Lean Canvas—How Will You Measure Success (Metrics)?

Metrics. Even the word can be unnerving. Visions of Six Sigma, Excel spreadsheets and pivot tables.

Image courtesy of artur84 / FreeDigitalPhotos.net

Image courtesy of artur84 / FreeDigitalPhotos.net

And yet, if we don’t measure how we’re doing, how will we know? I mean really know. Whether for fun or profit (or both), it’s helpful to know the score. Picture this: you fly to New York, spend a small fortune to buy tickets to the Seahawks vs. Broncos game, take a cab to the stadium and walk in 10 minutes after kickoff. You buy a beer and a hot dog, find your seats, and sit down. You turn to the guy who’s sitting next to you.

You: “Who’s winning?”
The Guy: “No one. They’re just having fun!”
You: “Why am I here?”

It sounds silly, but we do this sort of thing all the time in business. Sometimes it’s because getting the numbers is hard, but more often it’s because we don’t like the hassle, or we don’t want to see what’s really going on. Sometimes numbers can be scary.

To minimize that fear, Maurya suggests that we need to understand and measure at least a couple of things. The first is to figure out the key customer action that drives value. If you’re thinking about your employment business, you might decide that the key action is weekly participation in your group coaching program. Or attendance at your “Get Hired Now” seminar.

The second thing you need to measure is what Maurya calls your Success Metric: what would you need to achieve to make this target worthwhile? A revenue target? A profit target?

For your employment business, you might say that your success is $100,000 in annual revenue. Or you might say that it is a 90% success rate for people participating in your program. You get to decide what makes it worth it.

That being said, you should decide what makes it worth it. What does success look like in your business and how will you know when you’ve achieved it?



Lean Canvas—How Will You Get to Your Customers?

Image courtesy of KROMKRATHOG / FreeDigitalPhotos.net

Image courtesy of KROMKRATHOG / FreeDigitalPhotos.net

We’re almost done with your Lean Canvas. So far, you have a great idea about your customers, their problems, your solution, your unique value proposition, and your price. Guess what! If you can’t get your solution in front of enough customers, none of the work you’ve done might matter.

That’d be a shame.

So how do you get in front of your customers, or help your customers get in front of you? The answer is Channels, paths that will help you find your customers and your customers find you.

There are two types of channels, outbound and inbound. Both are important, so you need to get this right. Here’s a helpful infographic from Mashable, but the essential differences are:

Inbound Marketing:

  • Communication is interactive and two-way.
  • Customers come to you via search engines, referrals and social media.
  • Marketers provide relatively more value.

Outbound Marketing:

  • Communication is one-way.
  • Customers are sought out via print, TV, radio, advertising and cold calls.
  • Marketers provide relatively less value.

At first, you will probably need to focus on outbound channels. Even though they are harder in some ways, you can learn a lot about what works and what doesn’t from your outbound marketing.

Here are some ways Maurya suggests you get in front of customers:

  • Make a list of people that you know. Ask them if they would be interested in your solution.
  • Ask those people to introduce you to others who may be interested in your solution.
  • Create a teaser page with an opt-in and, from that, create an email list. Then email them about your solution (more about how to do this in an upcoming blog post, but I like Aweber, LaunchRock and LeadPages).
  • Ask your blog readers if they are interested in your solution or know someone who might be.
  • Talk about your solution on Facebook, LinkedIn, and Twitter. (Be careful about being very salesy—remember that people don’t like to be “sold” but they love to buy.)
  • Buy Google Adwords and Facebook Ads.
  • Cold call people you think might benefit.
  • Sponsor groups or events where potential customers will see you and can get to know you.
  • Content marketing.
  • Hiring a sales force.

So which channels do you think might help our hypothetical employment assistance business find Bill Johnson or help Bill Johnson find us?

First question I would ask: where is Bill now? In real life, is he going to any networking meetings? Job seeker support groups? Is he part of the Kiwanis Club? Who do you know that Bill knows? Online, is he on Facebook? LinkedIn? Craigslist? Does he tweet? When he is looking for help with his job search, what words does he Google?

