What should we do when we’re trying to start something new – whether it’s a new product line within an existing business or a startup dedicated to the idea?
All too often, we can come up with ideas for products and services and go quite far down the track of designing and creating them before finding out that the market isn’t that interested.
Alexander Osterwalder came up with the Business Model Canvas – a way to model a business using a one page framework.
This was much simpler than writing a 50-page business plan, and was enthusiastically adopted by the startup community.
A variant of the model by Ash Maurya is the Lean Canvas.
While the Business Model Canvas is designed to address all aspects of a business, the Lean Canvas focuses specifically on new product development.
The Lean Canvas retains five components of the Business Model Canvas:
- Value proposition: What does the customer get?
- Customer segments: Who is going to want this product?
- Channels: How are we going to get to speak to them?
- Revenue streams: What will they be willing to pay?
- Cost structure: What will it cost us to deliver the product or service?
It adds four new components.
First – what is the problem we are trying to solve for a customer?
As Theodore Levitt said, People don’t want to buy a quarter-inch drill, they want a quarter-inch hole.
If the product doesn’t address a real problem that potential customers have then it’s hard to justify its purchase.
Then, what is the solution we are proposing?
The solutions needs to be simple – easy to understand. That doesn’t mean it has to be easy to do – or the customer could just do it themselves.
It must be possible, however, to see how the solution solves the problem.
We then need to look at two more components – metrics and unfair advantage.
Success or failure needs to be measured in an objective way and for that we need to select metrics.
Selecting a metric directly influences the activities we do in order to improve our score on that metric – so it’s important to select a few and important ones.
Finally, there isn’t much point spending time and money developing a solution if it can be easily copied or bought from someone else.
We have a competitive advantage only when it is hard for others to compete with us.
So, in summary, in order to build something useful, we need to start with a customer’s problems, come up with a solution, make sure we are doing the right things, and make sure that what we do is unique to us.
An easy list to write – but not a simple one to do.
Handcrafted insight 