Minimum viable product (MVP): types, methods, stages of construction | 2022

The concept of a minimally viable product (or MVP) gained popularity after the publication of the book The Economical Startup. Its author, Eric Ries, defined it as a product that had only the basic and necessary features to work. But why did Reece call strategy critical for every startup?

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What is MVP?

The MVP (from Minimum Viable Product) is the earliest version of a product that has only the necessary features, enough to deliver the underlying values to the audience and test them on the first users.

The key to the idea of an MVP is that the company produces a real product, which it then delivers to the marketplace. This can be a one-page website or, on the face of it, a fully automated service that is actually done manually. Developers observe the behavior of people using the service for the first time. Based on the information gained from the experiment, the team continues, adjusts, or cancels work on the product.

The MVP has all the basic features necessary to implement the idea and retain the first followers. Such a product must be of sufficient value to users.

When an entrepreneur launches a startup, he can only wonder whether consumers will appreciate his idea, whether they will use the product as intended. He assumes that customers have a need and that the product the team is working on satisfies it. To know for sure, you need to present the MVP to customers and gather as much validated information as possible about their experience with the product.

But getting feedback from the CA is not the only benefit of implementing an MVP in a business strategy. Testing the beta on customers provides direct and indirect financial benefits:

  • Early release of the product to the market – the opportunity to make a profit before the development process is completed;
  • Saving money on market and CA analysis.
  • Beta testing as an opportunity to convince investors to allocate a large budget to complete development;

Why is MVP important for successful business development?

Startups offer a product or service in order to meet certain needs of the CA. The higher the importance of the problem for the consumer, the more valuable the proposed solution is. The implementation of MVP allows at the initial stages of business development to establish how the product meets the expectations and needs of the customer. Accordingly, the company management and investors get the data necessary to decide on the fate of the startup.

Statistically, about 70% of startups fail. Part of the failure is due to the release of useless or ill-timed products. Consider, for example, the legendary story of the appearance of sugar sachets-stickers. Their inventor wanted to make life easier for users. He assumed that visitors to the cafe would be able to break the bags in the middle and pour out the contents without dropping a single crumb. However, cafe customers kept tearing off the corner of the bag out of habit. At first glance, the brilliant idea turned out to be absolutely useless in practice. And although later the stickers became popular because they were easy to transport, they did not bring profit to their inventor.

MVP helps to establish the necessary functionality of the product and efficiently use production resources based on the goals set at the beginning of development.

By creating an MVP, the team can understand customer interest in the product without spending time and effort to perfect the idea. The sooner the creators get feedback from customers, the less effort and expense will be spent on a “stillborn” idea. MVP gives more reliable results than surveys of the target audience and allows you to observe the real interaction of the user and the program. This means that developers will already understand the potential payback during the creation process.

This concept is based on the lean startup philosophy and involves an iterative process of building a measurement-learning cycle to full market satisfaction. Starting with a minimally viable product, the team focuses on the core functions and value of the proposed idea. It clearly understands the most important tasks and implements them as a priority. For example, in the case of software development, programmers move on to optimizing the user interface only after the minimum viable product is released.

MVP prevents the fear of “unfinished construction” and gives a clear direction for development. In addition, having a functioning product motivates the development team and reduces product managers’ worries about insufficient functionality.

Wizard of Oz (sometimes called Flintstone's MVP)

Both names of this type of minimally viable product symbolize how it works. Just as Flintstone created the illusion of having a real machine, and the Wizard of Oz used tricks to pretend to be a giant green head, fairy, fireball, or monster, this type of MVP only seems fully functional. In reality, the starter does all the work by hand instead of using software. There is no basic software at all, but a product concept that needs to be tested.

Nick Swinmurn, the founder of Zappos, proved that this strategy works. In the beginning, he didn’t spend a dollar to buy shoes or rent a warehouse. He published pictures of the shoes on the website. Once customers started ordering shoes, he went to the store, bought the right pair, and shipped them out. After realizing that the project was viable, he updated the site’s functionality.

Entrepreneurs who choose concierge MVP also provide a hands-on service. But in this case, the client knows that there is a real person behind the service provided. Wealthfront, a financial planning and investment service, started with concierge MVPs. Wealthfront employees communicated directly with clients who needed help with money management.

The important difference between concierge MVP and the Wizard of Oz type is that it focuses on generating ideas about the future of the product, providing the service, and communicating with the client.