As you think about what’s going on in Bill’s life now, you’ll have a much better chance of picking the right channels, reaching him and being able to share your solution.

Lean Canvas—Show Me the Money

Today is a big day. An important day. One of the most important in the life of your business. Today you get to decide how much money you are going to charge your customers for the solution to their problem. Or at least begin the process of deciding.

You’ve got your Unique Value Proposition nailed down. Now let’s turn your attention to the Lean Canvas canvas box marked “Revenue Streams” and figure out what your pricing model should be.

Image courtesy of jannoon028 / FreeDigitalPhotos.net

Image courtesy of jannoon028 / FreeDigitalPhotos.net

Why are we talking about pricing now? Because pricing is actually part of your product. Your price will help to define your product in the mind of your customer and determine who your customers will be.

It’s not easy, though. There are lots of variables and no magic answers. According to Charles Toftoy, associate professor of management science at George Washington University, pricing is “probably the toughest thing there is to do.”

To help you in your decision about price, Maurya has some helpful suggestions. First of all, realize that cost-based pricing is a mistake. Cost-based pricing goes like this: It costs me $1 to produce, so I’ll charge 2 times cost. Or 3 times cost. Or whatever. The truth is, it’s irrelevant how much it costs you to produce your solution. When you look at cost-based pricing, you are forgetting the most important consideration: your customers are hiring your product/solution to do a job and fix a problem. They don’t care whether it costs you $1 or $100 to produce. Can you fix their problem?

If cost-based pricing isn’t the right answer, what is? Value Based Pricing. The real consideration your customer has is the value of your solution, and that value relative to your competitors’ offerings. In other words, if I have a problem, what will it cost me to hire your solution to fix it? What will it cost me to do something different to try to fix it? And remember, cost doesn’t always mean or even necessarily mean price.

Ben Guild recently wrote a blog post about selling TV’s three different ways: FOBO, Craigslist, and Fulfillment by Amazon. Craigslist turned out to be the place where he made the most money (net profit), but there were also considerations of inconvenience, speed of transaction, security, etc. In the end, Guild suggests FOBO has the right combination of factors to be the choice for most people. The profit was higher with Craigslist, but the cost was least with FOBO. Your customers will consider price as well as other factors. How convenient will it be? How fast can I get it? Is assembly required? Is it safe? How confident am I that this solution will really solve my problem?

As you are considering your business model, look at similar solutions in your marketplace. You have a Unique Value Proposition, but you know who your competitors are. Let’s look at our business designed to help people find work after 60. Who is doing that?

Honestly, I don’t know that market well enough to know who all the players are. But let’s assume that one option is the in-person career coach. According to this article, a career coach can start at $100 per hour and can costs thousands. According to this article, a resume and cover letter writing service can set you back $250 to $1000 or more.

To solve our hypothetical job-seeker Bill Johnson’s problems, he may need something like career coaching, but perhaps needs assistance with resume and cover letter writing as well. Perhaps a pricing model of $500/month service X 3 months with a guarantee to keep working with someone after if they haven’t found the right job might work. Or a $2500 flat fee.

On the other hand, Bill might just need a good book. Peggy McKee over at CareerConfidential.com has an ebook she’s selling for $1.99. Maybe we could write an ebook and charge $1.98.

Bottom line: your business model will determine your competitors, and your competitors’ solutions will set the price anchors in your customers’ minds.

More helpful pricing guidance: keep your pricing as simple as possible. Keep your early adopters in mind and consider what they are looking for. Eventually, you may want to go with a more complex pricing model. Today, keep it simple.

So that’s it. Or at least enough to take a first crack at it. What are you going to charge for your product or solution?


Lean Canvas—Standing Out from the Crowd

Here is a Google doc of the Lean Canvas you can use for yourself or to play along at home.

Now that you know about your prospective customer, their problems, and your potential solution, it’s time to consider how you are going to share your offer with the world.

