Many innovation methods and terms from Silicon Valley are new territory for European companies. This also applies to the Minimum Viable Product. Here are the five most important questions about it – and the answers.
What is only sketched in the picture on the left actually exists in reality and is a so-called “collector’s knife” with 87 tools and 141 functions. It offers its owner the right tool in every conceivable situation, but it is hardly really suitable for everyday use. I bought it many years ago for about 1,000 euros as a limited edition. It is no longer regularly available. It is now in my office and is more of a display piece than suitable for real life.
On the right is a simple, yet useful knife that is reduced to three functions: a corkscrew, a bottle opener and a knife. It’s known as a “bartender’s knife” because it has everything a bartender needs to do his job. You can already get this knife for around 15 euros – it has been sold millions of times worldwide.
Less is often more
In fact, the first knife stands for “featuritis,” a disease that many companies suffer from, especially in Europe, an engineering country. In most cases, a project team is put together for the development of a new product, which then retreats for months or even years to develop a supposedly perfect product in secret and in elaborate processes.
To satisfy all the needs of all potential customers, many companies make the mistake of offering too much at once. The result: a product that is far too expensive and has all the bells and whistles but is not needed by the customer. What often falls by the wayside instead are the actual needs of the actual target group. After all, who needs a saw, a nail file, and a corkscrew at the same time? Which functions are even superfluous? This is precisely where the MVP method, for which the second knife stands, comes in.
1. What does MVP mean?
“MVP” stands for “Minimum Viable Product”, which in European means something like “minimally functional product”. Originally, the term comes from Silicon Valley, where numerous young tech startups are already successfully working with the concept. They gain a competitive advantage over established companies because they can implement innovations more quickly and respond more flexibly to new requirements.
Especially in agile product development, the MVP method has become established in recent years. Nevertheless, the term is still interpreted very differently. The most common definition goes back to Eric Ries, who in 2011 coined a completely new philosophy of company formation with his book “Lean Startup”. He describes the MVP as “a version of a new product that allows a team to gather the maximum amount of validated information about customers with minimal effort.”
2. What does a Minimum Viable Product have to do with agility?
Classically, many companies apply the waterfall method to product development – a linear approach that is usually deeply embedded in the company culture. However, the development of an MVP is based on the principle of agile working, which works in exactly the opposite way: instead of creating detailed specifications over weeks or months, the team starts with a vague goal in mind and then sprints from one “pit stop” to the next to get customer feedback as quickly as possible. This is then used to continuously develop the product and adapt it to the actual needs of the customers.
How does the MVP process work in concrete terms?
Develop, measure, learn, repeat – these steps describe the cycle that makes up MVPs. The process always starts with a hypothesis that the team creates together. This hypothesis must be confirmed or refuted. In our example, that would be something like: If our pocketknife is equipped with a corkscrew, sales can be increased by ten percent within the first four weeks. Then the MVP process begins:
- The team develops a Minimum Viable Product.
- The MVP is tested with real users.
- The tests show whether the MVP is used and accepted by users as expected.
Based on user feedback, adjustments are made to the product and further sprints are conducted to improve the Minimum Viable Product. Possible new functions (features) are then added step by step.
4. What do you have to consider with a Minimum Viable Product?
Those who have had little contact with agile development methods may initially find the MVP process unintuitive. This is especially true for highly regulated industries, where a lot of time and care usually goes into implementing new ideas. The following basic principles help establish the MVP concept:
- Speed instead of perfection: it is less about developing perfect products than implementing ideas quickly.
- Focus instead of all-around: Especially in the test phase, it is essential to focus on the right feature (e.g., a specific feature) and measure its success.
- Agility instead of waterfall: Of course, it is always advisable to have a product idea in mind. However, only the next step is planned in concrete terms.
- Benefit instead of featuritis: It is not a matter of mapping as many features as possible, but of offering the user concrete added value.
- Savings & revenue: The success of the product is not only measured by revenue, but also by cost savings.
5. What are the advantages of a Minimum Viable Product?
By ensuring a fast, lean process, companies minimize their financial risk. At the same time, they can try out more ideas, identifying the best ones early on and discarding those that won’t deliver positive results. This allows companies to see if they are going in the right direction at a very early stage of product development and, if not, correct their course in time. Minimum Viable Products are a great way to drive innovation within the company.
It is important to anchor the understanding of this entrepreneurial and implementation-oriented approach so firmly in the corporate culture that every single employee recognizes the benefits and knows how to use them correctly for their own benefit. Developing an MVP is not about creating a perfect, mature product. On the contrary, it often still “jerks and wobbles” – but it works.
Would you like to create a MVP? Contact us today.