Many start-ups spend years fine-tuning a product idea, working out a marketing concept and investing a lot of money in production: then they present the finished product to potential customers. However, if the target group reacts with disinterest, the young company quickly disappears into oblivion. Because without sales, the money invested cannot be recovered. Those who have invested their entire assets are then faced with ruin. Smart founders, therefore, take a different approach: they start with a minimum viable product (MVP).
What does MVP mean? It is a product that is functional – no more and no less. This sounds simple at first, but there is a clear concept behind it. Frank Robinson, CEO of SyncDev Incorporated, first defined the term “Minimum Viable Product” in the early 2000s. Within the startup scene, the concept spread through books such as “The Lean Startup” by Eric Ries. The Minimum Viable Product is a central method of the Lean Startup philosophy. We explain how to get the most out of your product idea with minimal risk using the MVP.
MVP: Significance for product development
A Minimum Viable Product often referred to as a minimal product or smallest possible product in European, tells you whether there is a fundamental interest in the product and what the target group wants from the product, without you having to spend vast sums in the development phase. The guiding principle is: Don’t put a lot of time and effort into a product that you don’t know whether customers will accept. Instead, equip your product with only the most important features. These need to run smoothly. Additional features and design elements are not necessary. The initial development phase of the product is less about big sales. Rather, with the MVP, you learn from your customers and can thereby ideally answer the following questions:
- What are the basic needs of your target group?
- Does the core of the product idea meet a gap in the market or is it uninteresting for the target group?
- What additional features do potential customers miss?
- Can the existing basic idea be built upon or does it need to be modified to be successful?
The MVP was initially used predominantly in software development teams. In agile software development with Kanban or Scrum, they rely on the so-called build-measure-learn-feedback loop: a feedback loop of build-measure-learn, where customer needs are considered early in the product development process.
In the beginning, there is the MVP, which the so-called early adopters are the first to use. As a developer, point out upfront that this is a rudimentary but functional product. Also, ask for feedback. The responses can provide valuable insights. Go for small, gradual changes. If your idea has added value and you develop the product with your testers, your potential customer base will grow with each additional investment. Even before the official launch, you’ll know what your customers really want thanks to consumer collaboration.
Definition: Minimum Viable Product
The Minimum Viable Product, or MVP for short, is the product that is created with the smallest possible effort while fulfilling the most important functions and requirements. In the context of the Lean Startup principle, developers apply the Minimum Viable Product to test their product with customers and continuously improve it.
Eric Ries, the founder of the Lean Startup principle, describes startups as organizations that want to create something new under very uncertain conditions. In his opinion, founders must therefore develop a management concept that can adapt to constantly changing conditions. This requires creativity and a willingness to learn.
The lean startup concept is based on several fundamental principles. One of them is “Build-Measure-Learn.” For this area, the Minimum Viable Product is an extremely important building block. To find out whether you should see an idea through to the end or change course, you use feedback loops. At the shortest possible intervals, you build your product, measure customer reactions, and learn from them. On the one hand, you learn this way what customers like. For another, you learn to abandon ideas if there is no need for your product idea. That is the basic idea behind the Minimum Viable Product.
The Minimum Viable Product explained
The minimum viable product is the beginning of product development that takes customer feedback into account. However, it is more than a prototype, as the most important features must be functional. It is also more than a stage in the process. It is the result of the proper application of the feedback loop method.
In a quickly drawn sketch, Hendrik Kniberg illustrated how this approach is often misinterpreted or misused. The sketch below illustrates a development process in which the MVP approach was incorrectly implemented. Each symbol, from left to right, represents a further development of the product coming to market. The smileys below represent the customer response. The finished product is a car. Through the car, the developer should fulfil a specific need of the customer.
According to Kniberg, that need is this: “I want to get from point A to point B quickly and safely.”
MVP: This is the right way to do it
When developing a Minimum Viable Product, you should focus on the basic product idea and orient it to the customer’s needs: If you want to get ahead, you need a vehicle. For startup founders, it’s risky to invest a lot of money and time in a product that customers may not be interested in. So, test your product idea of a means of transportation with a solution that is as inexpensive as possible. For example, the skateboard in the picture is a functional vehicle. It provides the basic function of a means of transportation.
