Document your plan with a Lean Canvas Workshop

This essay is part 1 (of a 8-part series) on the process you need to achieve Problem Solution Fit within 12 weeks. Subscribe to get the rest of the series.

Goal

The goal of this post is to outline the process you and your team can execute in order to fill in a Lean Canvas, in the most effective and fast way possible.

Why?

Documenting your plan within a Lean Canvas is the 1st step towards building a business. It captures all the important criteria that you’re currently assuming within a 1-page document that is easy to follow by anybody in your team, and other stakeholders.

With this document, you can start creating tests to validate our assumptions, before deciding to invest more resources into the business.

There’s a full post that covers why you should fill in a lean canvas in detail here. So read that if you’d like the full break-down.

Workshop Overview

The workshop will cover the following steps:

1. Define our customer segments
2. Fill in Lean Canvas for the top 3 segments
3. Document digitally in your Problem-Solution-Fit workbook
4. Rank the Lean Canvas according specific key criteria (next post)
5. Select the top 3 canvases and create validation plans (next post)

The workshop can last 1 or 2 days. Depending on your pre-existing knowledge of the market, how clearly you’ve already defined your initial assumptions and how well aligned your team is.

1. Define customer segments

1.1- Establish a segment category with a Level 1 Job-to-be-done (JTBD)

Time: 5 minutes

The first thing you need to identify are the customer segments you’re aiming to address with our business.

To help brainstorm possible customer segments, you’ll start by defining the highest level job-to-be-done you’re trying to address.

Example:

• “Professionals that are looking to find new high paying jobs”
• “Anyone that wants to share lots of media content with their network.”

1.2- Define around 10 specific customer segments

Time: 10 minutes

Brainstorm a minimum of 10 possible specific customer segments that you think would be interested in hiring your high-level JTBD.

If several people are doing this exercise, you’ll likely have many repeated customer segments. Take a minute to quickly integrate them and eliminate any redundancies.

Example:

• Young professionals
• Mothers
• Videographers
• Parents

1.3- Refine segments

Time: 10 minutes

Our goal is to define customer segments so that you can later easily identify them offline or online, in order to chat to them and validate or invalidate our assumptions.

There best way to know if you’re clearly defined a customer segment is to identify if it fits to a possible role, title, attribute that they’d use to identify themselves.

They might do this offline, in a conversation with a friend, or they might do it online in their social media profiles (facebook, twitter, Linkedin). Additionally you’ll easily find forum groups of people revolving around that term in google or facebook.

First, you’ll cross out all customer segments that don’t fit that criteria. And take a few minutes to replace them as explained above.

1.4- Select your top 3 segments to get started

Time: 10 minutes

Most probably you’ll have a long list of possible customer segments that you could target. So you’ll select the Top 3 that you believe will be most aligned with our goals.

You can do this by considering the following sub-criteria in the following order of importance:

a- Pain:
How severe is their pain in regards to your high-level JTDB? How badly do you think they want it fixed? The higher the pain the better.

b- Size:
How big is this segment? The bigger the segment the better.

c- Currency:
How much can they offer you back in return in terms of money (if it’s a paid product) or time/engagement (if it’s an ad-derivative product) The more currency the better.

d- Affinity:
How aligned are you to help this customer segment? Are you excited to serve them? The more affinity you have towards them the better.

e- Access:
How accessible are they with your reach capacity? The faster, cheaper and easier you can reach them the better.

If the discussion reaches a standstill, you’ll use the Vot Doting technique to help us resolve the situation quickly and effectively. Followed by a quick discussion to confirm your choice.

Take your top 3 customer segments, identified in the previous exercise, and place them on the Customer Segment part of the Lean Canvas.

Now you’re ready to fill in the Lean Canvas!

2. Fill in Lean Canvas

Time: 3 hours for 1st segment. 1 hour for 2nd and 3rd segment.

Now, you’ll focus completely on completing the Lean Canvas for the 1st customer segment. Once you’ve done that, you’ll move on to the 2nd and 3rd one.

Here’s the order in which you’ll fill up the Lean Canvas.

2.1- List their top 3-5 problems stories

Time: 10 minutes

Note down the top problems or constraints your customer segment is encountering on his way to accomplish his Level 1 Job-to-be-done (JTBD).

You should also go deeper into the constraint to find the root-cause by asking “why did this problem occur?”

A good structure that will help you is:

• I want to (Level 1 JTBD),
  • But the problem is that (Constraint),
    • Because (Root Causes).

