A well expressed business story can help you connect with customers, employees and investors; but most importantly, it can help you define your business and set clear goals. So, what comes to your mind when we talk about elaborating your business? Fancy writing a 30+ page business plan that no one is probably ever going to read? Business plans are too long, too complicated to start, and your business is something you want to visualize.
“Startups operate under conditions of extreme uncertainty.”– Eric Ries
Lean startup has in its core the concept to first capture the idea on one piece of paper. Then you go test it, find evidence and make a more refined plan. Before, you were used to create a product, write a business plan, and pray for the best.
By creating visual diagram, you create a shared language that makes people excited about product and features. That being said, we will elaborate more on means how to make visual diagrams: Lean Canvas and Business Model Canvas.
Your initial startup goal is to improve likely success rate of your venture, and reduce risk of failure. In that process you would want to make an agile adoption, meaning making a slow transition into more structured thinking.
Lean Canvas is an adaptation of Business Model Canvas by Alexander Osterwalder.
Lean Canvas focuses on early-stage products and integrates problem/solution fields. You ask questions like “Do I have a problem worth solving?”. Before investing months or years of effort towards building a product, the first step is determining if this product is something worth doing.
From there you then derive the minimum features set to address the right set of problems — the Minimum Viable Product (MVP).
Business Model Canvas
Business Model Canvas is a single diagram consisted of nine building blocks — customer segment, value proposition, channels, customer relation, revenue stream, key resources, key activities, key partners, cost structure.
The Business Model Canvas was proposed by Alexander Osterwalder based on his earlier book: Business Model Ontology. It outlines several prescriptions which form the building blocks for the activities. It enables both new and existing businesses to focus on operational as well as strategic management and marketing plan.
Around 5 million people today use Business Model Canvas. For example, 10 per cent of MasterCard employees use it for the purpose of shared language. It results with better communication within the company.
The Canvas is popular with entrepreneurs and intrapreneurs for business model innovation. Fundamentally, it delivers three things:
- Focus: Stripping away the 30+ pages of ‘stuff’ in a traditional business plan, the BMC improves clarity and focus on what’s driving the business (and what’s non-core and getting in the way).
- Flexibility: It’s a lot easier to tweak the model and try things (from a planning perspective) with something that’s sitting on a single page.
- Transparency: Your team will have a much easier time understanding your business model and be much more likely to buy in to your vision when it’s laid out on a single page.
What is the best medium for creating one?
There are several tools out there to create your own canvas. In a nutshell, you should choose the medium that is most natural to you. If you feel more comfortable printing it out and using one on paper — do so. Online tools add the ease to share and edit them over time.
Few tools we’d bring out:
Both models give analytical approaches which are vital in the success of a business, they have faced their own share of criticisms. For instance, the Business Model Canvas does not take into account the performance measurement and the business model management which are vital for the continued success of the business while the Lean Canvas does not give the expected approach when the solution to the initial problem becomes unrealistic or difficult to attain on the ground. Often, we would recommend switching between two approaches. This way many businesses have been able to find the right answers needed.
Which of the two do you prefer? 😊