Paint a robust yet lean picture of an idea on a canvas to help those seeking to understand the idea and the value of the idea.
—Mario Moreira
When an idea flows into a company, there needs to be ways to express the idea in a meaningful yet concise way without bulk and extensive time commitment. Within an Agile context, limiting the amount of time spent on documenting the idea upfront is recommend since the idea has not yet been committed for work. In other words, why invest a lot of time into something that may not be worked on?
When you include too much information about the idea, it can be overwhelming and appear too certain. On the other hand, including too little information can make the idea feel ambiguous. The challenge is the uncertainty is what you have the most of upfront. Therefore, spending a lot of time attempting to prove an idea is valuable right upfront is a fool’s errand. Instead, you should look for leaner ways to document the idea in a meaningful way, knowing that discovery and learning are needed to prove its value to the customer.
Canvas Approach to Documenting Ideas
The traditional way to document an idea is write a business plan. There are some elements that can be gleaned from the business plan including the summary or pitch of the idea, financial highlights, and assumptions. Business plans are particularly useful when looking for money to finance an idea. Unfortunately, business plans have a reputation of being laborious because their intent is to prove upfront that the idea has value.
What are the alternatives? There are a number of vision and canvas approaches that are more appropriate for an Agile galaxy where you acknowledge you know less upfront, so the record of the idea should be equally trim. Within this chapter, I will share the Business Model Canvas, the Lean Canvas, and the Customer Value Canvas, designed specifically to support your focus on identifying and capturing customer value.
Before I introduce the canvases, it is important to know the context of where to apply a canvas. Following the enterprise idea pipeline, the Record stage is where to document the new idea in the canvas, as illustrated in Figure 13-1. In Chapter 11, I wrote that an idea can be written freestyle, as a hypothesis, or alternatively using a canvas. The key is to keep it meaningful, yet lean.
Figure 13-1. Canvas for recording an idea
Once the canvas is drafted, it should be visible and transparent to everyone in the enterprise. Just as each idea should include a description, persona or market segment, the value, the risks of doing the idea or not doing the idea, and assumptions being made, so should the canvas.
Business Model Canvas
In order to provide context to the Lean Canvas, you need to recognize the Business Model Canvas. The Business Model Canvas was one of the initial leaner ways of representing information that was typically found in a business plan. The Business Model Canvas was originated by Alexander Osterwalder based on his earlier work in business model ontology.
This canvas uses the premise that a simple business model can describe how an organization creates, delivers, and captures value. This canvas approach was created to provide a one-page, straightforward way to map business elements to a proposed business idea or strategic plan to help guide the direction of an enterprise.
Here is a quick walkthrough of the Business Model Canvas using the illustration provided in Figure 13-2. The value propositions are the ideas of what you are offering the customers. The customer segment consists of the customers or users you want to serve. The customer channels are ways to reach customers. The customer relationships are the ways you want to build relationships with customers within each segment.
Figure 13-2. Business Model Canvas
The revenue stream is a calculation of revenue of how much money you can make based on what the customer will pay. Key resources are those people and equipment needed to turn the idea into reality. Key activities are those activities that turn the idea into reality. Key partners are those people outside your team or enterprise that you rely on. Cost structure includes the expected costs of building the proposition.
Within a Business Model Canvas context, you can start anywhere. I recommend you start with the proposition and work from there. However, if you are targeting a specific customer segment, then this could be a good place to start. In any case, the point of having all of the business blocks in front of you is that you can organically consider any or all of the areas in the same work period without specifically focusing on a particular area.
Lean Canvas
The Lean Canvas came about as an experiment by Ash Maurya. He felt the Business Model Canvas was effective for an existing business that focused on existing key partners, customer relationships, and business direction. However, Maurya was looking for something that helped better capture hypothesis thinking associated with a new problem or solution in a startup environment. He investigated Rob Fitzpatrick’s four steps to epiphany and adapted the Business Model Canvas to form the Lean Canvas.
Agile Pit Stop
The Lean Canvas is a more actionable and entrepreneurial business plan adapted to focus on immediate problems and opportunities.
The Lean Canvas is a more actionable and entrepreneurial-focused lean business plan. It was adapted to focus on more immediate problems and opportunities and look for their solutions. The culture behind the enterprise idea pipeline is meant to support the immediate evaluation of current problems or opportunities. The Lean Canvas provides meaningful, yet concise information suited for an Agile culture.
