Business Model Canvas and Examples of other Business Models Frameworks - Which one to choose?
How often have you had difficult discussions with peers from innovation, product or development teams arguing countless hours about which Business Model Framework or Solution Approach to apply? What would work better: Design Thinking, Lean-Startup or Agile Methodology? Which one would make more sense: Business Model Canvas Examples or Value Proposition Canvas or Lean Canvas or Lean Analytics? Let me tell you that you are not alone. From domain experts, innovation specialists and process professionals to Scrum and Agile masters, there is clear evidence that no one in small startup to big-scale enterprise has a clear view when to apply which Business Model Framework and how they are linked and complement each other. These debates typically lack transparency and are a complete waste of time.
I promise that after reading this pretty long post, you will already make up for this time in your next discussion. We arm you with sufficient knowledge to lead and guide your team to make the right and critical choices for your business. We explain each of the methodologies, describe their benefits and show you how they differentiate and how they even link. On top, we introducte you to the Lean-Case Canvas which helps you to pitch all the assumptions of your business model on 1 page and answers the key investor questions on the metrics which matter.
Let’s dive into it and capture the key take aways along your read.
Putting Business Model Frameworks into Context
Design Thinking, Lean Startup, and Agile as well as Business Model Canvas, Lean Canvas and Lean Analytics are all highly valued innovation approaches across both worlds - startup and corporate.
However, picking the most suitable methodology often seems to be complicated and confusing. Where to start, and when to apply which methods? On the one hand, the approaches seem overlapping. On the other hand, there doesn't seem to be enough context and know-how how to pick the right one.
In this post, we are providing a business model landscape to position each methodology along 5 questions:
While three business model frameworks (Design Thinking, Lean-Startup and Agile) are very complimemtary and overarching (from ideation to development), the other three frameworks (Business Model Canvas, Lean Canvas and Lean Analytics) can be classified as Lean Startup based frameworks. Each of them provides a different alternative to shape the Lean Startup idea in more detail. On top, we propose the Lean Case Canvas which represents an additional layer being complimentary to all of the frameworks.
Looking at the first 3 complimentary approaches, Design Thinking is focussed on the Customer Problem, while Lean-Startup and Agile focus on the Customer Solution;
The additional methodologies have been developped based on the Lean Startup approach. They can all be seen as special implementations of the Lean Startup approach applicable in different situations on how to shape the idea.
On top, we are presenting the Lean-Case Canvas which is actually very complimentary to all the other methods. It allows you to pitch all the assumptions of your business model on 1 page and answers the key investor questions on revenue potential, unit economics, profitabibility, cash requirements and what-if scenarios,
Take away: Business Model Frameworks can be put into context along 5 questions. Apply them to pick the right framework for your situation.
Design Thinking vs. Lean Startup vs. Agile Methodology
Many articles dive very deep, describing the different approaches in meticulous detail but not giving enough practical advice about which one to choose for which situation. However, we want you to look at the more significant ideas of each model to help you decide on this common perplexity.
Design Thinking is how we approach customer problems; Lean Startup is our framework for developing, testing and learning our way to find the right customer solutions, and Agile is how we make and scale our solution. The diagram below explains this by differentiating between the customer problem and customer solution perspective.
To that end, we will describe the three approaches and show you how they are interlinked together.
Take away: The customer’s problem leads to design thinking to create ideas to solve a problem, the selected idea leads to Lean Startup to develop the idea into a business model solution, the defined business model leads to Agile to build a scalable solution
What is Design Thinking?
Design Thinking is about your ability to explore and approach the customer problem. It starts with Empathizing with the customer, Defining insights and opportunities, Ideating with idea generation techniques, Prototype the idea to make it tangible, and allowing users to finally Test the prototype with real users to validate its effectiveness.
