A Lean Canvas is NOT Enough to Replace a Business Plan

The Lean Canvas captures the overall business model story of an idea, but investors want numbers. I introduced a new model to expand on Key Metrics.

Let me know if this sounds familiar… Say you have a promising new idea. To get the green light to move forward, you are often asked to write an elaborate 30-page business plan, complete with a 5-year financial forecast and an 18-month product roadmap.

I don’t know about you, but most of the entrepreneurs and innovators we talk to hate writing these documents… not because they don’t want to put in the work, but because a lot of this information is simply unknown or unknowable at this stage.

Forcing an elaborate plan as a pre-condition to funding silently kills many ideas out of sheer inertia because they never even get started. More importantly, the world has changed.

Analyzing, planning, and executing used to work in a world where barriers to entry were high and competitors few. But in the new world of continuous innovation, where speed of learning has become the new unfair advantage, we need dynamic models — not static plans.

That is why we created the Lean Canvas.

Meet the Lean Canvas

I’m guessing that since you’re here, you’ve probably at least heard of the Lean Canvas and, hopefully, maybe even use it. Thank you :)

First, there was the Business Model Canvas. While we loved the idea of a 1-page business plan, I found the BMC too company-centric versus customer-centric — and thereby didn’t address what I considered the riskiest assumptions when starting a new project or business.

The purpose of a business is to create a customer.
- Peter Drucker

So I changed a few boxes and came up with the Lean Canvas, which took off (see what’s different).

The power of the Lean Canvas lies in its simplicity.

A design goal when creating the Lean Canvas was ensuring it was accessible to anyone in the company (not just the business folks) because good ideas can come from anywhere.

We tested the Lean Canvas in hundreds of workshops and across thousands of teams to ensure that all the boxes on the canvas were intuitive and easy to understand, and that you didn’t need a business degree or a PhD to fill one out.

That testing paid off…

Today you see the Lean Canvas used, not just by business folks, but also engineers and designers and product managers at thousands of startups, accelerators, and large companies. It is even taught in many of the top business and engineering schools around the world, and I learned recently, even at the high school level, which is amazing to see.

All that was great, but there was a problem.

As we saw more people adopt the Lean Canvas, we learned that the Lean Canvas was still not enough to replace the business plan.

Stakeholders Want Numbers

While the Lean Canvas did a good job of replacing the business model story that you find in the pages of a typical business plan, stakeholders still wanted to see the numbers side of the story — which is a reasonable ask.

After all, they are in the business of driving ROI and want to ensure the idea represents a big enough problem worth solving. In their defense, we have seen many teams get swept up in the excitement of finding early validation for their ideas, only to learn months down the road, that they were chasing too small a market.

To address this shortcoming, investors and stakeholders would still make teams spend countless hours on a financial forecast spreadsheet. If you’ve ever created one of these, you know it’s very easy to get lost in the numbers. But more important, you end up back in the old world: executing a plan.

You can’t learn and move fast, if you’re still stuck executing and defending a plan. So there was a problem…

We strongly believe that unless you can completely break away from the waterfall business planning process, you cannot practice continuous innovation.

So I Introduced a New Model

To solve this problem, we introduced a new traction-centric metrics model that we call “The Customer Factory”.

The Customer Factory uses just 7 key metrics to replace all the numbers in a typical financial forecast spreadsheet.

Fans of Dave McClure’s pirate metrics will recognize 5 of these metrics that I redrew using a customer factory metaphor. You can find more on that here: Pirate Metrics 2.0.

Using just these 7 key metrics, it is possible to

  • quickly test the viability of an idea using a 5 minute back-of -the-envelope calculation, and
  • build a traction roadmap that you can use to effectively define, measure and communicate progress to your internal and external stakeholders.

A Traction Roadmap is NOT a Product Roadmap

Simply creating a big product roadmap and pushing lots of features to customers no longer works.

The challenge today isn’t building more solutions, but continuously uncovering what to build. And when things don’t work, uncovering why they didn’t work. You do this by focusing on problems before solutions.

We, however, still need to set and communicate goals and milestones. That’s where the traction roadmap comes in.

Here’s what one looks like:

This traction roadmap was built using just the inputs from the customer factory blueprint model. It’s just detailed enough to get consensus and formulate a starting strategy.

Here’s a Real World Example

Back in 2006, Elon Musk shared a big vision of creating an affordable all-electric car. Tesla’s goal was to ship hundreds of thousands of cars at scale, but no one gets to scale on day one. So they employed a 10X traction model and formulated their now famous secret master plan:

Lightweight Tesla traction roadmap + high level strategy

Want to Complete your Lean Canvas with a Traction Roadmap?

Check out the Traction Roadmap tool

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