The Lean Canvas and the Knowledge Problem

In modern economics, one of the key assumptions is perfect knowledge/information. But in real life action, you find that such does not hold and entrepreneurs and market participants are always in a state of partial or complete ignorance and striving to eliminate such. One of the ways in which such is eliminated is through market generated prices which thought might appear simple carry a lot of information which those who need such information don’t really need to know.

In tech startup circles, one of the current trends is the Business Model Canvas on which people fill out information on building blocks such as customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key activities, key partnerships and cost structure. In the early stages of startups, information filled into these key blocks are usually based on quick research online and even guess work and estimation in some cases.

When a startup builds its Minimum Value Product (MVP), its actions are guided by this business model. But through more interactions with customers and better understanding the needs of customers, those key blocks begin to evolve and a clearer picture is developed. In some cases changes are made to the business idea and services while in others, the original business idea might be scrapped and a totally new business idea based on insights gathered is embarked on.

In many ways, the process of going from an early stage business model developed on the Business Model Canvas to a final business model which can be scaled is one of eliminating a knowledge problem. Even when the knowledge problems around the initial business model is resolved and a scalable and sustainable business is developed, the real knowledge problem beings. The world is never in a state of static motion, even sustainable businesses have to constantly deal with the knowledge problem. By constantly work to understand the needs of customers and where trends in their industry are heading if they are to stay relevant and not have their position upended by other market players or even entrants the knowledge problems always stays relevant