In many organizations the executive leadership will encourage the pursuit of some aspirational destination. These are the typically goals announced each year, and themes are how you keep track of them.

Initiatives are collections of epics versus Themes are labels that track high-level organizational goals. Initiatives have a structural design. They house epics, and the completion of those epics will lead to the completion of the initiative. Themes are an organizational tool that allows you to label initiatives to understand what work contributes to what organizational goals. Themes should inspire the creation of initiatives and epics, but should not have a rigid 1-to-1 relationship with them. A theme for a rocket ship company would be something like "Safety First".

We use the Lean Canvas model to help assess the right initiatives to implement. These "right" initiatives will then be further broken down to epics and prioritized for execution.

Introducing the Canvas

The Lean Canvas is a useful tool for rapid development and refinement of systems, initiatives, and products in order to make the most impact and generate the most revenue; it is a kind of roadmap.The Lean Canvas is designed to be flexible and testable, which will assist you in using your most precious resource (time) wisely, unlike moving forward on a static business plan which can result in taking unnecessary risks since the plan is based on untested assumptions.

The Canvas helps you to avoid bias by leading you through a quick process of documenting your ideas and then testing them on a small scale instead wasting time and money pursuing fruitless ideas. With the Canvas, you can learn quickly which problems are most critically in need of solving, to whom those solutions matter most, and which solutions can make the biggest impact with the least investment of your resources.

Once you have your initial roadmap, the first version of your Lean Canvas, you can then work through a process of identifying the most risky aspects of your plan, and whether or not you have correctly identified the solution that brings the largest return for the opportunity cost of bringing it forth.

In order to do this, the Lean Canvas requires you to keep in constant contact with your customers throughout the development process. Although this may seem like an extraordinary outlay of time and effort, you actually only need to make meaningful contact five or so customers to make a difference (although you will also ask them for referrals of other people to talk to). These customers will help you through several stages of testing your assumptions and learning about your customers' goals and the challenges to achieving those goals, and you avoid wasting more resources by pursuing what you think people want instead of what they actually want.

"Life is too short to keep building something nobody (or not enough people) want."

- Ash Maurya, creator of the Lean Canvas

 

Building Your Canvas

Fill in your canvas quickly; don't spend an endless amount of time but rather record your ideas as they exist so that they can be formally tested and proven or disproven by people other than yourself. Spend no more than 15 minutes or so per canvas, and be concise. Attempt to fit your entire canvas onto one page by distilling your ideas to their essence. Sometimes business plans try to predict the future or at least account for it, but base your canvas on the current state of affairs and what you know right now.

If you need to leave a section blank, it's OK; in fact, that blank section can help indicate what's riskiest about your idea and point you toward the hypotheses that you need to test in order to move your product forward. The section "Unfair Advantage" might take some time to figure out and that's OK. The task is to test and change your canvas over time, evolving to reflect the discoveries you have made along the way.

 

The Problem

Although it's sometimes fun to create new solutions for our own satisfaction or just for creations' sake, when we do so, we run the risk that we are the only ones who will appreciate our creation. In order to ensure that won't be the case, we need to start with a problem that our customers experience. But not just any problem - we want to solve our customers' core problem. We want to identify a problem that a large enough group of customers have, that someone will pay us to solve, and for which a solution is feasible.

If there are two significantly different perspective on the problem, such as in the case of a product that links a buyer and seller, create canvases for both perspectives, because the solution is at the intersection of both.

 

Existing Alternatives

An existing alternative is the way your customers currently solve their problems. Remember that while this can include your competitors, often the existing alternatives are low-tech or even no-tech. For example, an existing alternative to cloud file sharing might be the use of email attachments. As you list the existing alternatives, see if you can identify whether this solution is sufficient or if it has drawbacks.

One existing alternative available to your customers is that of doing absolutely nothing, if the need for a solution is not great enough. If that is the case with your product, consider whether it is something that someone really needs or whether you've simply become infatuated with the idea of building your solution.

 

Market Research

The market research that you have can point you toward your likely customer segments, but this research doesn't contain the type of qualitative information that your customer interviews will reveal. This kind of broad data analysis can be expensive to conduct, so consider whether you can use no-cost statistical evidence such as census data, Bureau of Labor Statistics data, or perhaps you can purchase other relevant data.

Your market research has hopefully helped you to identify at least two viable customer segments who might be early adopters, and the direct channels that might reach them. Again, don't become so attached to what you think you know that you are unwilling to seek another market if the one you initially chased is unviable.

 

Customer Segments

If you have already identified your major customer segments, you can use your understanding of them to formulate the top three problems your customers want you to solve. If you don't already have your top customer segments, you should develop your top three problems in tandem with development of your customer segments. You want to break down broader customer segments such as user roles, into smaller segments with specific problems to solve.

