Posted by Neha De
November 24, 2020 | 6-minute read (1032 words)
Launching a new product is always a huge risk. But to lower that risk, entrepreneurs often develop a minimum viable product (MVP) first. Take the case of Airbnb, which was founded in 2008 when its cofounders couldn’t pay rent and therefore decided to turn their living room into a bedroom with air mattresses for three people. Once they earned some money from renting out their living room, they built a basic website to offer the service to more people. The first Airbnb website lacked all the features of its current site, but as the company's MVP, it still delivered.
An MVP can be defined as a product or service that has a basic set of attributes, launched in order to test a new business idea and gauge people’s reactions. Since an MVP allows entrepreneurs to get the audience’s feedback first, before releasing a full-featured product, it can help them avoid huge capital losses and failures.
The main goal of building an MVP is to get a product or service to the market as quickly as possible, based on an initial idea, while minimizing costs. This approach allows business owners to collect user feedback and include it in future iterations. Using an MVP, they can attract the right audience, save time and generate ideas based on experience.
Creating an MVP means finding the right balance between what a business is offering to its users and what the users actually need. An MVP helps test the hypothesis by minimizing errors and by collecting quality feedback from specific types or groups of users.
The concept of an MVP was popularized by Eric Ries as part of the lean startup method, which is based on a three-step process known as the “build-measure-learn” feedback loop, wherein:
- Build involves developing a minimum viable product (MVP) based on a set of assumptions.
- Measure means launching the MVP and measuring the hypothesis based on those assumptions.
- Learn pertains to accepting or rejecting the initial hypothesis and iterating on the MVP.
The process is called a feedback loop because after learning from measurements, entrepreneurs go back to the drawing board and come up with a better and newer version of the original product. Then they release that new version and assess the results, learning from them and restarting the process yet again, if necessary. This informational loop allows organizations to develop, launch, learn and iterate on new and existing products.
According to Ries, the lean startup approach is focused on when to change course, and when to persist and grow a business with maximum acceleration.
The startup mindset is a systematic method of creating a company that gets its products and services into the hands of its consumers with increasing speed. It helps entrepreneurs pivot and adjust course to keep up with customer demands and interests.
How to Build an MVP
These five steps can help you build an MVP that shortens your time-to-market, validates your value proposition and reduces product development costs.
Step 1: Determine which problem you’re trying to solve, and for whom: The first step when developing an MVP is evaluating the business idea. Begin by asking yourself why people need this product and how it can help them. This will allow you to put yourself in your customers’ shoes and help you understand the main goal behind your product/service so you can find the best solution for your target customers’ actual needs.
Step 2: Analyze your competition: While this step seems obvious, sometimes business owners skip competitor analyses because they have blind faith in their product’s uniqueness.
There are several tools available that can help you explore your competitors’ products and/or services, and get real insights about their monthly traffic to their websites, site ranks (globally and within a particular country), sources of traffic, geographical location of visitors and users, and other information. You can use such tools as Similar Web, Ahrefs, Moz, Follow, App Annie and QuantCast for the purpose of competition analysis.
You can also analyze customer feedback about your competitors’ products. This can help you build an MVP for your own product/service which addresses the deficiencies of existing solutions.
Step 3: Define user flow: In order to define user flow, start by defining the process stages. All you need to do is explain the steps required to reach your product’s or service’s central goal. Focus more on basic tasks and think less about individual features. For example, if you are selling shoes online, basic tasks would be “find shoes,” “buy shoes,” “manage orders” and so on. These are the types of goals that will matter to your end users. Once these process stages are defined, features for each stage can then be clarified.
Step 4: List all required features and prioritize them: After defining all the steps your clients will need to take while using your product, start building a list of specific features for each stage. When the list of features for each stage is ready, prioritize them by asking yourself "What is the most important action I would like my customers to accomplish?"
Then, list all other features you want to offer, explaining why you need each of them. Now, cross out the least important ones. Finally, arrange the features in the order of highest to lowest priority.
Step 5: Build, test and learn: After defining the first scope of work, move on to the development stage before testing. The first testing stage is usually conducted by QA engineers, who work to improve the quality of the product before it’s released into the market. They ensure that the product is ready for alpha or beta testing.
Alpha testing is usually limited to a small focus group, mostly family and friends. Whereas for beta testing, the product is sent out into the real world to be tested by actual users. Beta testing usually takes between one and two weeks, but it can vary for different products and services. Based on feedback collected from beta testing, you may consider implementing changes to your product, but remember that you must make only crucial changes immediately. The rest can wait until you have more resources available.