Example:

• I want to “share lots of media content with my network”,
  • But the problem is that “it’s too time consuming and I don’t have enough free time”
    • Because “it takes me too long to send by email”
    • Because “because the upload speed is too slow”
    • Because “…”
  • But the problem is that “there’s so much demand I can’t keep up”
    • Because “I have to send it manually”
    • Because “…”
  • But the problem is that “if I use a tool like SmugMug I’m afraid of losing all my pictures”
    • Because “they don’t have a regular backup system that connects to my pc”

As the canvas is normally too small to fit all problems with their various roots causes, you’ll use the sides or above the canvas to capture all problems:

1. Place all the 1st level order problems on one horizontal line
2. Then place the 2nd, 3rd etc. level problems right underneath them. Number them so when you separated them, you can still track them to their 1st level problem.
3. Then simply order your top 3-5 problems from left to right (highest to lowest priority)

2.2- List their existing alternatives

Time: 10 minutes

The above exercise might have also provided us with a list of current solutions that customers already use and have problems with.

Do an additional brainstorm to find any other existing alternatives and organize them thematically before inserting them into the Lean Canvas. If you know it, also include a price point for the competing product. If not, you may do it later at the end of the session.

Example:
If you’re selling a photo sharing service, then existing alternatives might be:
Flickr Pro ($4/month), Smugmug ($5-$40/month), Facebook (free)

2.3- Identify your early adopters

Time: 10 minutes

The power of the Lean Canvas is that it’s fully actionable. During the next weeks you’ll be going outside of the building and approaching customers to validate you problems.

In general the only people that will dedicate their time to speaking with a stranger about their problems is somebody who already really feels a pain and is actively investing money to solve it. Either through a makeshift existing solution or time/effort by looking or building a homemade solution. That’s an early adopter.

Referencing Geoffrey Moore’s Crossing the chasm, you can see the difference between an Early Adopter and the rest of the adoption curve.

Example:

• Parents who use an existing alternative
• Parents posting pictures on facebook or instagram
• Parents of newborns
• Parents of kids up to 10 years old

2.4- Craft a unique value proposition (UVP) and high-level concept pitch

Time: 10 minutes

In order to sell to somebody, you first have to get their attention. This is much harder that it may seem at first. Today’s marketplace is crowded with hungry companies who’re bombarding your prospects every day. Additionally, people are less patient and have less time than ever.

That’s why it’s not only important to have a product that meets a strong need and is different, but also that can be communicated clearly, concisely, empathetically and with intensity. That’s the UVP.

A good UVP will address what, who and why in 1 easy-to-comprehend sentence. It might contain subheadlines to highlight the enormity of the problems or provide it with credibility.

Now try to answer the 3 following questions:

1- Who is your customer?
Be specific and start by targeting your early adopters. Stay away from generic marketing messages.

2 & 3-  What is your product? And Why should I care?
Don’t keep it superficial, but reach out and describe how your product impacts the life of your customer. Transform your features into benefits and into completed user story benefits:

• Features: ie. “professionally designed templates”
• Benefits: “eye-catching resume that stands out”
• Completed user story benefits: “landing your dream job”

What helps is to answer ‘the Super Hero” question: what superpowers do you provide customers with your product? What will they be able to do or who will they be able to become when they use your product?

Here’s some formulas that will help you create great UVPs:

• Dane Maxwell: “End Result Customer Wants + Specific Period of Time + Address Objections”
• Steve Blank: “We help X do Y doing Z”.
• Geoff Moore: For (target customer), who (need), our (product/service name) is (product category) that (benefit).

Examples:

• • Dominos: “Hot fresh pizza delivered to your door in 30 minutes or it’s free.”
  • Mint.com: “The free, easy way to manage your money online.”
  • Unbounce: “A/B Testing Without Tech Headaches.”
  • Crazy Egg: “Website Behavior Tracking at an Unbeatable Price”.

Don’t forget to create a high concept pitch that will allow anybody with no background to understand your company, in less than 2 seconds.

Examples:

• Titanic: “Romeo and Juliet on a sinking boat”
• Youtube: “Flickr for video”
• Dogster: “Friendster for dogs”

2.5- Solution

Time: 10 minutes

At last we arrive to that portion of the canvas that most Innovators start with, the solution. Only now it’s actually possible to establish it. If you filled this in first, then you’ve got a mild case of the Innovators Bias.

But before we can validate the solution, we need to validate the problem. So don’t worry about creating an extremely detailed version of the solution now. Simply describe the specific solutions to the main problems we’ve established before.

