Scaling Lean

Operating Expenses Operating expenses are the costs expended turning inventory into throughput. They include things like salaries and other costs incurred in the running of the system. The distinction between inventory and operating expenses may appear fuzzy. It helps to think of inventory as assets that contribute to the valuation of a company and

A for-profit business model aims to maximize the difference between value captured and the cost of delivering value, while a not-for-profit business model aims to keep this difference as close to zero as possible. While every business needs to eventually satisfy both of these equations, it doesn’t need to do so from the outset. In the “lean” approa

It’s much easier to do a gut test with people than with just numbers: “How does having to add 8,000-plus new SaaS customers every year make you feel?” I aim to achieve my minimum success criteria goal using just my early adopter segment (which is a smaller segment of the overall customer segment) to give myself room for further growth. A quick look

MODELING MULTISIDED BUSINESSES The next business model archetype is the multisided business model. Unlike a direct business model where your users become your customers, a multisided business is a multiactor model where your users and customers are different actors (or segments).

“A business model is a story about how an organization creates, delivers, and captures value.” —SAUL KAPLAN, THE BUSINESS MODEL INNOVATION FACTORY

2. Frame the outcome in terms of a revenue (or throughput) goal. A yearly revenue goal more directly maps to the revenue streams listed on your Lean Canvas and keeps the model simple. Profit and valuation are derivations of revenue anyway, and here’s how to incorporate them. If you’d like to target a profit goal, use a gross margin assumption to conve

Goldratt introduced the “theory of constraints,” a new way of thinking about production systems. Goldratt makes the case for visualizing the customer value stream not as one giant process, but rather as a system of interconnected processes. You can internalize this concept by visualizing the customer value stream as links in a chain. At any given p

How big is the market opportunity? They don’t care who your customers are, but how many—your market size.

3. A Pricing Model And finally, your offer should include an appropriate call to action. Depending on your business model type and the readiness of your solution, this may be an actual money exchange or some sort of derivative currency exchange.