In any case, you want to understand the problems that paying customers need you to solve, independent of any preconceived solutions, while keeping in mind that the solution you think is ideal may not even be solving a problem that your customers care about.

Keep in mind that, as with Personas, customers and users are not necessarily the same thing: customers pay while users interact with the product (such as with a search engine, the customers are the advertisers while the users are the people running searches.)

 

Early Adopters

The early adopters are easy-to-access, enthusiastic users who latch onto your product first. They are valuable because they feel their problem acutely and are eager to help you find its solution without needing to be convinced as long as the unique value of your product is high enough.Your success is their success, and these folks will often be your first customers.

 

Unique Value Proposition

Most first-time visitors will spend about eight seconds on a landing page. Your Unique Value Proposition is their first interaction with your product, and should quickly convey the essence of your product and why you are different and worth their attention.

Your Unique Value Proposition isn't about selling your product – that's a conversation for later – but it is about being different. The good news is that you don't have to worry about getting it right, right away. As with everything on the Canvas, start with your best guess and refine it from there.

The best place to discover your difference is by deriving your Unique Value Proposition from the number one problem you are solving. If the problem is truly worth solving, your Unique Value Proposition could present itself.

However, that's not to say that your Unique Value Proposition is simply listing the features and benefits of your product. Another way to find your Unique Value Proposition is by thinking in terms of the benefits your customers derive after the lifecycle of using your product.

Features: lightweight; loud, clear speakers; large buttons and icons; high-resolution camera.

Benefit: accessible for people with various disabilities.

Finished story benefit: people with disabilities use accessible devices to connect with life.

Dane Maxwell's formula for creating a good Unique Value Proposition is:

Instant Clarity Headline = End Result Customer Wants + Specific Period of Time (Optional) + Address the Objections (Optional)

A classic example that represents all these factors is the Domino's slogan, "Hot fresh pizza delivered to your door in 30 minutes or it's free."

Choose your words carefully: include a few key words that you use consistently in your Unique Value Proposition in order to improve your search engine rankings and use less expensive, "pull" type of marketing strategies to bring your ideal customers to you more easily.

Your Unique Value Proposition will also answer the question of who those ideal customers are, and why they should care to give you attention. If it's hard to fit the second part of that statement, the "why" into your Unique Value Proposition, then use a subheading, such as Prezi – "Presenting a better way to present. Welcome to Prezi, the presentation software that uses motion, zoom, and spatial relationships to bring your ideas to life and make you a great presenter."

AirBnB – "Rent unique accommodations from local hosts in 191+ countries. Feel at home anywhere you go in the world with Airbnb."

Visit the landing pages of brands you admire, and attempt to deconstruct why and how their messaging works.

 

The High-Concept Pitch

Another useful way to describe your work is the high-concept pitch. The high-concept pitch is important because it uses analogy to help your audience to understand what you do, based on something else they already understand.

Because there is a danger that your audience won't understand the analogy, you wouldn't necessarily use your high-concept pitch on a landing page, or even with your SEO. Your high-concept pitch is going to be useful to help you with inexpensive, "pull"-type viral marketing with your early adopter audience, such as with word of mouth or social media.

Hollywood producers often use the high-concept pitch to sell a movie to a studio. An example of a high-concept pitch for the Matt Damon movie The Martian, could be "Cast Away on Mars."

An example of a high-concept pitch for Cast Away might be, "Gilligan's Island with one guy." However, this demonstrates the hazard of a pitch being unsuitable for all audiences, as illustrated by the allusion to Gilligan's Island, a reference that may not be familiar to the Millennial generation.

A quality high-concept pitch can help your investors describe where they have invested their money (and hopefully the pitch is so attractive that other investors want in!) The high-concept pitch can help your customers easily share information about your company or product with their friends, and lastly, the high-concept pitch can help your team members to describe what they do.

Your high-concept pitch should have a few key attributes to ensure that it does the job well:

It needs to be brief: one sentence, no longer.

People need to understand the basic 'building blocks' of the pitch, so they can understand the analogy. If you use a reference people don't know, then the premise of the high-concept pitch is lost. (If you're not sure that your audience will get the reference, refer to your Personas. Ask yourself if this Persona understands what you're referring to.)

Lastly, the high-concept pitch isn't the same as the tag line. The high-concept pitch describes the product while the tag line is more focused on what you can do with it.

If you are lucky, you might develop a high concept pitch that works as a tagline also, such as with Cisco, but otherwise, your high-concept pitch just helps to frame what people can expect from your brand.

Cisco: We network networks.

Sequoia Capital: Entrepreneurs behind the entrepreneurs. (Tagline: We help the daring build legendary companies.)

YouTube: Flickr for video. (Tagline: Broadcast Yourself.)

LinkedIn: Facebook for business. (Tagline: The world's largest professional network: 400 million strong.)