The Lean Canvas is a one-page, straightforward way to map business elements to a problem. It gets established during the Record stage. It is particularly useful in the context of the enterprise idea pipeline as ideas are meant to evolve. The Lean Canvas is meant to evolve and pivot as new information is learned.
Here is a walkthrough of the blocks in the Lean Canvas, illustrated in Figure 13-3 as guidance. The Problem block is where you identify what you are trying to solve. Include the top three problems related to an area. This block also asks you to consider existing alternatives in case an existing solution is currently available in-house or on the market. The Customer Segments block shows the target customers or users and asks you to consider early adopters. The Solution block defines how to address the problem for the customer segment being targeted.
Figure 13-3. Lean Canvas
The Unique Value Proposition block asks how you are different from your competitors. This block also asks for a high-level concept on how your solution fits into the larger picture. Some call this your elevator pitch. The Unfair Advantage block consists of the plusses you have over your competitors. The Revenue Stream block shows the potential revenue generated. The Cost Structure block reveals the expected costs associated with the solution. The Key Metrics block includes the metrics that will show progress toward the outcomes being looked for. The Channels block focuses on ways to reach the customer segments.
Applying the Lean Canvas
This section provides you with an example of working with the Lean Canvas. The PO and those who have an investment stake (sales, marketing, and so on) in solving the problem may be collaboratively involved in building the Lean Canvas. Once built, the canvas should be shared during the Reveal stage to determine if the idea is high priority enough to move forward with.
Work on the Lean Canvas typically starts by identifying the problems you have in an area. You may start with the Customer Segment block if there is a problem with a specific customer and you want to first learn about the customer segment. For this example, it will start with the problem.
Figure 13-4 shows an example of how you and the stakeholders may work through a problem using the Lean Canvas. The group collaborative discusses the problems, identifying three top challenges recorded in the Problem block. This includes customers not being able to access their money when they are out, losing customers, and having customers get upset when they have to go home or to the bank to access their money. They consider existing alternatives such as using the computer or sharing another bank’s mobile network.
Figure 13-4. Lean Canvas in action
From there, the team explores the Customer Segments block and realizes that the problems impact many of the existing customers and are a barrier to getting new customers. The team identifies the Gen Y customers as early adopters since they tend to be willing to adopt new solutions, particularly mobile-related solutions, more quickly. They consider their Unfair Advantage block and recall that they have a large customer base with historically high customer satisfaction.
Agile Pit Stop
When considering your customer segment, it is important to identify early adopters as they are often more willing to use early versions and provide feedback.
The team decides to consider their Unique Value Proposition block and recognizes that security protocols have made banking secure and the pervasive access using ATMs and computers has made it special for their customers. The team collaboratively crafts a simple elevator pitch of how they want the bank to be perceived: “Bank from wherever you are knowing your transaction is safe and secure.”
The team decides that the solution should be to build a mobile application for their customers. They work on key metrics to help them better grasp if progress is being made once the mobile application is released. The team collaboratively considers the Channels block to determine where they can make their customers aware of the new mobile application.
They conclude by walking through the high-level Cost Structure block, which includes servers, integration tools, development time, and marketing. Finally, they consider the Revenue Streams block, where revenue can be made with new customers or avoided by reducing customer attrition.
Customer Value Canvas
Just as the Business Model Canvas is an adaptation toward leaner business plans, the Lean Canvas is an adaptation of the Business Model Canvas to solve more immediate problems. The Customer Value Canvas is a change of the Lean Canvas with a singular focus of being customer-value-driven (CVD) and incorporating elements of value (CoD, feedback loops, personas, and so on).
The Customer Value Canvas is an actionable way to document and evaluate an idea based on the first step in learning customer value. It was adapted to focus on ideas to determine their value and align with a discovery mindset (sometimes referred to as the Discovery Canvas). It is, for this reason, why this canvas is a good approach for the enterprise idea pipeline. The Agile culture behind the enterprise idea pipeline is meant to support the immediate evaluation of meaningful and concise ideas as they come in.
The Customer Value Canvas is a one-page, straightforward way to map business elements to a proposed idea specifically focused on getting to customer value. It gets established during the Record stage. It is particularly useful within the context of the enterprise idea pipeline as ideas are meant to evolve. The Customer Value Canvas is meant to pivot as new information is learned (for example, challenged assumptions, feedback from experiments, iterations, increments, and demonstrations).
Here is a walkthrough of the blocks in the Customer Value Canvas illustrated in Figure 13-5. The Opportunity block is where you state the problem you are trying to solve or the new idea you want to explore. This block also asks you to consider existing alternatives in case an existing or partial solution is currently available in-house or on the market. The Customer Personas block contains the customer or user groups you are targeting.
