMC components, including:
- Customer Segments
A company serves one or more customer segments. The customer is at the core of every business model. With profitable customers, the company can survive. So, to maintain customer satisfaction, companies can determine market segments based on user needs, behaviours and attributes. To make it easier for you, here I present the categories of the customer segment:
2. Customer Relationship
Customer relationship is what the customer expects to improve or develop and what our company has improved. From these improvements, the company will get some feedback.
3. Channel/Distribution Channels
Through Channels, customers can reach us and how we can get them too. We also consider which ones work best and are cost-effective.
4. Value Proposition
The value proposition is the values that we offer to customers, what are the customer’s problems and needs that we will satisfy with our product or service.
5. Key Activities
Key activities describe the most important activities our company undertakes for a successful business model to work. These key activities vary depending on the type of business model. There are three categories of the key activities, including:
- Production
- Problem solving
- Platform/Network
6. Key Resources
The key resources describe the necessary things we must own for the successful key activities and the value proposition to be delivered to the customer successfully.
7. Key Partner
Key partners are parties that we can potentially cooperate with, such as suppliers and company resources, or others.
8. Revenue Streams
Revenue streams are ways that our company can generate revenue and profit. Here are some ways to generate revenues, including:
9. Cost Structure
The cost structure is a breakdown of the biggest costs we have to spend to carry out key activities and produce a value proposition.
The visual form of the BMC template and when brainstorming is done, as in the following example image
And, another example of BMC for big companies in the world:
2. LinkedIn
3. Amazon
4. Tesla
After discussing the Business Model Canvas, I will discuss more about the Business Lean Canvas or Lean Model Canvas.
Business Lean Canvas
Business Lean Canvas or Lean Canvas was first created by Ash Maurya, the CEO of Leanstack. He also wrote a book about Lean Canvas and Running Lean in 2010.
Lean Canvas is actually an adaptation of the Business Model Canvas with similar principles, but with different goals. Lean Canvas focuses on making business ideas actionable after identifying what is most at risk for business sustainability.
Some of the main boxes were removed to add problem boxes, unfair solutions and benefits, and key metrics. The key activities and key resources boxes were removed because they were more useful for helping entrepreneurs understand their business than for helping to understand what they were doing.
So, in simple terms the Business Model Canvas is released when a business already exists and is successful so it will be difficult to apply to new business ideas. While Lean Canvas focuses on identifying problems and solutions, which are designed to fit the mindset of budding entrepreneurs and help build their business ideas.
All summaries of business aspects are summarised into 9 BMC components, including:
- Problems
Each customers segment who we define will have a set of problems that they need to solve. Try to list one to three high priority problems that your customer segment has
2. Customer Segments
A company serves one or more customer segments. The customer is at the core of every business model. With profitable customers, the company can survive. So, to maintain customer satisfaction, companies can determine market segments based on user needs, behaviors and attributes. Try to list your target customers and users.
3. Unique Value Proposition
A value proposition is a promise of value to be delivered. That’s the main reason prospects should buy from you.
The way to understand this is to think about why you are different and why your customer segment should buy/invest time in you — further reading: A Useful Value Proposition Example (and How to Create a Good One).
4. Solution
Finding a solution to this problem is the point! You won’t get this in the first place, but that’s okay.
All you need to do is Get Out The Building — a phrase coined by, Steve Blanks. The solution is not in your office, but on the streets. So, interview your customer segments, ask them questions, and accept the learning. Remember, Lean Startups are validated learning through a continuous Build — Measure — Learn cycle
5. Channels
Channels are how you reach your customer segments. And remember that in the early stages, it is important not to think about scale, but to focus on learning.
With that in mind, try to think about which channels will give you enough access to your customer segment while giving you enough learning.
Channels can be email, social, CPC ads, blogs, articles, trade shows, radio & TV, webinars etc. And BTW you don’t have to be in everything, just where your customer segment is..
6. Revenue Streams
How you price your business will depend on the type of model, however, it is very common for startups to lower costs, even offer them for free to gain traction, however, this can create some problems.
The trick is that it actually delays/avoids validation. Encouraging people to sign up for something for free is a lot different from asking them to pay. There is also the notion of perceived value.
7. Cost Structure
Here you must list all the operating costs of bringing this business to market. How much does it cost to build/land a page? What is your burn rate — your total monthly operating costs? How much does it cost to interview your customer segment? How much does a market research paper cost? etc.
You can then use these costs and potential revenue streams to calculate a rough break-even point or BEP.
8. Key Metrics
Every business, regardless of industry or size, will have several key metrics used to monitor performance.
The best way to help with this is to visualize the top of the funnel flowing from the large open top, through several stages to the narrow end.
A good model to help with this is Dave McClure’s ARRRR (aka Pirate Metrics)
9. Unfair Advantage
This point is the most difficult to answer. However, try to think about this as having an unfair advantage can help when looking for partners & investors.
The visual form of the BMC template and when brainstorming is done, as in the following example image.
And, another example of BMC for big companies in the world:
2. Amazon
3. Apple
4. Tesla
Well, that’s the Business Model Canvas & Business Lean Canvas I explain to you. If you are curious about this topic, you can read from my reference sources below, or you can also browse other sources. Please don’t hesitate to leave comments so I can improve my writing better next time. Thank you for reading my article!
