Step 1: Create a hypothesis
- First things first: Make sure you have a support network around you;
- Answer the fundamentals for lean canvas:
- 1.Who are the customers?
- 2.What are their problems, needs or desires?
- 3.How do you solve them?
- 4.What is the value that you create for the customer?
- 5.How do you reach the customer?
- 6.Who do you compete with (think beyond just direct competitors – what are the current solutions that you will need to displace)?
- 7.What are your advantages over the existing solutions?
- Which idea to choose? Optimal stopping problem – 37% rule (You cannot be always right, but this way you will be less wrong.)
Understand what to build: Product versus services versus solution
- Product is a tangible item that can be consumed in some way by the customer. Costs are deterministic, thus the pricing can be pre-determined and is based on usage or features. Costs scale at a lower rate than revenue. Usually requires investment upfront to then derive value later. Should always be reused with new or different customers with no or minimal changes. Usually based on engineering output.
- Services is an intangible item that is performed to or for the customer. It can have a standard process/approach, but it does require tailoring for each individual case. Costs cannot be determined ahead of time, only work-unit rates and, at best, an estimated effort. Costs scale linearly with the revenue. Usually has low upfront setup costs. Can rarely be re-used with new or different customers. Usually based on human capital.
- Solution is an outcome of applying a product or services to solve a customer problem. Focus is on benefits, rather than features. Pricing is based on the value created, delivered or captured, rather than costs.
Lean Canvas model
- Two most important risks for an early business:
- Market risk – is there a market for your product?
- Product risk – can you actually build the product?
- Lean Canvas is not box-ticking exercise – Only once your thoughts have been organised into a structure, can you understand what you are testing your hypothesis against
- If you are unable to concisely define each field by distilling it into two or three bullet points, chances are that you have not yet fully understood the area and need further insight
- The dirty business secret: most of the time, reports are initiated and paid for by the company that is praised the most in it.
- ‘good artists copy, great artists steal’. It took a lot of energy for your competitors to be in the position they are in today – use their work as a shortcut to learning market needs, industry keywords and product metrics.
- Identify exactly what metrics really matter to your growth and the success of the product. Then, learn how to measure them with as little noise as you can. Finally, be obsessed about constantly improving them.