Figure 13-5. Customer Value Canvas
The Idea as Hypothesis block asks you to create a hypothesis that affirms you are approaching your idea in a more scientific and data driven manner. The Assumptions and Risks block asks you to include assumptions and risks you identified as they relate to the idea when calculating CoD and duration. The Feedback Loops block includes the ways you plan to capture feedback to validate you are moving in the direction of customer value.
The Unfair Advantage block tells you what advantages you have over your competitors. The Channels block shows ways to reach the customer personas. The Cost of Delay and Value Score block includes the type of cost of delay (CoD), the CoD per week, and the CoD divided by duration (CD3) as the value score. The Cost and Duration block shows the expected costs associated with the solution, including an estimate for dream duration. The Key Metrics block contains the metrics that show progress toward the desired outcomes and the results once released.
Applying the Customer Value Canvas
This section provides you with an example of working with the Customer Value Canvas. The PO and those who have an investment stake (that is, the product owner constellation) in evolving the idea should collaboratively build the Customer Value Canvas in the Record stage. Once built, it should be shared during the Reveal stage to determine if it is high priority enough to move forward.
Agile Pit Stop
The Customer Value Canvas uses opportunities instead of problems since the idea can be to solve a problem or explore an innovative idea.
Figure 13-6 shows an example of how you and a group of stakeholders may work through an idea using the Customer Value Canvas. The group collaborative discusses an innovative idea or problem. This discussion includes capturing new customers who are mobile-centric and those that can’t access their money when they are out. These details get documented in the Opportunity block. The group members consider existing alternatives and learns they may be able to re-use some code from another group that has built a mobile application.
Figure 13-6. Customer Value Canvas in action
From there, the team explores the Customer Personas block. The team realizes that while Erin the Senior Citizen may benefit from a mobile app, Sunny the Gen X-er will be the primary persona of the idea. The team identifies the David the Gen Y-er persona as an example of early adopters since they tend to be willing to adopt new ideas, particularly mobile-related ones, more quickly. They consider their Unfair Advantage block and realize that they have a large customer base with historically high customer satisfaction along with strong security protocols.
In the Idea as Hypothesis block, the team crafts the idea using a hypothesis format. They consider their costs and duration of the work in the Cost and Duration block, which includes servers, integration tools, marketing, and a dream duration for development time. Then the Cost of Delay and Value Score block is visited where the cost of delay is established and the value score is calculated using CD3. Because there is very limited data and information at this point in the idea life cycle, they document the assumptions being made and known risks in the Assumptions and Risks block.
The Feedback Loops block is added to include customer input and feedback during the Refine stage and throughout the Realize stage. The team works on key metrics to understand if progress is being made while building the mobile application and once it is released. The team collaboratively thinks through the Channels block, determining where they can make their customers aware of the new mobile application.
The Living and Pivoting Canvas
When using any of the canvases discussed in this chapter, you should consider them all living. They should live as long as the idea is deemed valuable and should be archived when it is clear that it will not float high enough in the Reveal pool to merit attention.
The idea on the canvas is the manifestation of an actual working product or service as it flows through the enterprise idea pipeline. The canvas is the record for the idea and, therefore, should evolve as the idea evolves. A canvas is meant to be updated as new information changes the idea.
For the Lean Canvas and Customer Value Canvas, the canvas should be updated as you work through each part of the 5R or 6R model, assuming the idea continues to be valuable. It should be a snapshot in time for where the idea is to date. However, it is not meant to be a status report of the idea but should reference where more information can be found.
Are You Painting Your Canvas of Ideas?
Just as the Business Model Canvas is an adaptation toward leaner business plans, the Lean Canvas is an adaptation of the Business Model Canvas to solve more immediate problems. The Customer Value Canvas changes the Lean Canvas for a singular focus of being customer-value-driven and working with the elements of value (CoD, feedback loops, personas, and so on). I strongly recommend that you experiment with the Lean Canvas and Customer Value Canvas to gain personal experience with each one.
What colors are you using to paint your canvas? If you are either using a heavy document like a business plan or providing very little information to make a qualified and quantified decision on what to work on next, consider adapting to a canvas approach. Try it once. Adapt it to fit your needs if you find it helps.
For additional material, I suggest the following:
Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers by Alexander Osterwalder and Yves Pigneur, Jon Wiley and Sons, 2010
Running Lean: Iterate from Plan A to a Plan That Works by Ash Maurya, O’Reilly Media, 2012