The idea behind the disparate MVP is to communicate the value of using existing tools instead of creating a unique solution. A prototype product looks like a comprehensive product. You can use simple software, put everything together, and add the functionality you need after receiving feedback.

Groupon is a great example of a siloed MVP. Its founder Andrew Mason ran a site on WordPress where he manually posted food images every day. He generated offers as PDF documents using AppleScript and emailed them via Apple Mail. So he confirmed the Groupon hypothesis.

Single parameter product

MVPs can be real software with a minimal set of features, basic, necessary for testing. You can use them to narrow down your target group, get feedback and analysis, and focus on testing.

Regardless of which type of MVP you choose, you will need to follow a few basic steps to create a minimally viable product.

A product always begins with an idea. The main difference between a successful product and an unclaimed one is that a popular product is the result of a feasible idea transformed with a detailed development plan.

We offer a step-by-step guide on how to test your idea and turn it into a product. You can create an MVP in seven steps. Step 0 is an introduction to basic principles and methods. Steps eight and nine are about project management approaches.

Before beginning any actual work, it’s worth taking some time to outline the basic principles and methods of the MVP, and then making sure your team uses them throughout the process. The following points are important at all stages of implementing your MVP.

1. Try to spend as little money and effort as possible. The basic idea behind an MVP is to reduce the time and resources required to test your business idea. Determine the simplest type of MVP that is sufficient to get feedback and stick to it.

2. Focus on raising awareness. Engage as many information channels as possible in order to guarantee yourself the necessary number of first-time users. This can be done through your PoC activities.

3. Conduct a pre-sale of the product. You can use Kickstarter and other crowdfunding platforms or sell your product directly to achieve two main goals. The first and most important one is to get feedback, and the second is to invest in further development. This way you can understand if people like the product concept.

4. interview users all the time. No matter what step you’re on, interview your potential customers so you can then make adjustments to the initial flowchart. Keep interviewing until you move from the MVP stage to version 1.0. After that, you should also follow this practice, but expand on it with A/B testing and other modern methods. You can use forms of online research or talk to customers face-to-face. Formulating the right questions will help you not only explore user concerns, but also find out if they’re even worth pursuing. Ask what bothered users when they encountered problems. Have them tell you what they weren’t happy with about the solutions they were using.

5. Set up a feedback loop. The feedback you get through interviews or one of the other channels should be systematic, having a real, immediate impact on your product. Track all feedback, summarize and convert it into ideas for further team tasks.

6. Create a landing page. The page should include a product description and features, as well as a sign-up form with free and paid solutions. With the help of a landing page, you will be able to determine the best value for your product.

7. Use social media. Platforms such as Facebook, Reddit and YouTube will be the most effective sources of information, provided you have enough audience attention. We also recommend using blogging tools: your own or public ones like Medium.

8. Launch an advertising campaign. Use Google, Facebook and Twitter to see if your MVP reaches your target audience. These advertising platforms have very flexible segmentation capabilities, so you can test hypotheses by setting up several narrow user segments.

Step 1: Identify the problem you want to solve

The first thing to do is to formulate the purpose of the product. Answer the question, “What is the purpose of the product? Move on to the next step as soon as you clearly state in a few words the value of the product. For example, if you want to open a food delivery service, the problem you want to solve might be, “To ensure that users get food from local takeout restaurants.

Step 2: Identify your target audience and narrow it down

Satisfying the needs of a wide audience is a wrong decision. Increase your chances of success by targeting a specific audience. Make a detailed description of the person who might like your product, who will buy it without hesitation. You need to know how old this person is, what their education is, where they work and what their income is. A description of specific habits and hobbies will complete the portrait of a potential buyer. To learn more about creating buyer personas, check out our story about starting a SaaS business.

Insights into the lifestyles of your audience of interest will help you understand whether your future product will be able to solve the problems potential customers face on a regular basis.

Step 3: Analyze your competitors

Don’t overestimate the exclusivity of your product, especially if you know about other companies in the industry beforehand. Analyze your competitors. Find out their strengths and weaknesses to determine the functionality of your future product. Classify your competitors based on how they compete for market share.

1. identify your competitors. Analyze the top three players in the market, find out how long they have been in the market, what products and services they provide. Determine if they have a competitive advantage and evaluate your ability to offer something better.