Donald Norman, the author of The Design of Everyday Things, describes a designer’s discontent with the first idea. Design Thinking is simply exploring those problems from our buyer personas, role objectives, decisions, challenges, and pain points. Design Thinking is a mindset that helps us do it better and is suited for complex problems vs. complicated problems. What makes a problem complex? In complicated problems (e.g. a heart surgery), you know the solution but the execution might not be simple. So, what makes a problem complex?
Take away: Design Thinking is a people oriented approach exploring ideas to solve a complex customer problem
What is Lean Startup?
Eric Ries pioneered the idea of Build-Measure-Learn in his book "The Lean Startup". It is a learning and feedback loop for establishing how effective a product, service, or idea is and doing this as quickly and cheaply as possible.
Lean Startup is a Business Model Framework which follows 4 steps to use the Build-Measure-Learn feedback loop:
Step 1: Plan your experiment: learn, measure, and build – including developing a formal hypothesis.
Step 2: Build a minimum viable product, and test it.
Step 3: Measure the results against your hypothesis to decide whether you can develop a viable business around your product.
Step 4: Learn from your results, and decide whether to persevere or pivot.
Then, cycle back to the beginning, and keep on going around the loop as you develop your product.
The biggest advantage of this technique is that it minimizes the risk and cost of creating products or services that no one wants and helps you "zero in" on something that customers will embrace.
Feedback plays a critical role in every industry, and it is remarkably essential in the case of startups. After transforming ideas into products, startups focus on comprehending how the customers or the market respond to their products and evaluating whether they should continue or just cut their ends and run. Having a feedback mechanism will help in making this happen.
The Build-Measure-Learn cycle is a feedback loop that is one of the Lean Startup methodology’s core components. Its goal is to turn uncertainties, assumptions, and risks into knowledge or “sure things” that will eventually guide organizations and businesses towards progress.
In the Build phase, the startup’s goal is to build or develop its MVP – “minimum viable product,” or the bare minimum product that can be built to test several assumptions or the theory formulated – as quickly as possible. It requires faster integration by using techniques like unit tests, Just in time scalability, or refactoring.
In this Measure phase, the startup must then determine whether real progress is being made or not, and this involves measuring the results obtained from the experiment performed during the BUILD phase. In this phase, analysis is the most critical task. It varies from adopting methods like funnel analysis, cohort analysis, split test, etc.
In the Learning phase, the startup will have to decide based on the estimations gathered: should it “persevere,” or should it “pivot”? Persevere means carrying on with the same goals. At the same time, pivot involves changing or shifting some aspects of the product approach. In the learning phase, accountability and ownership are critical aspects. Methods like smoke tests and questions like five whys should always be considered to learn the product faster.
Take away: Lean Startup is focused to build a solution for a problem. It applies a more actionable Testing Cycle Learn-Measure-Build with stronger metric focus than Design Thinking.
What is Agile Methodology?
Agile methodology is geared to the question "how to build and scale your solution". It is a type of project management process, mainly used for software development. Demands and solutions evolve through the collaborative effort of self-organizing and cross-functional teams and their customers.
The Agile methodology is a collection of principles that value adaptability and flexibility. Agile aims to provide better responsiveness to changing business needs and therefore focuses on enabling teams to deliver in workable increments.
A typical agile cycle integrates six steps,
The Agile Manifesto
Agile is based on the the values and principles of the Agile Manifesto created in 2001, in a snowy, ski lodge in Utah, by a group of industry practitioners. It refelects the response to the inadequacies of traditional development methods such as the Waterfall method. The four foundational values of the Agile Manifesto drive
Following these values, this means that developers need to constantly improve and innovate their products to keep on top of the game — and the linear, sequential approach of the Waterfall method just wasn’t cutting it.
Take away: Agile is focused to build a scalable solution in an interative approach and values people over process.
Connected Playbook: Design Thinking, Lean Startup, and Agile Methodology
The biggest challenge for innovators and managers seems to be that they don't know when to apply which Business Model Framework and when to switch between them. So, how do the 3 methods link, overlap or complement each other?
