Minimum Viable Product (MVP)

SOME COMMON MISCONCEPTIONS:

An M.V. P. is NOT:

X a cheaper alternative

X a landing page; MVPs can exist in other forms too

X solely for technology development

DEFINITION:

A Minimum Viable Product is ‘that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least amount of effort.’ Eric Ries, Lean StartUp

Traditionally innovation required tremendous effort and significant risk (reputational, technology and financial). However using lean techniques and the MVP methodology, all 4 types of innovation can be pursued more efficiently. The practice involves running tests BEFORE you build what your target market says it wants. With MVPs you can:

1. Unlock hidden value in existing business models 2. Introduce existing business models to an

underserved market segment3. Identify novel scientific discoveries or

breakthrough products4. Repurpose technology or inventions

5ways to create MVPs that provide validated learning

1. Establish what has to be learnt about the potential customer’s needs

Examples of what may need to be learnt:

What is the root cause of the problem? What is the major pain associated with the problem? What will they gain as a result of the solutions? Where did they look for solutions in the past? Why did they look there? Why were they still looking for a solution?

2. Identify the metrics linked to point 1 i.e. what exactly do you need to learn from the customer. These measures will help you identify milestones and distinguish whether your learning

is validated.

3. Start off with a single or a few customers (although this may seem unprofitable, such an approach creates the opportunity for validated learning, and will help you to profile target customers, figure out what to build and allow you to differentiate your service or product from that of competitors)

4. Pre -launch, create or join a community for those with the same need to engage potential customers (these are not the early adopters you’ve already engaged with, these are members of the majority crowd - those who share the problem you solve and may most likely choose to buy your solution some time in the future)

5. Test your hypotheses using different messages, different MVPs and targeted to different customer segments (the wider the range of tests the more likely you are to determine the most appropriate / profitable business model fit)

THE COST OF VALIDATED LEARNING:

Accounting for validated learning (also known as Innovation Accounting*)is derived from empirical data discovered during the hypothesis testing phase of new products. Validated learning provides investors with non financial facts that justify continuing activity when there are no profits.

*Refer to the Innovation Accounting slide

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