Dogster: Friendster for dogs. (Tagline: Dogster is for dog owners and lovers.)

 

The Solution

"I recently got asked about the most common pitfall that trips up entrepreneurs. Top on my list is: Falling in love with your solution. I've previously labeled this pre-disposition for the solution as the 'Innovator's Bias'."

- Ash Maurya, creator of the Lean Canvas

Because all you have are problems that haven't yet been market-tested, it's fairly common for the problems that form the foundation of your canvas to be replaced, altered, or reprioritized after some customer interviews. It is for that reason that Ash Maurya recommends that you resist the trap of falling in love with your solutions, and just sketch out the simplest thing you can possibly build to address each problem, as late as you possibly can.

 

Channels

Products need customers, and failing to reach them equals failure to launch.

However, don't let that scare you, because the initial goal is to learn, not to grow. During your initial customer discovery and interview process, you will learn which channels are the most significant paths to your customers… the early adopters you contact can be original sources of viral messaging as well as your earliest source of revenue.

Many channels are available, and for projects running on smaller budgets, such as startups, it's best to look for channels which are less expensive for more return on the investment.

 

Inbound

The least expensive channels tend to be inbound, "pull-messaged," meaning they rely on customers finding you instead of the other way around. These channels include editorials, guest submissions, SEO, personal blogs, eBooks, white papers, and webinars. While these channels are less expensive, they are not free; there is still the opportunity cost of producing these materials when you could be doing something else, as well as the actual human capital expense. The return on the investment is harder to calculate because these channels keep working for you over time, but if you specify a length of time to be your measurement benchmark, it may be easier to compare the effectiveness of various methods.

 

Outbound

While you may be tempted to use outbound, or large-scale "push marketing" channels, without having first had your assumptions tested, you could be paying to promote a product that no one wants. So, it's best to wait to use these channels until you're sure that at least your "early adopter" customers will want what you build.

Some examples of these channels include print, TV, and banner ads, trade shows, cold calling, and SEM. Outbound channels are usually expensive, so if you haven't yet determined from your customers which is the right one to use, using an outbound channel is risky.

Customer interviews are the exception – they do qualify as outbound marketing, but the return on your investment is that you will be creating a product that people want, and which will sell. This is the most valuable marketing investment you can make.

 

Direct Marketing or Automated?

Direct marketing is expensive, with heavy human capital outlay. It doesn't usually make sense to pay a sales person unless the lifetime value of the customer will exceed the sales person's total compensation.

However, remember that we still need contact with our customers in the learning phase of development, so some direct selling will take place.

Sell directly first, then automate your sales.

Because you're going to wait to automate your sales, you can wait to build your automated sales platforms. Doing this later has the bonus side effect of giving you some instruction on what your customers need in their automated platform. You can test the sales platform before releasing it to the wider public, in order to limit the frustration felt by a wider audience.

 

Going Viral

Many brands are obsessed with building virality and referral programs from day one, however, it's essential to (with respect to TED) have an idea worth spreading before reaching for virality. Virality and referral programs can be expensive to execute, so it's important to ensure you'll get a good return.

It's much more important to keep the customers you have. They were likely somewhat expensive to obtain, and what they know is incredibly valuable to help you build something that people want, and that they will pay for.

And ideally, if you are able to keep those customers well enough, they will begin to initiate referral and virality for you… when their referrals come so often that you need it, you'll have your sales platform perfected and you'll be ready to initiate virality and referral incentives!

What is possible, however, if you go viral before ensuring you have something that people want, and will pay for? I leave those dire scenarios to your imagination.

 

Costs and Revenues

Instead of taking a whole-business or a long-term approach to model viability, the Lean Canvas approach asks you to model the viability of the product, by first modeling the costs you expect and revenues you will need in order to define, build, and launch your minimum viable product.

 

Revenues

Some teams choose to put off the question of pricing because they don't think their product is ready for it, or they suffer from embarrassment, because the product (in the beginning) truly is minimal. How or what could we charge for it?

Why not charge for it? The minimal viable product is not an inferior product – rather, it is precisely what is needed to address your customer's key problems, no more and no less! Your minimum viable product solves important problems that customers will pay you to solve!

Another mindset that sometimes causes pricing to be an afterthought, is that of trying to make it as easy as possible for an individual to sign up and take a chance on the product, hoping to eventually convert the individual into a paying customer.

There are a couple of problems with this mindset. The customers netted by this approach are not usually very connected to your offering and aren't reliable sources of learning.

Free broadcasts messages you don't want to send about your product. People often see a free product as worthless, while people believe that products that are more expensive are of higher quality. Another message that your pricing conveys, is which customer segment you are seeking. These two points are especially evident in luxury consumer goods, which can be of similar quality to lower-priced items but have a higher cachet nonetheless.