How do you get noticed? How do you stand out so you can have a sales conversation with your prospective customer?

According to Ash Maurya, you can figure this out by creating your Unique Value Proposition. You may have heard of the “Unique Selling Proposition,” a phrase coined by the great Rosser Reeves. It’s the reason your customer should consider buying from you as opposed to your competitor. I sort of like the phrase Unique Value Proposition, because it focuses on the customer’s perception of value. As I’m sure you know, people don’t like to be “sold” something, but they love to buy.

You begin with a guess. What would make the customer want to pay attention to you? Think about your own experience. Do you use a cloud storage service? Dropbox? Skydrive? Google Drive? Copy? Box? How do they distinguish themselves and how did they get you to pick them?

Ideally, you want to get people’s attention and attract them to you by making a unique offer, a promise to fix their problem.

To create your UVP, Maurya recommends that you consider your customer’s biggest problem and combine that with a “finished story benefit.” A “finished story benefit” is what things are going to look and feel like once your customers have bought/experienced the benefit of your solution.

Let’s take the example of our intrepid Bill Johnson. He’s a retired auto worker who needs to reenter the workforce, but he’s not having a lot of luck. We said before that his biggest problems are:

  1. Bill doesn’t know how to find the contact information for the appropriate person with hiring authority.
  2. Bill doesn’t know how to get over or around the road blocks employers set up to thwart job seekers from contacting them directly.
  3. Bill doesn’t know how to communicate the value that he offers a potential employer.

We combine the knowledge of Bill’s problems with the fact that, in the end, we want Bill to find meaningful and rewarding work, work he loves.

Before we get to the UVP, Maurya cautions entrepreneurs to avoid empty words such as “simple,” “fast,” and “easy.” The easy button may work for Staples, but it’s unlikely to work for you. Most customers have a BS detector on high at all times, and the more you sound salesy the less likely your potential customers are to listen or believe you.

Image courtesy of Stuart Miles/ FreeDigitalPhotos.net

Image courtesy of Stuart Miles/ FreeDigitalPhotos.net

To aide in creating the UVP, Maurya borrows from Dane Maxwell and shares the formula:

End Result Customer Wants + Specific Time Period + Address the Objections

In an ideal scenario, you could frame your UVP with those segments. Thus, “Fresh, hot pizza in 30 minutes or less or it’s free.” Tom Monaghan captured a large segment of the pizza market with that UVP.

In the case of our hypothetical company we’re creating to help people like Bill, we might try something like:

Get hired in 90 days (or I’ll keep coaching you for free until you do).


30 days to the skills you need to make the right contacts, ace the interview and get the job you really want.

Or something like that. You will probably go through several iterations of your UVP, and the only way to know for sure what’s going to resonate is to test it.

The last thing you need to conquer is the High Concept Pitch. That’s a common technique in Hollywood (Alien is like Jaws set in space). The high concept pitch is also common in the startup/tech world (Youtube’s founders described it as Flickr for video).

For our business helping folks find jobs, we might say that our business is “like the career services center at college, but for people 60 years old and up.”

Or “It’s the career coaching equivalent of Angelo Dundee guiding Muhammed Ali through prize fights with Foreman and Frazier.”

Those would need some refining, of course, depending on what business model we chose, but I think you probably get the idea. The best high concept pitches are a single sentence and immediately give people an understanding of what you’re trying to accomplish.

So here’s my question for you: What’s your unique value proposition? How are you standing out from a crowd? And if I asked you what your business is like, what would you tell me?

More Important than Startup Success?

I lost a friend today. Unexpectedly. I had just talked to him yesterday, and everything seemed good.

I recently read a blogpost about the top 5 regrets dying people have. I changed them from regrets to encouragements and wrote them on my bathroom mirror with Dry Erase markers.

5 EncouragementsThey are:

1. Have the courage to live a life true to yourself, not the life others expect of you.
2. Don’t work so hard.
3. Have the courage to express your feelings.
4. Stay in touch with your friends.
5. Let yourself be happy.