If you’ve followed the instructions from the Problem section, you can simply place the solutions (with different post-it colours) for all level problems, not just the 1st order level, on top or next to the problems.

2.6- Channels

Time: 10 minutes

Many entrepreneurs disregard channels completely and think that their product will just reach their customers almost by act of magic. In fact, it’s one of the common reasons why companies fail. Most time they’re product-driven companies that haven’t performed the customer discovery process.

In our case, we need to reach early adopters to validate our problems next week, so we need to build early channels to go get them.

Depending on the current budget, the qualities of a good early channel are as follows:

• Direct > indirect:
  You can reach them directly at their place of interest. Unless you’ve already got a following, you probably want to start with outbound channels (cold contacts, recommendations) and not inbound (blog posts). You’ll reach people much faster at this point.

• Free > paid:
  Depending on your budget and team efficiency, it’s normally better to start with free channels. But if you’ve got a budget, don’t be afraid to use it, just do it wisely. Don’t simply outsource an agency to provide you with a user panel.

• Non-scalability > automation
  Focus on non-scalable, not automation. Many people are obsessed to automate right from the beginning and that’s a mistake. At this point, you want to spend your time opening the channel, you’ll automate later.

• In-house > Outsourced
  Do it yourself or manage the process extremely close. Don’t partner with somebody to do it for you and have them send you reports. Right now, you’re in the founding stage. If you’re not willing to get your hands dirty, you won’t get the results you need.

Example:
The most common ones to get started are:

• Social Media Groups and Pages ie. Facebook Groups, Quora etc.
• Forum and Groups ie. type on google “problem/product/brand forum”
• Social Media ads and news feeds ie. Facebook, Twitter, Instagram
• Physical places of interest ie. the gym, airport, cafes
• Word of mouth

2.7- Revenue Streams, Costs, Break-even point

Time: 15 minutes

At this point we want to understand the basic economics of our proposed Lean Canvas. Fight the internal push to leave it for now, that “you’ll figure out it later”. Do it now, because pricing is an integral part the nature of our product and business.

Different pricing points will heavily impact the design of both your business and product in answering the following key questions:

1. Who to target? Can this customer segment afford it?
2. Which problem to solve? Is this problem urgent and intense enough to justify short-term payment? And
3. Which solution to build? Can we effectively build the required solution?
4. How will the solution be different? Is the differentiation strong enough to justify this price point?

Additionally, when we go out to validate our solution, we’re going to present prospects with a price point and ask them to buy our solution from us. Yes, without having built it yet. The reason is that, payment is has the highest form of fidelity in validating problem solution fit. We’re looking for people to buy our product, not to tell us they will.

Now insert into the canvas:

• Revenue streams:
  The price plan we intend to sell our solution at. You should provide a logical reasoning that is based on factors like advantages such as product, brand or market competition.

• Cost structure:
  Focus on the costs incurred into getting your Version 1.0 to market. Don’t forget to add both fixed costs and variable costs.

• Break-even point:
  The amount of customers you’ll have to sell your solution to in order to reach your break-even. This will give you a good trend in terms of how plausible your model is, taking into account the size of the market and your capacity to acquire it.

2.8- Key metrics and north star

Time: 10 minutes

The Running Lean method uses the scientific method to validate your assumptions. So it’s essential that you’ve clearly defined what the the key metrics that will indicate your business is progressing.

It’s quite usual, especially if you’ve gathered a group of different departments, that you’ll have many different metrics. So from all those, you’ll want to select the One Metrics That Matters that you can all agree has the biggest impact on achieving customer and business-wide success.

There’s multiple frameworks for metrics but the one that’s easiest to use is Dave McClure’s Pirate Metrics.

Acquisition
The key metric to display is “How many prospects become aware of our solution?”

Our goal is to turn unaware visitors into interested prospects. For that to happen, they must showcase a certain degree of engagement or attention for our solution. That means arriving on our landing page and not bouncing, or quickly leaving without doing anything. But staying around, reading some content, visiting the pricing page and even seeing the signup page.

Activation
The key metric to display is “How many users have a successful first time experience?”.

Once we have the prospects attention, our goal is to get them to sign up, followed by acting and engaging with our product. For this we must define what is a successful first time experience.

For users, the best case scenario is that they:

1. Signup and are receive on the solution’s promise
2. With the highest value
3. In the easiest manner
4. In the shortest time

If the customer’s journey to value takes longer than 1 session, we must successfully connect them well enough in the short-term so that they can perceive the longer term benefit.

