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Guide
How to build a lean business case
Validate and pitch business potential in an agile manner
About this guide
Innovation is the lifeblood of any company that wants to stay competitive. But innovation is also risky. You can only invest in so many ideas, so how do you know which ones are right to pursue?
In this guide learn the basics of the lean business case method, which you can use to create a light but comprehensive view of any potential business opportunity.
What is this guide?
Whether you work within a company, as an entrepreneur or elsewhere, this guide helps you evaluate business opportunities in a lean way. It helps business developers, product and portfolio managers and other innovators put together everything that is needed to understand whether their new idea is worth investing in.
Who exactly is the guide for?
Across six chapters, we describe how to build your lean business case. We start with why a business case needs to be built lean, walk you through the steps to make it lean, and eventually pitch it. The menu in the upper part of each page will help keep you on track.
1. The lean business case
Your lean business case is a series of investment decisions, always ready to be stopped or pivoted, if the assumptions and market validation does not support the objectives and goals you set for the investment.
It is a holistic and well-communicated hypothesis of a market and business opportunity and investment proposal, and it is backed with facts.
It's also living (meaning that it is maintained) and visual document of various Go | No-go | Pivot decisions spanning from early idea to post-launch.
While business cases always require financial calculations of revenue, costs and KPIs, the other parts of the business model, describing your monetization logic, are equally important.
The three principles of building a lean business case
Speed: We want to learn – not fail – fast! Focus on the most important and uncertain issues first, the most potential "deal killers". By "fast" we mean days and weeks, not months!
Efficiency: More is more – also with lean business cases. Tools, templates and examples support and speed up your work.
Data-driven, but visual storytelling: The aim is to create good "conversation pictures" backed with data, where the relevant information is presented in a visual and easy-to-understand way.
Iterating business potential with a lean business case
Business cases are not always necessary. But at a minimum, we recommend that you build one at least when there are more than usual uncertainties and risks, or when the investment's size is substantial (in relation to company size).
Developing the business case is an investment too. If the benefits are self-evident, save your money for something more valuable.
Building the lean business case is an iterative process, similar to the build-measure-learn loop in "Lean startup" by Eric Ries. With as-minimal-as-possible investments, you try to learn and achieve as-much-as-possible.
Similar to the "Lean startup" clock cycle, how fast you can iterate within your case is important.
You need discipline to pivot or stop (kill the case) in an early phase. Far too often business cases are being stubbornly developed, although the facts don't support them.
The 4 elements usually found in a lean business case
Initial business model(s)
Initial business model(s) or earning/monetization logic
Early solution draft
Early solution draft based on a need/problem among targeted customer segments in a certain market
Financial model
Financial model including market potential, pricing model (based on our value), revenue estimates and costs of development and delivery
Analysis and recommendations
Analysis and recommendations for next steps, including investments required
The lean business case might still need a business plan
