Starting business ideas does not necessarily represent complicated long plans. The models we are going to explore help us to identify how an idea can be mapped out to see if it works as a business while creating value.
Read on to discover what these models are about, their differences, similarities, which model to apply and when.
Business Model Canvas
The creators of this model are Alexander Osterwalder and Yves Pigneur. Basically, it is an elementary visual framework showing how a company crafts, produces, and depicts value.
It portrays all the key parts of your trade on one page and how do they connect.
Nine blocks make up the business model:
- Value proposition – what`s in your ideas, products, or services that are valuable to clients
- Client segments – who you serve as groups of people or organisations
- Channels – how you reach out and provide value to your clients
- Client relationships – how you entice, hold, and grow your portfolio or base
- Income streams – how your trade earns money
- Key resources – the tools and assets needed to make your company work
- Key activities – the key actions needed to deliver your value proposition
- Key partners – suppliers or external organisations that support your trade
- Cost structure – the main expenses involved to operate your business
For established businesses or for teams who are already working on strategic planning and mapping operations, the business model canvas is more recommended. This is because it portrays a clear big-picture view that helps to refine business strategies for growth and align teams.
Lean Model Canvas
Ash Maurya created this model, which is a startup-focused version of the business model canvas. It is designed in a way that assists entrepreneurs to swiftly assess ideas and spot risks by focusing on issues first.
To the contrary of the business model canvas, the lean canvas stresses on what is uncertain and requires validations.
The typical blocks here are:
- Problem – the top issues your clients face
- Solution – your proposed resolve to these issues
- Key metrics – the stats showing that your idea is working
- Unique value proposition – what makes your service or product stand out
- Unfair advantage – what provides you with a sustainable edge over competitors
- Channels – how you reach out and provide value to clients
- Customer segments – who your target clients are
- Cost structure – the main expenses of running your idea
- Revenue streams – how your trade will make money
For early-stage projects and startups the lean canvas model is ideal. It is best suited for validating assumptions, rapid testing, and concentrating on your business` riskiest sectors before you go all in and invest heavily.
Lean Canvas vs Business Model Canvas – Core Differences
Below we list the main elements which differentiates the lean (LC) and business (BMC) model canvases from each other:
- Target
LC – more focused on startups that need to validate assumptions and test ideas swiftly
BMC – for both new and established trades aiming to optimise and map their operations - Focus
LC – targets founders and entrepreneurs who need to identify risks and validate ideas
BMC – focuses on clients, advisors, investors, and internal stakeholders to ensure strategic clarity - Customer Orientation
LC – startups often have undefined markets or untested products, so it puts less emphasis on clients` segments
BMC – focuses on client segment, relationships, and channels, providing a clear picture of engagement for all types of trades - Approach
LC – it starts off with identifying issues, defining channels, outlining potential income streams, and estimating expenses
BMC – to plan and understand business model it maps key resources, activities, revenue streams, and infrastructure - Competition & Advantage
LC – it calculates whether the trade has any unique or unfair advantage and how it can leverage it for early traction
BMC – to maintain a competitive advantage it focuses on market positioning and value propositions, both quantitively and qualitatively - Application
LC – for entrepreneurs to evaluate ideas and develop swiftly it offers a simple step-by-step problem/solution framework
BMC – for scaling and growth it encourages creative thinking, discussions, and detailed strategic analysis
Is the Lean Canvas for Tech Startups Only?
The short answer is no. Indeed, it is more popular with tech startups, but it can work for every business idea where you want to test solutions, validate assumptions, or identify issues.
Pros/Cons & Similarities
The lean and business model models are alike as they are both a one-page strategic canvases used to map how a trade captures and creates value. Teams are assisted by both models’ same number of nine building blocks, from which they can align swiftly around clients, expenses, income, and assumptions. Both canvases need to be updated as priorities, business conditions, and evidence change since they are both iterative working documents.
The lean canvas centres on issues, risk, and assumptions, thus it is faster for early-stage validation. However, it can feel narrow for scaling.
Business canvas is stronger for communication and planning, as it gives a broader operational view with resources, activities, and partners. Nevertheless, it can be slow if it is used for rapid validation or experimentation.
In Conclusion
Keep in mind that business model canvas is not for large companies only, as small and medium-sized businesses can also reap benefits by using its operations, while visualise revenue streams and plan partnerships.
The biggest mistake most people do is to treat these models as static documents. Maintain your canvases, it is important to keep them updated as strategies evolve, experiments conclude, or when assumptions change, as these models are meant to be living tools.
It is not necessary to use both canvases for each and every project, use the lean one if your goal is for a quick validation, while use the business model for a more structured view for stakeholder communication or planning. Using both can come handy when you want to switch from an idea verification to scaling.
Finally, remember that a validated lean canvas shows that you have understood key risks and tested assumptions, and a clear business model is often sought by investors, so this can strengthen your pitch to indirectly secure funding.