Business Planning Start-Up Guide
In Phase I you tested the viability of your proposed product or service. In that phase, you did not actually build it. You were testing your Customer Theory and seeing if there was interest in your product or service. In this step, you’ll develop a production product or service and test it in the market place.
Not all companies will need to develop a Minimum Viable Product (MVP), per se. But, they will they should follow the process of iterative and process testing and improvement. We’ll briefly discuss this here.
What is the MVP?
You develop a minimum viable product (MVP) because you don’t really know what your customer wants. You don’t actually know if they’ll buy it at the quantity where you can make money providing it. You’ll refine it until you find what your customer wants and is willing to purchase.
A fabulous book I suggest reading is The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses by Eric Ries, Crwon Business (2011). It costs around $11.00 at Amazon. The MVP is an important principle the author describes in his book.
When developing a MVP, one focuses on developing the core features which allow the product or service to be marketed and no more. The product/service is deployed to a subset of customers, such as early adopters that are more forgiving and more likely to give feedback.
The strategy seeks to avoid building products/services that customers do not want. The process seeks to maximize the information learned about the customer per dollar spent. It is an iterative process of prototyping, presentation, data collection, analysis and learning. The process continues until a desirable product or market fit is obtained, or until it is deemed non-viable.
To develop the MVP, one develops a system within the product or service that allows for customer input and testing. A/B testing is often used to determine what customers want and their willingness purchase.
Shift or Small Improvements
It a business cannot find a profitable product or service, it my decide to shift its efforts to a radically different product or service. The information obtained in the MVP process may allow developers to find segments which customers prefer. Even when the system settles on something customers buy in sustainable quantities, it doesn’t stop the iterative process.