In this scenario, you had a product idea. You implement it with a product that has relatively low development or manufacturing costs. Some early adopters and selected test customers then provide you with feedback. You take this feedback into account when adapting/further developing the product. In the picture, this is a scooter. What do we learn from the feedback on this change to the product?
- Customers embraced the basic idea (means of transportation with wheels).
- Some felt unsafe on the skateboard.
- Steering and braking are difficult for some.
- By adding a simple handlebar with a handbrake, you improve the safety, comfort, and stability of your product.
Over the next development stages, you improve the execution of your product idea: With a bicycle, customers can travel faster with less effort than with a skateboard. They pedal and transfer their power to the wheels via a gear shift. The bike is even faster and more comfortable because riders no longer must exert any force themselves to accelerate. For comfort, there’s a new feature: the seat.
The feedback loop reinforces the basic idea “Customers want to move fast and safely.” That’s why you improve the drive every time. For speed, it doesn’t matter how many wheels the vehicle has. The motorcycle fulfils basic idea – it is fast and comfortable. The smiley under it symbolizes satisfied users. Thanks to your test customers, you have identified additional unique selling points. Because if you want to convince the market as a company, you need to deliver more than just a functional product.
The last symbol in the image is a car. The green car (illustration for the wrong approach) fulfils customer requirements of safety and speed. It also offers space for several people. The pink car (illustration for the right approach) fulfils same criteria.
The differences cannot be shown completely in the graphic: Your customers wanted more speed. Therefore, pay attention to an aerodynamic design and install a turbo engine. The feedback shows: Your customers want more space and safety, but they don’t want to miss the feeling of freedom on the bike. Stabilize the vehicle by giving it four wheels again. In addition, a car offers more space for passengers or luggage compared to a motorcycle. With the top-down buyers can enjoy the summer weather. Since an aesthetic and individual design is also important to your regular customers, bring out a product with several selectable paint finishes and high-quality fittings. The result:
- Test customers have built a relationship with the brand.
- Customer feedback provides data that you can use to develop new ideas for the product.
- The insights resulting from this data indicate whether the basic idea should be retained or discarded.
- People want something new, but not so different from what they know that it seems foreign.
- Ergo: Many small changes during development increase customer acceptance to embrace innovation in the next iteration.
- The Minimum Viable Product requires fewer resources. Small changes entail fewer financial risks. Customers are more likely to accept incremental price increases than big leaps.)
Agile product development with the MVP
The Minimum Viable Product is a component of agile product development. During the development process, the product is subject to constant assessment. Agile product development is therefore characterized by a changeable process. This means that the development team can change course at any time. This usually involves minor adjustments. The concept of agile product development is characterized by the following features:
- It is iterative, meaning it repeats itself constantly.
- It is incremental, so it changes step by step.
- It saves time and resources through short development phases.
- It allows immediate reactions.
The Minimum Viable Product: A Question of Definition
The build-measure-learn principle with feedback loop is not only applied by start-ups. Large companies also reduce the risks of resource-intensive projects through agile project management. The only difference between the approaches is that large companies usually have an existing customer base and well-known branding. Therefore, enjoy a resource and trust advantage in contrast to start-ups. It is important for start-ups to also design a Minimum Viable Product in accordance with current standards. This is because consumers at least expect a product to perform its essential basic function well.
The meaning and use of the term “Minimum Viable Product” have changed over time. Since the primary goal is to create a product that pleases the customer with little effort, the term does not fit in every case (because in the face of tough competition, the customer may not be satisfied with mere basic functions). Some management experts therefore now speak of the Minimum Awesome Product or the Minimum Lovable Product.
Needs pyramids show which requirements a Minimum Viable Product must fulfill. For a customer to buy a product, it must satisfy a need. First, therefore, the customer must have the feeling that something is missing. Once basic human needs such as food, sleep and security have been met, most people long for more – for example, recognition or luxury. The demands on products or services can also be represented in such need’s pyramids.
The Minimum Viable Product is more than just a functional product. In combination with the build-measure-learn method, this concept can minimize the risk for start-ups. It is also the cornerstone for agile development. Before the first iteration, work out a basic idea about which a customer need can be met. Then, to satisfy more sophisticated needs, work on reliability, usability, and desirability, taking feedback into account.
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