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Beyond MVP - shaping the path of innovation more clearly


Wichtigkeit des Innovationsmanagement

Picture: Traction is the sole economic objective of an innovation.


The inspiration for this article originated from a post by Jeff Gotthelf on LinkedIn, as well as from his website and the ensuing discussion on the term MVP (Minimum Viable Product).

 

In the constantly changing world of product development and innovation, the term "Minimum Viable Product" (MVP) has secured a firm place as a guide for companies and startups aiming for rapid innovation and market launches. Over time, the term MVP has evolved into a confusion of definitions, ranging from initial prototypes to finished products. According to various sources, the first mention of the term is attributed to Frank Robinson.


It says, think big for the long-term but small for the short-term. Think big enough that the first product is a sound launching pad for it and its next generation and the roadmap that follows, but not so small that you leave room for a competitor to get the jump on you.

Later, Eric Ries adopted and defined the content in his book "The Lean Startup" and his blog:


The 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 effort.

The origins of the MVP concept

A retrospective on the origins and the original purpose of the MVP concept is worthwhile to understand current misunderstandings. The term was coined to accelerate the innovation process, manage innovation risks, keep costs low, and focus on the essential components of a marketable product. The true essence of the MVP was to learn early from real customer interactions, rather than working in isolation on an extensive product that nobody might want in the end. It was meant to bridge the gap between idea and implementation, emphasizing rapid validation of product hypotheses and adjustments.


Minimum Viable Product™ (MVP):
Problem: Teams often brag, “We added 800 new features.” Unfortunately, adding features doesn’t necessarily improve the business case. It may take longer, make the product less usable, and carry more risk.
Solution: The MVP is the right-sized product for your company and your customer. It is big enough to cause adoption, satisfaction, and sales but not so big as to be bloated and risky. Technically, it is the product with maximum ROI divided by risk. The MVP is determined by revenue-weighting major features across your most relevant customers, not aggregating all requests for all features from all customers.

What has been lost?

With time and the growing pressure to bring innovations to market in record time, the original purpose of the MVP concept has shifted. Companies now often interpret "Minimum" as an invitation to minimize essential features, rather than delivering the minimum set of features that make the product marketable. This paradigm shift leads to premature product releases in an incomplete state, ultimately frustrating users and damaging the reputation of the MVP.


An MVP is not a prototype

A prime example of the flawed use of the MVP concept is the release of products that lack essential features or a user-friendly interface (User Experience / User Interface). Startups that focus too much on minimizing costs and development effort risk alienating their target audience. A failed MVP can not only lead to a loss of reputation but also significant financial consequences.


Lack of innovation strategy

Another common mistake is using the MVP concept as an excuse for a lack of strategic planning. Companies that solely focus on the rapid market launch of a product (Product-Market-Fit) and not a business model with traction (Business-Model-Fit) without a clear long-term vision risk burning money and resources senselessly, diluting their brand. The consequences often include disappointed customers, misunderstood expectations for innovation, and a dilution of the spirit of innovation (#Innovationtheater).


First stand, then walk, then run

However, on the path to a marketable product, additional steps must be taken. It is not enough to validate only the product; the entire underlying business model must also be validated. This is where the business model (Minimum Viable Business Model) or, for a startup, the founding (Minimum Viable Company) comes into play according to the Customer Development/Product Development/Company Building principles of Frank Robinson and Steve Blank.


No business model - no business

An MVP must be embedded in a minimally marketable business model. It is the goal of every innovation and broadens the innovation focus by not only considering the marketability of the product but also validating the business model with traction in the real world. It examines key elements such as Value Proposition, Value Creation, Value Delivery, Value Capturing, and Value Re-distribution.


In fact, I don’t think revenue is in and of itself a goal for startups, and neither is profit. What matters is proving the viability of the company’s business model, what investors call 'traction.' Demonstrating traction is the true purpose of revenue in an early growth company.

Source: Eric Ries


Validation of business model components:

The Value Proposition, which is the value the product provides to customers, must be clearly defined and verified. Value Creation deals with creating this value in an ecosystem, while Value Delivery ensures that customer value is efficiently delivered to customers. The aspect of Value Capturing deals with the monetization of the value, and finally, Value Re-distribution ensures the fair distribution of the created company value to resource providers.


Conclusion: Clarifying the path of innovation

In summary, the discussion about the "Minimum Viable Product" emphasizes the need to consider the innovation process more comprehensively instead of arguing about definitions and shortcuts. Integrating business model validation into product development offers the opportunity not only to find a relevant problem (Problem-Solution-Fit), create a marketable product (MVP), but also to build a sustainable business (Business-Model-Fit) with traction that is scalable. It is up to companies to break free from the misunderstandings of the MVP concept and focus on precise, holistic innovation that includes both the product and the underlying business model.


Yetvart Artinyan

P.S: Do you want to know more about how to make your innovation project successful and avoiding typical pitfalls?

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