Characterize their market share. Research their past and current strategies, sales volume, revenues, financial and marketing goals. This data will help you understand how successful and profitable they are.

Use primary and secondary sources of information. The information companies share themselves is the primary source most reliable for analysis. Visit company websites, examine presentations, white papers, annual reports, blogs, promotional materials and other publications. Secondary sources of information – magazine and newspaper articles, videos, reports and books – shape public opinion about market players. While these sources may be less reliable than primary sources, they provide the most comprehensive view of the industry.

4. Dig deeper. Feel free to attend business events attended by competitors, make contacts, use a competitor’s product, and analyze reviews.

5. Use analytics programs. Various online tools for competitive analysis will make your life easier. Services like Similar Web, Ahrefs, Quantcast, App Annie or AppFollow collect data about sites and apps. You can use them to learn about the popularity of a competitor’s app/website, their monthly traffic, audience interests, geographic customer locations, and similar products. Some of the existing tools provide basic information for free. Others, like Moz and SensorTower, on a subscription basis.

When you know the weaknesses and strengths of your key competitors, you can understand what makes your product unique in the marketplace and what it lacks to become so.

Step 4: Do a SWOT analysis

SWOT means strengths, weaknesses, opportunities and threats. This structure is usually used in strategic planning. However, it is also quite easy to use in ranking MVP ideas. To perform a SWOT analysis, you need to objectively answer several questions related to the above categories. Let’s see what a SWOT analysis might look like using the food delivery example we mentioned above.

The goal of a SWOT analysis is to focus on strengths, identify and minimize weaknesses, avoid threats, and take advantage of existing opportunities for further development. Strengths and weaknesses are usually related to internal factors. Opportunities and threats are external.

SWOT-analysis helps companies to analyze their competitors and choose the strategy of market positioning.

Step 5: Define the user path map

User flow – the path a user takes when interacting with the product. It should be logical and understandable.

A user path map is a guide with content requirements and website/application design. When building a good user path map, you need to understand what customers want when using your product. Make sure you provide users with additional information and figure out possible shortcomings that may prevent them from taking the next step.

Let’s use the example of delivering takeout from local restaurants to look at the list of tasks users need to accomplish in order to reach the main goal. The user journey will be as follows: form an order, manage the order, pay for the food, receive the order. Once the steps have been mapped out, we need to define the functions for each of them.

Step 6: Make a list of functions graded by priority

You need to list the mandatory features for the future product. The storytelling method (or user stories) will help you in this planning phase.

User stories are a dual approach to managing user stories. It allows you to focus on individual pieces of functionality while still having a complete view of the product.

The methodology aims to help developers select useful features from the user’s perspective. Its author and practitioner Jeff Patton believes that the description of features should contain the human action.

We’ve listed 4 steps that users do with our product: form an order, manage an order, pay for a meal, and deliver an order.

Now we have to describe the functions for each step and write them on the cards. For example, to set up an order, the user can:

  • choose a restaurant;
  • choose a kitchen;
  • choose where he/she lives;
  • choose a dish;
  • choose a drink;
  • read the descriptions of the selected items;
  • add the order to the cart.

Now let’s prioritize. You have to figure out how important and valuable a particular function is, how often it is used, whether it has risks, and how many users access it.

Once you have organized the functions according to their priority, draw a vertical line and place them in the right order. Put the most important and frequently used ones at the top of the list, and place the rest at the bottom.

Step 7: Determine MVP volume

Once you have prioritized the functions, you can determine the scope of the MVP. The first horizontal row on the map is called the walking skeleton (skeleton). This walking skeleton is the least useful version of the product, which lacks “meat,” that is, functionality. First we have to create the skeleton.

In some cases, the MVP is the same as the skeleton, and sometimes it has limited functionality. To understand what the differences are between the wireframe, the minimally viable product and its further concept, you have to classify the functionality.

Let’s draw a line to separate the main functions from the non-essential ones. The functions you give the highest priority to represent the minimally viable product. The rest can be added after MVP deployment and feedback analysis.

Step 8. Choose the most appropriate method of MVP management and development

Once you have determined the scope of work, you can finally start developing a minimally viable product. Let’s find out what project management techniques apply to building an MVP.

