Lean canvas explained

How to use Lean Canvas?

In this short tutorial, I would like to show you how to use Lean Canvas. Well, I am going to show you the way I am using Lean Canvas to define the basic vision of our clients’ products. We found it very useful for clarifying the scope that needs to be implemented by our product development teams when we start cooperation with a new client. I have used this tool a countless number of times. Both for our customers’ product ideas as well as for designing and validating our products and services hypothesis.

What is Lean Product Canvas?

Lean Canvas, or, in this case, Lean Product Canvas is a 1-page visualisation of any product idea. It was designed and proposed by Ash Mayura a long time ago. Lean Canvas is a simple but efficient way to describe a business model of your product. It usually takes from 20 to 60 minutes to prepare a well descriptive Lean Product Canvas. It is much faster than writing a traditional business plan and requirements documentation.

This form of product documentation is fair enough for starting a discussion about the scope and estimates with our Product Owners. So do not hesitate to contact us after you fill up your own canvas. Beside of conversation starter, Lean Canvas is a great product idea clarification tool. You should use it as one of the very first hypothesis validation tools for product development. Thanks to clear structure it is easy to find any problems with your product concepts at the very early stage.

How to use Lean Canvas step by step?

Lean Canvas consists of 9 fields/areas where you should add particular information. In this tutorial, I am going to show you not only how to fill them up but also in what order you should do this. Years of experience in using this tool proved me that the order matters. The way I am filling it up is not necessarily the same as in other tutorials you might find in the web, but trust me you will be happy with results.

For online workshops, I am usually using a tool called Canvanizer. But whenever we have a chance to meet with clients in person I prefer using the whiteboard and sticky notes.

1. Start with problem definition

Every product is created to solve particular problems of some group of users. In a best-case scenario, users who want to pay for solving that problem. The first field in our canvas we should fill up should be our problems definitions. There could be more than one problems that we want to address with our product. But I recommend to not add too many of them at the start. Focus on most important. There will be time to add new features or even pivot later after you will validate your hypothesis with the market.

2. Define your customers

A second step should be answering the question of who have the problems you defined in the previous step? Try to describe your potential customers and group them by characteristics you think distinguishing them. Try to be specific in defining these groups that will help you later with marketing. As mentioned before it would be great to define groups of users that might be willing to pay for solving problems defined in the previous step. (Paying one way or another – it is not always straight forward).

Your product could be solving different problems for particular groups. It is also possible that it will be solving the same problems differently for different user groups.

3. How will you measure that you solved the problem?

Define a few key metrics for your product. Try to think about it from your users’ perspective. How will they know that their problems are solved by your solution? What data will you show to them to prove that the product they are paying for is worth it?

Try to think both about quantitative and qualitative measurements. Think about lead and lag metrics too. Try to define goals around that metrics and thresholds that will tell you that your product works.

You do not need to present all of these metrics to your users later on. But defining it will be very helpful to design the right solution.

4. Solution – your product

Only after you follow the previous step you can focus on describing your product. Without defining real problems and a group of users who are willing to pay for the solution first, it is worthless to focus on features.

Try to answer the question “How can we meet the goals based on the metrics from the 3rd step in the simplest way?”. That will tell you what are the most important features your product needs. At least that will tell you how to go live fast and validate your hypothesis at the low cost. By focusing on what matters and bring results you will avoid a classic scope creep problems.

5. What is so unique in your product?

Why users defined in the second step should choose your product over the competition? What makes your solution unique?

Try to define the uniqueness of your product in a short sentence that will help you pitch the idea and build the marketing around it.

At this step, it is required to do at least basic market research. It is good to answer the question of how others are solving similar problems to the one we defined at the first step? If there is not an existing solution for this problem it is good to check why? Maybe there were products like yours in the past, and they failed? If yes, then why did they failed? If there were no solution for the problems you defined maybe there is none who cares enough about this problem, or none want to pay for the solution.

6. (Un)fair advanatage

Is there anything that will stop your competitors from copying your idea? Is there anything that you have that none else could have (or at least it will not be easy for them)?

Not every product needs to have an unfair advantage from the very begin. Sometimes fast pace of development, quick hypothesis validation cycle, scalable growth, conquering the market fast etc. are good enough to create an unfair advantage over time.

Some examples of unfair advantage that are not so easy to be copied: patents, expertise, customers, strong brand, strong partners, government contracts, unique culture + staff, subscribers, brand ambassadors, etc.

7. How to reach your customers?

So we already know what problems are we going to solve? How are we going to solve them? Who have these problems and most probably are willing to pay for solutions? And we do have a message about our unique solution that we want to present them. Now it is time to define the way of how are we going to reach those people with our message.

At this stage, we are not only defining our marketing and advertising channels but also collecting basic information about our customers’ acquisition costs. Here we also define our growth strategy. That might have a huge impact on our product development and definitely has an impact on our cost structure.

8. How are you going to make money on that product?

At the end of the day, your product should generate some revenue. Here is the place to describe how will it be generated?

What is your product’s business model? One time payment, licensing, subscription fee, ads, data. What is your estimated customer live-time value taking into consideration your revenue stream model?

In the best-case scenario, our revenue should be bigger than the costs. The revenue model will influence the costs of product development as well as the way you are going to market it.

9. How much will it cost?

Last but not least, now after we have more information about our product in place we can start estimating cost of creating it. The cost structure is usually directly connected both to the scope of product development (described in Solution definition), Unfair Advantage (licences, patents, partnerships etc.), marketing channels (cost of customer acquisition, marketing, ads, materials etc.).

In terms of the estimated costs of product development, you may always ask a software house like ours to help you with estimation. Lean Canvas is a great conversation starter that will definitely speed up the estimation process. What is more important it will allow our experienced product development teams to create a product backlog with the minimal scope that and cut the cost of product hypothesis validation to the minimum.