Let's summarize some major take-away points which we learnt:
Using these learnings we can combine the 3 methods very nicely in one end-to-end chain to solve customer problems and build a solutions
Take away: Design Thinking + Lean Startup + Agile complement each other nicely
We can summarize this very simply: The customer’s problem leads to design thinking to create ideas to solve a problem, the selected idea leads to Lean Startup to develop the idea into a business model solution, the defined business model leads to Agile to build a scalable solution
Lean-Startup based Frameworks
Now, let's dive one level deeper and address - what we call - Lean Startup based Frameworks. Models which help you to shape the idea better which is at the core of the Lean Startup project.
Now, let's dive one level deeper and address - what we call - Lean Startup based Frameworks. These are Business Model Frameworks which help you to shape the idea / MVP better which is at the core of the Lean Startup. The major frameworks which we look at are.
The Business Model Canvas vs. Lean Canvas vs. Lean Analytics
Before describing each approach in more depth, we are starting with a comprehensive comparative overview of the Business Model Frameworks Business Model Canvas vs. Lean Canvas vs. Lean Analytics, We are describing the different targets and users, highlight the focus of each methodology on Customer/Product/Market as well as Execution and Financials and describe how each framework strives to achieve competitive adbantage and in which situation it could best be applied.
Business Model Canvas/
Value Proposition Canvas
New and existing businesses
Startup businesses purely
New and existing businesses and startups
Businesses, Entrepreneurs, Investors, Consultants, Advisors
Entrepreneurs, Accelerators & Incubators
Focus on Customer/
Focus on value proposition, customer segments, channels and customer relationships for the business
Value Proposition canvas complements Business Model Canvas going into depth on value proposition and customer segments
Focus on Product and Market perspective rather than customer segments because startups have no known or tested products to sell (adapted from Bus. Modell Canvas)
Focus on which business (eCom, SaaS, Media, Content ..) and which growth stage (from Empathy to Scale) you are in - following a Build-Measure-Learn approach based on data
Focus on Execution
Focus on business components Key Partners, Key Resources, Key Activities of the business to support the implementation process
Focus on the problem, a proposed solution and the channels to achieve the solution
Focus on the “One Metric That Matters” (OMTM) which depends on the stage of the business to drive improvements in iterative steps
Focus on Financials
Only basic description of revenue streams and cost structure (no methodological support)
Only basic description of anticipated revenue streams, cost structure and Key Metrics (no methodological support)
Requires understanding of business model logic and definition of key performance indicators incl. OMTM
(KPIs explained for various business models)
How to stay/become competitive
Emphasis on value proposition in quantitative and qualitative terms as way to stay smart in the market
Emphasis whether the business has an unfair advantage over the rest and how to capitalize on it for better grounding
Emphasis to establish a competitive business which must drive you and your company to improve the OMTM
To drive candid understanding, creativity, discussion and constructive analysis of an existing business
To drive a problem-solution oriented approach to develop a solution step-by-step for a startup or project idea
To drive the improvement of Key Performance Indicators (KPIs) in an iterative approach
Book: Business Model Generation
Book: Value Proposition Design
Book: Running Lean
Take away: Each of the Lean Startup based approaches pursues the same idea in shaping the idea/business solution but significantly differs in its approach.
Why use the Business Model Canvas and Value Proposition Canvas?
Based on Eric Ries Lean Startup approach, Alexander Osterwalder initially developed the Business Model Canvas Examples. It is a great way of shaping an idea - mapping it out, allowing it to be understood, tested and improved.
Later on, Osterwalder designed the Value Proposition Canvas as a natural extensuon of the Business Model Canvas. It's a more detailed look at the connection between the Customer Segment and Value Propositon part of the broader Business Model Canvas. Customer shares and value recommendations.
The BMC and the VPC provide a framework for innovation. Both tools are single pages which show how all parts of a business work together for success. The tools allow companies to unite their innovation roadmap under a clear picture showing where it is today and where it could be tomorrow (and how it gets there).