Lean Canvas—Don’t Turn Your Business into a Swiss Army Knife

Now that you have clarity about your customers and their problems, you get to focus on creating a solution. Since you probably had a “solution” in mind before you started this process, let’s look closely to make sure it’s reasonable considering your customers and their problems.

Image courtesy of posterize/ FreeDigitalPhotos.net

Image courtesy of posterize/ FreeDigitalPhotos.net

To do that, we’ll take another look at Bill Johnson (whom we discussed here and here). He’s the retired auto worker who has to get back into the workforce, and he’s having trouble. Specifically,

  1. Bill doesn’t know how to find the contact information for the appropriate person with hiring authority.
  2. Bill doesn’t know how to get over or around the road blocks employers set up to thwart job seekers from contacting them directly.
  3. Bill doesn’t know how to communicate the value that he offers a potential employer.

There are lots of ways you could design a company to help Bill. You could create a one-on-one in person coaching program. You could design a virtual group coaching program. You could create a Udemy course to teach him what he needs to know. You could write an ebook. You could create an app or a membership site. You may try all of them eventually, but you have to start somewhere.

Here’s where entrepreneurs get into trouble. Most entrepreneurs envision a solution and begin to construct a product to deliver their solution. They ponder their product, dream about their product, talk about their product. And as they do, they start to think, “Wouldn’t it be nice if…”

Let’s say I want to construct a virtual group coaching program to help people like Bill. I can conduct my meetings for free using Google Hangouts or Skype. But it’d be nice if I could integrate a transcription service into the virtual meeting platform—one that could automatically email meeting notes to everyone after our virtual get-togethers. It would also be kind of cool if I could integrate my virtual meeting platform with monster.com, the local newspaper want ads, etc.. That way we could take a look at real-time classified ads and talk about overcoming the hurdles that thwart job seekers. And it be awesome if we were able to integrate LinkedIn to our virtual meeting platform…

You see what’s happening? Feature creep. We confuse what would be nice to have with what we need to have. What we need to produce, at least early on, is what is referred to in the startup world as a “minimum viable product.” That is the smallest product that will deliver value to your customer, something that they are willing to buy.

Would someone invest in my virtual coaching program if I just used Google Hangouts or Skype without integrating monster.com or LinkedIn.com, or without the transcription and email service? If so, then I shouldn’t go chasing the other stuff.

When I want to buy a pocket knife, most of the time what I really want is a good blade. It’s fun to have the corkscrew, the leather punch, the tiny magnifying glass I can get with a Swiss Army Knife, but do I really need those features to buy the knife? Almost always, the answer is “no.”

At this stage in the game, don’t turn your business into a Swiss Army Knife. As an entrepreneur, your job is to focus on that one blade, the blade you’re going to sell, and refine it until people will invest. When you do, you will save an enormous amount of time, money and emotional capital. It’s hard to believe but true: you will invest your emotional capital in your solution. And even if you recognize you’ve built a feature no one wants, it will be hard for you to let go of it. Better to avoid the Swiss Army Knife Syndrome altogether.

So here’s my question for you: given what you know about your potential customers and their problems, what’s the minimum product or service you can produce to turn your prospects into customers? Not that you will always choose to do the minimum, but that’s where you should start.

Bonus: Once you’ve started, you’ll get to know your actual customers well enough so that you won’t waste as much time on a bunch of nonsense they don’t want anyway.


Lean Canvas—Clarity About Customer Problems

Here is a Google doc of the Lean Canvas you can use for yourself or to play along at home.

When you complete a Lean Canvas, Ash Mauyra recommends that you work on Customer Segmentation and Problem Statements simultaneously. You know who you customers are now. What are their problems?

Image courtesy of Stuart Miles/ FreeDigitalPhotos.net

Image courtesy of Stuart Miles/ FreeDigitalPhotos.net

Mauyra recommends that you first list your customers’/early adopters’ top 3 problems, the problems you are going to help them solve. In order to do that, he recommends the 5 Whys method of seeking the root cause.

