Do You Really Know the Minimum Viable Product (MVP) in Agile Projects?

the Minimum Viable Product MVP in Agile Projects

Developing new, innovative products is risky, and such projects often fail. In this context, the method with the Minimum Viable Product (MVP) has successfully established itself, especially in agile software development. Do you know what an MVP is, why and how it is created and how it is used correctly? If not, then this article is just right for you. Read on and deepen your knowledge!

Product Development is Risky

Developing innovative solutions is an inherently risky and uncertain process. This uncertainty causes some enterprises to avoid taking risks—and when they do, it increases the likelihood they will spend too much time and money building the wrong thing, based on flawed data or invalid assumptions. In this context, the Minimum Viable Product (MVP) has proven itself in agile software development—but not only there.

What is a Minimum Viable Product?

The term was defined in 2001 by Frank Robinson and then popularized by Eric Ries through his book The Lean Startup.

Here is the original definition by Eric Ries:

A Minimum Viable Product (MVP) is a version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort.”

That means, a Minimum Viable Product is the first version of a product, that contains enough features of sufficient quality to attract a first group of customers and, crucially, provides valuable feedback and information on how customers use and appreciate the product.

As the definition of Ries makes clear, the MVP is not a product with the least possible functionality necessary for a public launch. Rather, the MVP is the key to using the scientific method for building products. It is purely a mechanism for validated learning, used to test hypotheses and discover what will meet customers’ needs.

Is the Business Idea Viable and Profitable?

Developing products in the traditional way is expensive and risky and often fails, for example, due to incorrect assumptions. Gathering insights from an MVP is often less expensive than developing a product with more features. For this purpose, an MVP is an excellent tool to validate business hypotheses. It is utilized so that prospective entrepreneurs would know whether a business idea would be viable and profitable by testing the assumptions behind a product or business idea. The MVP can validate a market need for a product, but often also for the incremental development of an existing product.

Every innovation begins as a hypothesis—a set of assumptions and beliefs regarding how a new or improved product will delight customers and help the organization achieve its business objectives. However, hypotheses are just informed guesses until they are supported by validated feedback from real customers. As Eric Ries promotes in his book The Startup Way, the fastest way to accept or reject a product development hypothesis is to experiment by building a Minimum Viable Product (MVP).

Every innovation begins as a hypothesis that needs to be to accepted or rejected.”

An MVP is the simplest way to test the proposed innovation, to see if it leads to the desired results. MVPs must be tested. Ideally by customers in the target market or by intended users of the system for fast feedback. If the feedback is positive, then the product is launched on the market. If the feedback is negative, a change in direction is necessary. This could be as simple as a set of modifications to the product followed by additional experiments for feedback, or it could prompt a ‘pivot’ to an entirely different product or strategy.

The following figure shows the Lean Startup Cycle as it is used in SAFe

The Lean Startup Cycle applied in SAFe - Minimum Viable Product MVP
The Lean Startup Cycle applied in SAFe

The Feedback Loop: Build – Measure – Learn

A key element of the Lean Method is applied in the concept of Minimum Viable Product: The Build, Measure, Learn Cycle. This is a method to collect feedback, analyze it and then learn from it. Here is the meaning of each element:

Build: Create a “Minimum Viable Product” based on your product idea or on the learning from a previous cycle. Without investing great energy, produce enough of a representation of your solution to validate your hypothesis with real customers.

Measure: When testing the MVP with customers, you engage in “Validated Learning”. Here, you need to quantify what is good or bad about the product and if customers really use it, what would they pay, how many downloads and installs you are seeing and any other metric that gives you real data that you can act on.

Learn: Based on the success of your MVP, and the information you gleaned from the Validated Learning exercise, you “Pivot or Persevere”. You persevere if your customers like where you are going and you only need to adjust and enhance. However, if you are way off the mark, and adjustments are not having a real impact, you must pivot, perhaps with a dramatic change to your strategy.

the core purpose of a Minimum Viable Product is to gather data.”

The following figure shows the cycle of validated learning by Eric Ries.

Build, Measure, Learn Feedback Loop from Lean Startup - Minimum Viable Product MVP
Build – Measure – Learn Feedback Loop from Lean Startup

The Innovation Accounting Framework

Eric Ries coint in his book The Lean Startup also the term Innovation Accounting. This framework consists of three learning milestones which illustrates the “Build – Measure –Learn” Feedback Loop:

  1. Minimum Viable Product (MVP): Establish a baseline to test assumptions and gather objective data.
  2. Tune the Engine: Quickly adjust and move towards the goal, based on the data gathered.
  3. Pivot or persevere: Decide based on the validated learning, whether you want to change the direction of development (Pivot) or pursue the idea and deliver additional value (Persevere).

Lean thinking defines value as providing benefit to the customer; anything else is waste. Therefore, a fast feedback loop is essential to validate learning and reduce waste. Applying the learning obtained from real customer feedback results in increased predictability, decreased waste, and improved shareholder value.

What is Minimum And What is Viable?

According to the above described definition of Ries an MVP is the first version of a product, the solution to a problem and it’s one that contains enough features of high enough quality to attract a first set of customers and crucially to gather valuable feedback and information about how customers use and value that product.

The core purpose of a minimum viable product is to gather data.

But What Is Minimum and What Is Viable?

Minimum means: A minimal viable product doesn’t mean it is half finished or the absolute minimum functionality that you can get away. It means doing a small number of things to a high standard produced with less effort.

Viable means: Something that is capable of doing what it is intended to do.

Do it right: Minimum and Viable - The Minimum Viable Product MVP
Do it right: Minimum and Viable

Creating a viable product with minimal features and little effort offers the opportunity to question and assess assumptions and ideas, opportunities and risks as quickly as possible. You only need the feedback of the users.

Here You Can Find Even More Knowledge

This was an overview about the Minimum Viable Product. What is your experience with MVPs? Do you agree with my statements in this article or do you have a different opinion? Share your experience with the readers in the comment box below so we can all get a broader view. Thank you!
Would you like to learn more about how to make your projects more successful with Scrum and Agile Project Management? My book Scrum – How to Successfully Apply Agile Project Management and Scrum takes you an important step further!

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More books that might interest you:

Eric Ries: The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses

Eric Ries: The Startup Way: How Entrepreneurial Management Transforms Culture and Drives Growth

Get more Information about How to Build an App MVP to Launch Your Business

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