The Canvas Business Model shifts innovation from the 'in theory' phase to the solution phase. Let's take a closer look of how to use them.
How the Business Model Canvas Template works
The Business Model Canvas Template is a single page with nine connected boxes, which show how all parts of your business work together for success. It can be sketched anywhere – on a whiteboard, napkin or notepad.
Filling one in should not take more than 1 hour.
How to fill the Business Model Canvas
Blocks of the Business Model Canvas should be filled in one by one in the following order:
Business Model Canvas Examples
Let's understand the benefits of the Business Model Canvas by providing some benefits and examples.
1. Business Model Canvas is focused - It explains how to get product to customers. It also gives you a competitive opportunity to start a profitable business through product innovation and setting up your business well.
2. Business Model Canvas is clear and concise - It helps you plan the MVP journey so you can easily change as you go. Imagine doing that in a 100-page document! It is useful for easy communication with your team, investors, partners, and employees to get on board with your vision.
3. Target customer needs - The canvas of the business model allows you to think outside your product. When you think about how you sell your product, what kind of amenities you need, and the different customer segments you can serve, the business becomes clear.
4. Reduces the risk of failure - The business model canvas guides you through the required implementation steps to bring your idea to market. Linking the points between your value proposition + futures segments and + income streams is a great addition to your marketing strategy, positioning, or sales strategy.
5. Scientific framework that works - Business model canvas is an approach that is sought not only by start-ups but also by innovation in large companies. Nespresso, Nestlé's wholly-owned subsidiary, is a prime example of a powerful business model. It changed the coffee industry’s face by turning a commercial business (selling coffee through sales) into a fixed income business (selling real estate through direct channels).
Take away: Business Model Canvas Template is a single page concept for existing businesses which show how all parts of your business work together for success.
What is the Value Proposition Canvas?
The Value Proposition Canvas is a tool used to ensure that a product or service is focused on its values and needs.
It's a detailed look at the connection between two parts of Osterwalder's broader business model, Canvas: the value proposition segment (what you offer your customers) and their customer segments (who your customers are). It is a a great tool for understanding how customers make decisions, and therefore helps to create offers that they will find appealing.
The Value Proposition Canvas can be used when an existing product or service needs to be updated or when a new offering is developed from scratch.
How to fill the Value Proposition Model Canvas
The Business Model Framework Value Proposition Canvas consists of three components: .
A customer profile should be created for each customer category as each department has specific benefits, pains, and functions. The customer canvas paints a more detailed picture on
A customer profile must be created for each customer category, as each category has certain advantages, pains, and functions. Pains and Gains might not seem rational, but they’re very powerful in decision making.
Value Proposition Map
Having explored customers and their motivations, you can get creative in describing the Product Canvas with
Linking value proposition and customer profile
Focusing on Gain Creators and Pain Relievers give us the best possible chance of making a sale. This is why rating each of them and linking them to the customer benefts is the most crucial task. Qualification is achieved when the value proposition’s products and services map to the customer gains and pains.
Business Model and Value Proposition Canvas – How they link
The Value Proposition Canvas was initially developed as a framework to ensure that there is a fit between the product and market by zooming in on two elements of a business model: the value proposition segment (what you offer to your customers) and the customer segments (who your customers are). Later it turned into its own useful proposition
Take away: The Value Proposition Canvas complements the Business Model Canvas by zooming in on two elements: the value proposition segment (what you offer to your customers) and the customer segments (who your customers are).
What is a Lean Canvas?
The Business Model Framework Lean Canvas uses the same 9-block concept as the Business Model Canvas, except that they are somewhat tailored to the needs/goals/requirements of startup. The Lean Canvas is the perfect one-page format for researching potential business models. The blocks guide you through logical steps starting with customer problems through the unmatched advantage (perhaps the most difficult block to answer).
What is Lean Canvas Methodology?
