Gaining a competitive edge with MVPs
7 out of every 10 companies fail within the first year, according to a study from CBinsights. While the causes for this are undeniably multi-faceted, a lot of these failures can be traced back to the time and cost of web and mobile development. One strategy that has proven effective for survival and continual growth is the use of Minimum Viable Products, commonly known as MVPs. According to Solveit, MVPs can save an organization approximately US$275,000 and 5 months of development time. Cost and time savings like these are a real lifeline for organizations looking to explore their market.
These streamlined versions of a product serve as a litmus test, or decisively indicative test for market validation, allowing organizations to fine-tune their offerings based on real-world feedback. The focus on core functionalities means MVPs help organizations launch quickly, gather user insights, and make iterative improvements which aligns perfectly with the modern business ethos of agility and customer-centricity.
What is an MVP? A quick primer
A Minimum Viable Product (MVP) is a stripped-down version of a product that contains only the essential features needed to meet the needs of early adopters. The primary objective is to launch quickly into the market to test the viability of the product concept. With this methodology, organizations can gather invaluable end-user feedback for iterative development, thereby reducing the risks associated with product failure. MVPs are fundamentally rooted in the principles of lean startup methodology, a methodology focused on emphasizing agility, customer feedback, and iterative design.
This can be well illustrated with the example of a mobile app focused on task management. In its MVP form, the app would provide base functionality, such as to-do lists, and the ability to add, edit and delete tasks. The goal is a rapid market entry to assess the app’s basic utility and user engagement.
Subsequent to the initial product launch, organizations will gather user feedback to identify potential enhancements and desired features. This is done so the development team can confirm the app’s core value proposition before committing resources to more advanced features. The primary purpose of an MVP in this context would be evaluating the market demand for a product, minimizing the risk of product failure, preventing resource waste, and saving time on fruitless development.
What are the key benefits of MVPs?
Speed to market
Timing is everything. MVPs mean applications launch quickly, often outpacing competitors. This first-mover advantage is extraordinary when capturing market share and establishing brand presence. An organization looking to establish their presence in a saturated market will need to build and deploy rapidly, to try to stay ahead of the curve.
Organizations that forgo the MVP approach often find themselves bogged down in lengthy development cycles and risk missing out on capturing early market share. On the other hand, a typical MVP, such as a simplified social networking app with just profile creation and basic messaging, can launch much faster. This speed allows the organization to seize first-mover advantage, capturing market share and establishing brand presence.
With a study from CB insights showing that 38% of failed startups cited “running out of cash” as a primary reason for their failure; MVPs focus on developing only the essential features which conserves both financial and human resources.
Startups that don’t adopt an MVP approach often invest heavily in feature-rich platforms, only to find that they’ve exhausted their resources without validating market demand. In contrast, a typical MVP, like a basic eCommerce platform with just product listings, a shopping cart, and checkout, allows for quick market entry and revenue generation. This focused approach conserves both money and manpower, reducing the risk of running out of cash.
At the heart of every successful product is a satisfied end user. The unique opportunity to gather real-world feedback, from early adopters and potential future users, means MVPs guarantee products evolve based on actual user needs. If the MVP is attractive to new users, it is more likely to build momentum, leading to snowballing development.
Before going all-in, organizations must know if there’s a genuine demand for their product. MVPs serve as a viability test, providing insights into market demand and potential roadblocks. This validates the product and acts as a key indicator of feasibility and market demand for investors. Betting big on a product without first understanding the market and without customer validation can be catastrophic.
What MVPs are not
While MVPs can play an exceptional role for many organizations, understanding what MVPs are not, exploring alternative validation methods, and clarifying common misconceptions, helps organizations make more informed decisions on how to approach product development and market validation.
MVPs are not a universal fix for every business challenge. There are scenarios where the minimalistic approach of an MVP might not be suitable, such as complex systems that require a full set of features to even be functional. This is excellently illustrated by an online banking system. Using an MVP approach would be fraught with risk. Omitting essential security features like advanced encryption and multi-factor authentication could make the system vulnerable to hacking and financial fraud. Given the high stakes, an MVP is not just inadequate but poses a significant risk to both financial assets and user trust.
The term MVP is often misused to describe products loaded with half baked features, leading to failed projects and wasted resources. An MVP should focus on the minimum set of essential features that deliver value, serving as a stepping stone for future iterations.
Another frequent misunderstanding is confusing MVPs with prototypes. While a prototype is an initial model created to test a concept or design before full-scale production, it’s often used solely for internal testing and doesn’t have to be a viable product. In contrast, an MVP is customer-facing and aims to be a minimal yet functional version of the final product.
Equating MVPs with beta versions of a product is a common misconception. While both are used for testing, a beta version is a nearly complete product, whereas an MVP is the most basic version that is still viable.
Real-world MVPs that made it big
Airbnb: Disrupting the hospitality industry
Initially conceived as a solution for attendees of a local design conference in San Francisco – primarily those who were struggling to find accommodation – Airbnb offered air mattresses in the founders’ apartment. The concept was minimal but effective. Today, Airbnb has transformed the way people think about travel and lodging. According to data from Rubyhome, the platform now offers over 7 million active listings in 220 countries and more than 150 million users worldwide. Airbnb effectively disrupted traditional hotel chains and created a new category in the hospitality industry, commanding a market share that rivals established players.
Common pitfalls to avoid when building an MVP
Straying from the target audience
Skipping market research is akin to shooting in the dark, a foundational mistake that can doom even a well-designed MVP. A successful MVP must be rooted in a clear understanding of the target audience.. Specialized expertise can make the MVP development process more efficient and goal-focused, building a solid foundation and reducing the risk of failure.
Not iterating with user feedback
Ignoring user feedback after launch is also a devastating error. The essence of an MVP is to collect real-world insights for iterative development. Setting up efficient feedback loops and taking timely action can guide the MVP in a direction that truly meets user needs, refining the product while conserving resources. Neglecting either of these critical steps can result in wasted resources and a product that completely misses its mark. Employing well-trained and experienced project managers is vital when addressing customer feedback and future development.
Misunderstanding the true purpose of an MVP
A frequent mistake is thinking that more features automatically make an MVP more valuable, leading to a cluttered and confusing product. This is often made worse by a misunderstanding of the ‘V’ in MVP. An MVP needs to offer real, tangible value to its users. Complicating matters further is the tendency to make the MVP overly complex, which can lead to delays and increased costs.
Onboarding experienced project & product managers, making use of specialized development teams, and leveraging digital consultants can help maintain the MVP’s focus and efficiency. These external experts can guide the project, ensuring it stays lean yet effective, while also managing resources and timelines skillfully. Their involvement can be the difference between an MVP that meets market needs and one that misses the mark.