A minimum viable product (MVP) is a low-fidelity version of a product or service with just enough features to be usable by early customers who can then provide feedback for future product or service development.
The release of an MVP potentially avoids lengthy and (ultimately) unnecessary work. Iterations of working versions are released early to potential early adopters to gain feedback from real users/customers, challenging and validating assumptions about a product or service’s requirements to be viable as a commercially sustainable product or service. The term was coined and defined in 2001 by Frank Robinson and popularized by Steve Blank and Eric Ries. Creating MVPs may also involve carrying out market analysis before launch.
An MVP is analogous to experimentation in the scientific method applied in the context of validating business hypotheses. It is utilized so that prospective entrepreneurs or new business models will quickly learn whether a given business idea will actually be viable and profitable by testing the assumptions behind a product or business idea. The concept can be used to validate a market need for a product and for incremental developments of an existing product. As it tests a potential business model with real potential customers to see how the market will react, it is especially useful for new/startup companies or new market entrants who are more concerned with finding out where potential business opportunities exist rather than executing a prefabricated, isolated static business model.
A minimum viable product has just enough core features to effectively deploy the product or service in its fundamental sense, and no more. Business model developers typically deploy the product/service to a subset of possible customers—such as early adopters who are typically more forgiving, more likely to give feedback, and able to grasp a product vision from an early prototype or from digital marketing information. This strategy targets avoiding building products or designing services that customers do not want and seek to maximize information about the customer with the least money expended. The technique falls under the Lean Startup methodology as MVPs aim to test business hypotheses and validate learning through multiple iterations. Validated Learning is one of the five principles of the Lean Startup method. It contrasts strongly with the traditional “stealth mode” method of product or new service development where businesses make detailed business plans spanning a considerable time horizon.
Steve Blank argues that the main principle of the Lean Startup approach rests in the validation of the hypotheses underlying the product/service by asking customers if they want the product or if the product meets their needs, and pivoting to another approach if the hypothesis turns out to be false. This approach to validating business ideas inexpensively before substantial investment saves costs and limits business risk under the premise that upon experimentation a business model tested by an MVP that turns out to be commercially unfeasible can easily be terminated. It is especially important when considering the main cause of startup or new market entrant failure is the lack of market need or competitiveness, that is, many startups fail because their product/service isn’t needed by many people, and so they cannot generate sufficient revenue to reach sustainability. Therefore, it is widely known in business academia that utilizing an MVP will illuminate a prospective entrepreneur or new market entrant on the market demand for their product/service.
An example helps illustrate:
in 2015, specialists from the University of Sydney devised the Rippa robot to automate farm and weed management. Before it was released, the technical hypothesis — that the robot can distinguish weeds from farm plants — had already been proven. But the business hypothesis — that it would be a viable tool on a working farm — still needed to be proved. The application of the MVP method here is that the business hypothesis, and only if it proves to successfully sell at a profitable price will further investment in development be made.
“The minimum viable product is that version of a new product a team uses to collect the maximum amount of validated learning about customers with the least effort.” The definition’s use of the words maximum and minimum means it is not formulaic. It requires judgment to figure out, for any given context, what MVP makes sense. Due to this vagueness, the term MVP is commonly used, either deliberately or unwittingly, to refer to a much broader notion ranging from a prototype-like product or service to a full-fledged and marketable product/service.
An MVP can be part of a strategy and process directed toward designing, making, and selling a product/service to customers. It is a core artifact in an iterative process of idea generation, prototyping, presentation, data collection, analysis and validated learning. Minimizing the total time spent on an iteration is a goal of MVPs. The process is iterated until a desirable product or service/market fit is obtained, or until the product is deemed non-viable.
Steve Blank often refers to minimum viable products as minimum feature sets.
Purposes
- Be able to test a product hypothesis with minimal resources
- Accelerate learning
- Reduce wasted engineering hours
- Get the product to early customers as soon as possible
- The base for other products
- To establish a builder’s abilities in crafting the product required
- Brand building very quickly
Testing
- Testing is the essence of minimum viable products. An MVP seeks to test whether an idea or new business model works in market environments while utilizing the least possible expenditure. This is beneficial since it reduces “waste,” or the risk of innovating (so that enormous amounts of capital would not have to be sacrificed before proving that the concept does not actually work) and allows for gradual, market-tested expansion models.