Retention
The key metric to display is “How many users come back for more?”

Once our user has experienced our solution’s promise once, our goal is to get them to come back to experience it as often as possible. Ideally that means they will:

• Return to your product frequently
• Engage with it effectively

Revenue
The key metric to display is “How many users pay and become customers?”

Once a user is engaged with our product, our goal is to have him pay for it. Payment is a signal of effectively value delivery throughout time, but in the in the case of ecommerce, users might purchase products immediately and on their first visit, without having to engage with the website previously.

Referral
The key metric to display is “How many users are telling others about our product?”

Once a prospect, user or customer has engaged with our solution, our goal is to have them spread the word to the four winds. Not only is a measure of validation for how good our solution is, but it’s also a key channel for acquiring users at a reduced cost as we focus growth later on.

For digital product you might measure how many people are sharing on social media or inviting friends through email.

2.9- Unfair advantage

Time: 10 minutes

For our business to go past the stage of inception and into growth, it must edge itself a place in the market. It must then fight off competitors to defend it and keep it.

In traditional markets, most competition will stall our growth, erode our margins and in the long term ultimately turn us into a non-competitive business.

So the best case scenario, is to acquire such competitive advantage over others that we’re light years ahead of them. And even if our innovation processes fail to create the next advantageous leap, our stable position in the market will allow us to profit for many years to come before we’re displaced as category leaders. You want to create a monopoly for as long as we can.

Thus the qualities of a good unfair advantage are:

• Has a dominating position
  • It leads and dominates in at least one of the three:
    • Value creation: how well or how fast you create value.
    • Value capturing: how effective in keeping users paying for that value.
    • Value delivery: how cost-effectively you deliver value.

• Has barriers to entry
  It’s enduring in the sense that it’s protected by the complexity of it’s nature. Meaning that it cannot be copied or payed in order to replicate its results in the short-term

Example:

• Authority in regards to superior team expertise and experience
• Advanced custom team process, logistical networks or machinery
• Large network effects or communities
• Existing customer base
• Patents (depending on the complexity, it provides with a head start)

You’ve now successfully completed the Lean Canvas for your 1st Customer Segment.

3. Document digitally in your Problem-Solution-Fit workbook

Time: 20 minutes

Now you’re going to transfer the Lean Canvases on the wall, into a digital form. We recommend you use a Problem-Solution-Fit Workbook for the next 8 weeks. Something online and simple that everybody in your team can access. We like to use Google Sheets.

You probably have multiple canvases for each customer segment, totalling to 5 or 10. Simply insert the into one or multiple the Digital Lean Canvas Template in GDrive.

A few tips:

• If you’ve several canvases for 1 customer segment, add the name according to the customer segment and a differentiator ie. Parents (rich), Parents (normal)
• Don’t type all information if it’s repeated. Complete 1 Lean Canvas, simply copy and paste and change what’s necessary. You’ll save a ton of time.
• For further reference, for yourself and stakeholders, mark the differences between the Lean Canvases, so they’re easy to identify. You’ll avoid many headaches.

Don’t forget to capture all your order levels. You can do so by inputting them into the Digital Detailed Problem-Solution Template.This will keep the Lean Canvas clean and light.

Rinse and Repeat

At this point you’ve successfully completed the whole process for your 1st Customer Segment. Now enjoy a good lunch, then come back to repeat the same process for Customer Segment 2 and Customer Segment 3.

In many cases, you’ll realize that a lot of information is quite similar to your 1st Customer Segment. So be agile with it, and instead of repeating the same process and writing everything down, simply ask yourself if there’s anything that’s different between them, and simply annotate the differences or new comments into canvas.

This way you’ll be able to complete Canvas 2 and 3 quite quickly.

Next steps

That’s it for documenting plans! You’ve successfully identified several business model stories that your business can pursue.

You’re armed with a backlog of business opportunities. But where do you start to validate?

The next blog post will cover how to prioritise them and choosing 3 to get started on. You’ll rank them according to key criteria, then choose the most attractive ones to start validating outside in the real world.

So if you’re interested, don’t forget to subscribe. You’ll receive the next blog posts to help you on your way to achieve Problem-Solution-Fit in 8 weeks.

Credits
I’d like to credit the following people for methodologies and frameworks that have inspired this post. Make sure you check them out:

• Ash Maurya
• Justin Wilcox
• Dave McClure