In the scenario from yesterday’s post, a 5 whys analysis might look something like this:

Problem: Bill Johnson hasn’t found a job.
Why? Because he hasn’t convinced an employer to hire him.
Why? Because he hasn’t had an opportunity to speak to a person with hiring authority and present the value he offers to potential employers.
Why? Because he hasn’t been able figure out who the people with hiring authority are.
Why? Because he doesn’t know how to find the pertinent information.
Why? Because the employers set up road blocks to keep job seekers away.
Why? Because employers don’t have time/don’t see the value in talking with potential job applicants.

There is nothing magical about the number 5, of course. It could be the 4 whys or the 8 whys. The important thing is that you dig until you get a clear sense of what the problems are (or at least a reasonable hypothesis regarding the problems).

Using the example above, we might hypothesize that Bill’s 3 biggest problems are:

  1. Bill doesn’t know how to find the contact information for the appropriate person with hiring authority.
  2. Bill doesn’t know how to get over or around the road blocks employers set up to thwart job seekers from contacting them directly.
  3. Bill doesn’t know how to communicate the value that he offers a potential employer.

The good news? At this stage you could be dead wrong. These might not be your potential customers’ biggest problems. But if they aren’t, when would you rather discover that you’re wrong—today or after you’ve invested countless hours and dollars to create a solution for a problem that doesn’t exist? Finding out you’re wrong that this stage is inexpensive and instructive—you can learn, pivot and grow.

Another way of looking at this, Clayton Christensen says, is to consider the question, “What is the job the customer is hiring you or your product to do?” The premise is that customers hire your product to get a job done. They may already be solving or attempting to solve that problem without you. Alternatively, they may not be doing anything about the problem because addressing it is relatively less stressful than not doing anything.

Given his predicament, Bill might do any or all of the following:

  • Ignore the challenge he’s facing and go to the movies.
  • Go to the library to look up company contact information in the white pages.
  • Pretend he is friends with the hiring manager if he gets the gatekeeper on the phone (“Is Bob there? Tell him it’s Bill.”)
  • Try to make the hiring manager look/feel stupid for not considering a job candidate with Bill’s qualifications.

You get the point. People can do anything. The question you need to ask and answer is, “What are my current prospects doing now (or not doing now) to solve their big problem?”

Soon we’ll be discussing the next components of the Lean Canvas: your solution, your unique value proposition, and your revenue streams.

In the meanwhile, what are your customers’ top 3 problems? How are they addressing (or not addressing) their top 3 problems currently?


Lean Canvas—Clarity About Customer Segments and Early Adopters

Here is a Google doc of the Lean Canvas you can use for yourself or to play along at home.

Ash Maurya is one bright guy. I don’t know him, but his work is smart and useful. His blog—Practice Trumps Theory—is a great resource for entrepreneurs. His gifts to the entrepreneurial world include the Lean Canvas and his book Running Lean.

Image courtesy of ratch0013/ FreeDigitalPhotos.ne

Image courtesy of ratch0013/ FreeDigitalPhotos.ne

As I mentioned in a previous post, Alexander Osterwalder’s Business Model Canvas is one of the go-to resources of the Startup World. Championed by Steve Blank and Bob Dorf in their Startup Owner’s Manual, the business model canvas turns 9 boxes into a way of presenting and digging into just about any business model. One of the foundational concepts of the Business Model Canvas is being aware of and taking action to determine and mitigate risk. 

Ash Maurya takes those nine boxes and changes them up a little bit. His adaptations focus on areas of highest risk. In a way, he’s created a tool that says “PAY SPECIAL ATTENTION TO THESE THINGS! THEY MIGHT KILL YOUR BUSINESS!”

I’m exaggerating a little bit, but not much.

And what are the first two boxes you should be paying attention to? Customer Segments and Problem Statements.

Customers are the people that pay for your service. Sometimes that means “users,” but sometimes it doesn’t. You need to be aware of both customers and users, but don’t confuse one for the other.