A way to overcome objections to the initial sign-up is to offer a free trial period, but to collect payment information at the outset. Customers then opt-out of continuing the service once the trial period is over in order to avoid charges. The chances are high that if you have delivered a high value solution for a genuine problem, you will have a customer who is willing to pay for your solution.

Setting a price may seem arbitrary, but you can measure it against the existing alternatives from your Problem Box on the Canvas and then test pricing structures with your interview subjects, who can help you understand what the market will bear. For more information, Neil Davidson offers a free ebook about software pricing called Don't Just Roll the Dice.

 

Costs

Again, instead of asking us to predict long-range forecasts the way that a business plan might, the Canvas asks us to look at the short-term because we are going to change the plan as we learn more. So here, your initial cost estimate will be for:

  • What will it cost you to interview 30 to 50 customers? (Human capital expenditures)
  • What will it cost to build and launch your minimum viable product? (Materials, Capital Equipment, Human capital)
  • What is the ongoing burn rate for both fixed and variable costs?

Use the revenue streams and cost structure inputs to estimate your break-even point, as this will help you make the key decision about which pricing model you start with.

 

Key Metrics

Every business needs to have a way of measuring how well it is doing, called key metrics.

Dave McClure developed a funnel of metrics, which he calls Pirate Metrics (because the acronym is AARRR):

  1. Acquisition - Are customers finding you?
  2. Activation - Are users having a great first experience?
  3. Retention - How many users return?
  4. Revenue - Are you making money?
  5. Referral - Are users telling others?

Although there are many things that can be counted, it's important to determine whether the measurement will be helpful - can it be linked to a specific and repeatable action? Or is it what is known as a vanity metric: a count that goes up each month, but doesn't mean much to your bottom line on its own, such as the number of Facebook "likes" that you have. (Although the individual count may be part of a larger measurement effort.)

To be meaningful, a metric needs to be: actionable, meaning that something can be done with it; accessible, meaning it can be understood; and auditable, meaning there is a way to verify its accuracy.

We can use an example of a car dealership to illustrate this process:

Acquisition is the point at which a person becomes a prospect; they go from being unaware to interested in what you have to offer, you can determine for yourself what signifies an acquisition. Is it when the individual progresses from a homepage to viewing the signup page, or some other part of your website?

With the auto dealership, acquisition could be the point at which the individual chooses to step foot onto the lot, or chooses to click to an inventory page. A counter can capture this measurement, but on its own, the number may lack meaning, since there's not a specific action to tie it to. However, this count could be useful for the next stage: activation.

Activation is when the individual has their first satisfying user encounter with the promise you've made about yourself: your unique value proposition.

At the car dealership, activation might be the appointment for a test drive, or the test drive itself. It may be helpful to tie this measurement to the acquisition measurement, to determine a conversion rate.

Retention is when that positive experience results in the user having repeated engagement with your product, such as logging back in to use the product again, or clicking through on emails that you've sent to them.

In the case of the dealership, this might be the application for credit – the individual is not yet committed to being a customer, but they have returned to the building to complete financial forms after their test drive, instead of walking away.

Revenue measures if and how users turn into paying customers, whether buying a physical product or a subscription for service.

At the dealership, this is measured in customers who've signed a sales contract.

Referral is another form of acquisition, where happy customers direct new potential customers into your conversion process. This form of acquisition doesn't have the same volume as inbound marketing, but a personal recommendation carries a stronger message than other forms of outreach.

The car dealership may offer a cash incentive for referrals, or a software product may rely on viral or social sharing, or Net Promoter Score etc.

As mentioned previously, referral is a form of acquisition that can be counterproductive in the first stages of development, so this metric is not appropriate until later in the development cycle.

 

Unfair Advantage

Your unfair advantage is unique to your position, and is something that your competitors cannot easily copy or buy. The unfair advantage can sometime be hard to determine, but there are two definitely wrong answers when it comes to this section:

Being first - This is more of an unfair disadvantage because you've had to break new ground and make an investment into development or outreach, which "fast followers" can then copy without the same level of investment… unless you have a truly unfair advantage.

Features - Someone else can copy this, or even improve on what you've done. No advantages here.

However, some good examples of an unfair advantage might be an existing affinity with a large network or community of people, an existing customer base, existing brand reputation, access to "expert" endorsements, and the company values (such as a satisfaction guarantee or personal touch) that allow your brand to stand apart from others.

This section is meant to make you think hard about the difference you present, and how to make that difference matter. You may need to leave the section blank for a while, but the Unfair Advantage is also an important part of your Unique Value Proposal.

 

Now, Create Your Canvas!

Don't let your ideas fester in your head; get them out onto paper (we've created a template for you to use) so you can use it as a tool to systematically test and take the risk out of your plan.

Secure Kids Canvas