LEAN

One Agile software development method based on several principles: eliminating unnecessary costs, rapid delivery, reinforcing learning, and building integrity. In fact, Lean uses iterative development following a create-measure-learn pattern. With Lean, developers can defer most design decisions, establish a quick feedback loop, and make sure they’re creating a product that’s in demand.

SCRUM

Another iterative approach to software development. It involves efficient workload allocation that helps teams complete tasks faster. You can manage MVP feature development in sprints (short cycles of about two or four weeks each). Identify a scrum master to monitor the stability of all scrum processes. The MVP is implemented immediately after the first sprint. The development team can update the product in all subsequent sprints, responding to user feedback. Although Scrum is more time-consuming than Learn, it can be less stressful for specialists – suitable for gradual and long-term development.

Kanban

It focuses on the work-in-progress model and, unlike Learn and Scrum, has no cyclic progression. Instead, Kanban suggests focusing on tasks as they arise. This balances the amount of work with the capabilities of the team. Professionals add tasks to the pipeline as soon as they receive feedback from users. Kanban can be applied after the first version of MVP is released and become a powerful method if the feedback keeps coming in.

Extreme Programming (EP)

It’s a set of development practices such as code refactoring, small releases, simplified design, and coding standards that allow you to improve code and update it as quickly as possible. Development cycles with XP don’t exceed one week, so you can run the first version faster and then scale it up. XP is good for MVP, which relies heavily on code quality.

Choosing one of the iterative development approaches is critical because it allows you to create a consistent feedback loop.

Step 9: Use alpha and beta testing

Alpha is what is known as internal testing, where a limited group of people (mostly friends or family members) evaluate the product. If the product passes this test, you can move on to beta testing – letting real users try the product for one or two weeks. Analyze the feedback and determine what features need to be added or replaced to make the product better.

If you’ve gathered enough feedback, you can update the product, then test it again and get feedback. The number of “create-test-train” cycles and their time frame depend on the product. Once you have completed several cycles, you can return to step 0, change direction, or continue to iteratively improve your product.

Examples of MVPs in different industries

The MVP should convey the essence of the idea in its simplest form, which depends on the context. Accordingly, and minimally viable products vary from project to project: from a single-page website to a working software prototype.

For example, in 1999, Nick Swinmurn had the idea of selling shoes online, so he needed a full-fledged Shoesite.com site. He launched the business without any inventory or inventory, buying products for every order placed. This gave him a low-risk opportunity to test his idea without the expense of restocking inventory. Shoesite.com soon evolved into Zappos, which Amazon acquired in 2009.

Slightly more effort was put into their concept by the creators of Uber. Garrett Camp and Travis Kalanick were frustrated by the high cab fares in San Francisco. In 2010, they launched UberCab, a simple iPhone app that allowed passengers to rent a limousine for a ride at only 1.5 times the price of a city cab. Initially, the project covered a limited territory and was obviously intended for a limited target audience. However, the beta version helped the creators to communicate the value of the idea and get the first large investments a year later.

One of the easiest MVPs to implement was introduced in 2008 by Brian Chesky and Joe Gebbia. They couldn’t pay for a loft apartment in San Francisco and decided to see if there was any demand to rent rooms directly from the landlord. The entrepreneurs created a simple MVP, which was nothing more than a one-page site with pictures of their own apartment. This is how the now world-famous Airbnb was founded.

MVP and PoC: what's the difference

MVP should not be confused with proof of concept (PoC). The latter can be interpreted differently depending on the industry.

First of all, proof of concept is not an early version of a product. PoC in software development describes the processes to find out if a software concept is technically viable. The team can also choose this approach to determine the amount of work needed and the best development techniques, identifying possible technical problems and finding solutions.

Drew Houston, the founder of Dropbox, made an explanatory video and explained in it how Dropbox should work. About 75,000 people signed up for it the first night. A similar method can be accomplished with a blog in which you share ideas with your audience about a product you plan to develop. Although some people refer to proof of concept as MVP, we tend to classify this treatment separately as PoC.

The terms MVP and PoC are related, but not interchangeable. Proof-of-concept, implemented in the optimal way, becomes a minimally viable product.

Final Tip

A minimally viable product plays the role of a safety cushion – enabling you to predict the commercial and technical potential of the product as well as its realization. MVP allows you to make technical and business decisions based on facts, not assumptions. Therefore, testing a concept or product in the marketplace is the main purpose of creating an MVP.

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