- A simple method of testing the financial viability of a new business model or idea would be discovery-driven planning, which first tests the financial viability of new ventures by carefully examining the assumptions behind the idea by a reverse income statement (first, begin with the income you want to obtain, then the costs the new invention would take, and see if the required amount of revenue that must be gained for the project to work). Results from an MVP test aim to indicate if the product/service should be built or offered in the marketplace, to begin with. Testing evaluates if the initial problem or goal is solved in a manner that customers want to pay a profitable price making it reasonable to move forward to sustainability.
Notable quotes
- Steve Blank: “You’re selling the vision and delivering the minimum feature set to visionaries, not everyone.”
Digital Marketing
Releasing and assessing the impact of a minimum viable product is a digital market testing strategy that is used to screen product/service ideas soon after their generation. In software development, the release is facilitated by rapid application development tools and languages common to web application development.
The MVP differs from the conventional market testing strategy of investing time and money early to implement a product before testing it in the market. The MVP is intended to ensure that the market wants the product before significant time and monetary investments are made. The MVP differs from the open-source software methodology of releasing early, release often listens to users, letting them define the features and future of the product. The MVP starts with a product/service vision, which is maintained throughout the product life cycle, although it is adapted based on the explicit and implicit (indirect measures) feedback from potential future customers of the product.
The MVP is a strategy that may be used as a part of Steve Blank’s customer development methodology that focuses on continual product iteration and refinement based on customer feedback. Additionally, the presentation of non-existing products and features may be refined using web-based statistical hypothesis testing, such as A/B testing via digital channels.
Business Model Canvas
The Business Model Canvas is used to map the major components and activities for a company or new business model starting out. The minimum viable product can be designed by using selected components of the Business Model Canvas:
Customers
Customers on the Business Model Canvas denote to whom a value proposition is considered. Utilizing the minimum viable concept here would be useful to determine whether the selected customer segment actually wants that product, either from questionnaires or experimental launches. Whichever method is chosen, the key in using the MVP is to spend as little as possible while learning as much as possible, thus in this case validating the market with the least possible cost.
Value proposition
The value proposition details what does a business offer to its customers – what desires it satisfies or what problems it solves. In this case, usage of the MVP would focus more on the technical feasibilities of the product (whether such value is possible to deliver using the product), as in the Rippa case described earlier.
Channels
In the business model canvas lingo, channels refer to the ways by which a business delivers value to its customers. MVPs would thus be used here to test whether a newly proposed method of value delivery (for example new channels of distribution, innovations in supply chains) works.
Relationship
As its name implies, relationships refer to how a business attracts and maintains its customers by providing them with the treatment and care they expect. MVPs here would be used to learn if customers would better appreciate a new method of relationship building, and true to the MVP concept the test would seek to learn as much as possible whilst sacrificing the least amount of brand equity, reputation, or costs possible.
Emerging applications
Concepts from minimum viable products are applied in other aspects of startups and organizations. Emerging are pure digital MVPs that deliver the product or service without actually being a sustainable enterprise but proving the viability of the concept.
Minimum viable brand (MVB)
Using a minimum viable brand (MVB) concept can ensure brand hypotheses are grounded in strategic intent and market insights.
Minimum viable co-founder
Finding other people to create a minimum viable product is a common challenge for new companies and startups. The concept of a minimum viable co-founder is based on looking for a co-founder with the following attributes:
- Trust
- Exceptional at building or selling
- Company commitment
- Personally likable
- Productivity
- Reasonable
- Rational
- Realistic
Minimum viable team
Founders with an early-stage company are faced with the challenge of building a team with minimal people and cost. The process starts by listing out the basic functions of a particular company (e.g., engineer, operations, finance) and then stripping down to the abstract job activities and skills that the company must have to operate.
If you desire help in creating new business models or market entrants and feel testing with MVPs might be productive, contact [email protected] or call (469) 536-8478.