The Lean Startup methodology suggests that every startup is a huge experiment that strives to answer a question. The mystery is not "Can this product be constructed?" Alternatively, the questions are "Should this product be produced?" and "Can we construct a sustainable venture around this set of products and services?"
This analysis is more than just a customary examination. If it is flourishing, it allows a manager to get started with his or her operations: enlisting early adopters, adding employees to each further experiment or iteration, and eventually building a product. By the term that product is ready to be shared broadly, it will already have customers. It will have solved real problems and offer specific blueprints for what needs to be built.
Blocks should be filled in one by one in the following order:
Take away: The Lean Canvas is the perfect one-page format for researching potential greenfield business models and ideas
Lean Canvas Examples
Let's understand the benefits of the Lean Canvas by providing some examples.
FAST - Instead of creating a business plan that takes several weeks or months, you can outline different business models in one a few hours.
PORTABLE - It's easier to translate a business model from one page to another, which means that more people read it and update it more frequently.
CONCISE - With Lean Canvas, you can brew the essence of your product. You have 30 seconds to get investors' attention on a metaphorical promotional tour and 8 seconds to grab the attention of customers on your landing page.
EFFECTIVE - Whether you're investing with investors or providing updates for your team or board, you can use our established viewing tools to track and communicate your progress.
The chart below defines how you iterate in the Lean-Canvas approach by identifying the most endangered parts of your model and develop relief strategies and by testing continuously with experiments, your product/business model, the risks, and develop mitigation strategies.
What is Lean Analytics?
Lean analytics is a great method to streamline your sales funnel. The core idea behind focuses on 2 questions: by knowing the type of business you are in and the stage you’re at, you learn how track and optimize the most important metrics that matter to your business right now.
The Lean Analytics book by Yoskovitz and Croll describes 5 lean analytic stages every startup goes through:
Each stage contains a “gate” that startups must reach to proceed to the next one. Looking at the 5 Stages of Lean Analytics, product/market fit is achieved at each stage.
Take away: Lean Analytics is a great method to streamline your sales funnel. The core idea behind focuses on 2 questions: by knowing the type of business you are in and the stage you’re at, you learn how track and optimize the most important metrics that matter to your
Lean Financial Frameworks
If you closely look at all the Business Model Frameworks presented above, they are falling short when it comes to answer the key financial questions of decision makers. Adding the capability of creating a simple back-of-the-envelope calculation, a traction model or a sophisticated business model and presenting it on one page, increases the trust in your business model significantly and gives decision makers the metrics which matter without waisting your time to create convoluted and errorprone Excel sheets.
Pioneered by Eckhard Ortwein and build on Steve Blank's Customer Lifecycle Ephany, the Lean-Case methodology is based on understanding the concept of the customer customer lifecycle which has 2 stages
To build your own lifecycle (e.g. for a SaaS Business model), you should specifically be able to answer 3 key questions:
With those answers in mind, Lean-Case becomes a "lean" business plan simulator that allows you to model the customer lifecycle model of your business so that you can
The presentation of the business assumptions on 1 page is what we call the Lean Case Canvas.
The 4 key business questions which investors ask provide the framework for this training:
In particular understanding the unit economics - if Customer Lifetime Value (CLTV) is significantly higher than Cost of Customer Acquisition (CAC) is relevant for funding decisions.
If unit economic work well, it is great to spend money on scaling your business. Most Excel plans do not answer this question and often investors invest without an understanding of unit economics, thus financing incorrect propositions.
You can experience how to browse and create a Lean-Case here.
Take away: Lean Case allows you to model the customer lifecycle model of your business to understand the key assumptions and metrics about your business, present and explain them LOGICALLY on just one page and answer the key business questions which decision makers have.
Well, we hope that we achieved what we promised. You should now have a good idea when to apply which business model framework. Of course, we invite you to trial Lean-Case as a new complimentary methodology in the space. Find a training documentation here.
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