You’re an Entrepreneur. Or you’re a Product Manager charged with launching a new product. But how can you know if your new product or service idea is a good one? How can you minimise the risk of an expensive flop? The answer is to build a Minimum Viable Product – an MVP.
Like some of the best of our Big Ideas, a Minimum Viable Product is exactly what its name suggests. It is the minimum product you could create that is viable in terms of serving its primary purpose. So, let’s put some detail on that minimum viable explanation.
Why Do We Need Minimum Viable Products?
There are two primary reasons for creating a Minimum Viable Product.
- Risk Reduction
An MVP is a way of testing the market to see if your idea is a good one. Will your new product idea meet your customers’ needs? Is it something that they would buy? If not, it’s better to spend as little as possible building an MVP, rather than craft a final product, with all the necessary costs.
- Quality Management
New products are rarely right first time. And if your customers pay top-Dollar for a defective product, they may resent it. And that could damage your reputation. But, promoting an MVP as just that is a way to test out quality and specification issues early on. That way, your subsequent first full production version will be better than it may otherwise have been.
An MVP is an investment
You could easily skip the MVP stage of your product development and launch process. But, investing in an MVP is often a wise move. And the cost of creating an MVP can be recouped in two ways:
- Investment Capital
If your MVP is truly viable, then you can sell it as a product. You do need to be clear with them that your MVP is just that. And, almost certainly, you will want to offer it at a reduced price – and probably offer free or discounted upgrades to later versions. The money you raise can help fund the development of the finished product.
- Marketing Capital
In offering your MVP – often to enthusiasts who either already support your business or who are enthused by the promise of your start-up, you create a buzz. Getting something onto the market early can give you a marketing boost. And, of course, positive customer reactions to your MP can earn you feedback and testimonials to use in subsequent marketing campaigns.
- Revenue Advancement
Even if you have fully provided for your capital costs, early sales of an MVP bring forward revenue earnings from the product. In a start-up, it builds viability for your business. And this is also true for an entrepreneurial off-shoot of an established company. Cash talks more persuasively to a CFO than the promise of a great product in months or years to come.
- Revenue Enhancement
Engaging potential customers with your MVP can do two things. First, it could increase their commitment to buy final products later on. But also, their feedback can help you create a better final product. This will sell more easily and maybe for a higher premium.
What is a Minimum Viable Product?
So, let’s be clear what a minimum viable product (MVP) is. It is a first version of a product. It has just enough features to satisfy early customers and fulfill the most important functions the product promises. Creating, marketing, and using it will provide feedback for future product development.
In essence, a minimum viable product is a low risk and relatively high return version of the final product you hope to create.
The term ‘Minimum Viable Product’ was first coined by Frank Robinson in 2001. But it was popularised by Steve Blank and Eric Ries:
- First when Blank launched the Lean Startup movement
- And then, when Ries wrote about it in his 2009 book, Lean Startup.
Definition of Minimum Viable Product
In Lean Startup, Ries defined an MVP as:
‘that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort.’
How to Use Your Minimum Viable Product
The core idea of an MVP is to produce a real product that you can offer to customers. But you will limit its functionality to the minimum that delivers valuable utility to your customers and its finish could be far lower than a final product. This could mean that your MVP:
- Uses lower-grade materials
- Has minimal automation – some elements could be simulated to appear automated, but are really served by a human operator
- Delivers one function only
It is really one step up from a proof of concept. But, by creating something you can reasonably offer to your customers, you can use it to observe customer behavior and gather feedback. Observing how people use a real product is far more reliable than asking them what they would do with a hypothetical one. So, an MVP needs to allow you to test customer reactions, build commitment, and learn about your next priorities for the product development cycle.
What if Your MVP Fails
The principal purpose of a Minimum Viable Product is to test the viability of the product.
So, we market an MVP to understand our customers’ interest in a product and what further needs they have. The earlier you find out whether your potential product will meet your customers’ needs, the less effort and expense you will waste on a product that does not. That way, you do not need to fully develop it, based on speculation.
What is Your experience of Minimum Viable Products?
We’d love to hear your experiences, ideas, and questions. Please leave them in the comments below.
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