Once you have a broad idea of people you want to serve, you need to create a list of possible customers within that list. For example, if you wanted to create a business to help the unemployed and underemployed, it would be helpful to pick a subset of the unemployed. “Everyone” is too large a group, too diverse. So you might break it down into smaller groups. People that took early retirement. People that were laid off. Baby Boomers. People over 60. Whatever the segment, it should be large enough to make the business sustainable, but narrow enough to be able to meet their specific needs.

Once you’ve identified your Customer Segments, you need to determine your early adopters. Who needs your help the most? In the example above, perhaps the people who need your help the most are people over 60 who have worked in areas which did not require special certifications or licensure (e.g. CPA’s, attorneys, etc.)—because they’re likely to have greater challenges when returning to the workplace.

You could further narrow your early adopters to people who worked in manufacturing (e.g. auto plants) and took early retirement, assuming that their pensions would secure their future. Now they find their pensions have been threatened, reduced, or taken away altogether, and they are having to reenter the job force.

Let’s make one up. Bill Johnson is a 65 year old man living in Arlington, TX. He worked on the line building Chevy Suburbans at the GM assembly plant in Arlington until 2007, when he took early retirement. He’s worked hard all his life, standing 8-10 hours a day while on the line. He had some savings, had his health insurance paid for until he became eligible for Medicare, had his retirement package and his pension coming. That was all before the Great Recession. Bill is our early adopter.

Now people have broken their promises to Bill, and he has to get a job. He’s got a wife, a mortgage, a car payment, and medical bills. He’s not exactly sure where or how to look. The Ft. Worth Star Telegram‘s want ads aren’t what they used to be, and there’s so much stuff on the internet it’s all one confusing, depressing blur.

Your homework: Think about your customer segments. Who is your customer? Who is your early adopter? Who can you help the most? Tomorrow we’ll talk more specifically about what your early adopter’s problems are, and how you are going to help.

Lean Canvas—Before You Write a Business Plan, Try This

The Lean Canvas Will Make Your Business Plan Better

I was talking with a friend of mine earlier about what it takes to start a business. We talked about vision, strategies for innovation, funding, market research, etc. Like lots of entrepreneurs, me included, he also said he felt like he needed a business plan, which meant he needed information and a process for creating a meaningful, effective business plan.

Everyone talks about a business plan, but few entrepreneurs actually create them. And when they do, they are usually a lot of wishful thinking designed to get money-loans or investors. The Small Business Administration has a helpful series of articles outlining the contents of the various sections a model business plan that are worth reading.

I have found, though, that before you start your business plan, there are several tools that will make the business plan process much easier and more useful. Some are simple: write down 5 people you know personally that would buy the product or solution you’re selling. Some are more complex: SWOT analysis, PEST analysis, TOWS Matrix.

One of my favorites is the Lean Canvas.

If you are familiar with the brilliant work of Alexander Osterwalder in his Business Model Generation, you will recognize similarities between the Business Model Canvas and the Lean Canvas.

Lean Canvas

Lean Canvas

Business Model Canvas

Business Model Canvas

Differences Between the Lean Canvas and the Business Model Canvas

There are significant differences between the two, of course. The Lean Canvas adds Problem, Solution, Key Metrics, and Unfair Advantage and removes Key Activities and Key Resources, Customer Relationships, and Key Partners. We’ll discuss the reason for these variations this week as we walk through the various aspects of the Lean Canvas and applying them to a specific business.

In the meanwhile: do you have a business plan? If so, do you use it? If not, why not?

793 Simple Tips to Make Things Perfect (Or Not)

Have you noticed the trend? Ever-expanding lists of superbly awesome information!

Don’t get me wrong. I love resources and tips and trends and hints. Love ’em!

The problem is, maybe I love them too much. Some days I’m so busy reading tips I don’t actually have time to implement any of them.


I’m thinking about having a tip of the day that I actually use. Or maybe a hint of the week.

Here are my questions for you:

  • What do you do to manage your content consumption?
  • How do you keep it all straight?
  • How do you decide what to do with all that content?