Are you running lean?

One of our research projects, U-QASAR, has the mission of creating a flexible Quality Assurance, Control and Measurement Methodology to measure the quality of Internet-related software development projects and their resulting products. We are in the last year of the project and focused on making a business case to turn our consortium’s extensive research, methodology and platform into a commercial product.
In this process, we recently started to use Ash Maurya’s Lean Canvas (from his book “Running Lean: Iterate from Plan A to a Plan That Works”).

“Most of the answers lie outside the building -not in your computer, or in the lab. You have to get out and directly engage customers”

In Maurya’s approach to business model canvassing (this term comes from the excellent book “Business Model Generation” by Alexander Osterwalder & Yves Pigneur) the key is approaching a business as a problem to be solved. This is an ideal way to start working on defining the solution from the start. Asking yourself first what are the top 3 problems and then what would be the top 3 features / services that would make up the solution provides a quick framework to rapidly test from.

When applied to a customer segment (remember that the elements of a business model may have pretty wild fluctuations based on different customer segments!) you have a good start to dig into the rest of the canvas. Then, empirical work should begin. As soon as you have a quick draft or inkling of your service, you can supercharge yourself to the potential customers and start gathering insights and feedback. Customer centric business modelling is at its best when you can bring the potential customers in as early as possible and benefit from their views.

For now, I will describe Maurya’s canvas and it’s 9 building blocks. The order, as becomes apparent in this reading, is critical.

1. We start with a problem: define your top 3 problems

2. Then, customer segments should be identified: who are your target customers?

3. In the third area of the canvas, we describe our unique value proposition: a single, clear and compelling message that states why you are different and worth buying

4. Solution: now, with a customer segment and value proposition in hand, we can attack the key issue: what are the 3 key features that will provide a solution to the problem stated in point 1

5. At this stage, we can focus on the channels to get them there: describe your path to customers

6. Revenue streams anyone? At this time, you may go into describing your revenue model, lifetime value, revenue and gross margin targets

7. Now, look at the cost structure: define customer acquisition costs, distribution costs, hosting, staff…

8. Having reached this point, you might want to enumerate the key activities to measure and set some KPIs for the business

9. And finally, on canvas, we have unfair advantage: can your solution be easily copied or bought?

Think about this approach to business modelling: SOLVING A PROBLEM. It is compelling and, in combination with a clear definition of your customer segment, may provide a powerful driver for your modelling endeavours. We will start putting them into use with real practitioners and consortium partners in a workshop in Bremen in February 2015 and keep you posted!