In the start-up world, the MVP (Minimum Viable Product) approach didn’t become viewed as the lowest risk way to build-up a business only yesterday. This way of thinking propagates “think small” not “think big”. The idea is that you see if there’s even a demand, before pushing forward with a business idea and investing in it. The first step is testing hypotheses and ideas.
Zappos is probably the most well-known example. They first tested if it was even possible to sell shoes online before starting and professionalising. This is why the first Zappos order didn’t occur via their own warehouse; the shoes were simply purchased at the store across the road and then posted.
MVP in short
According to the MVP principle, you don’t spend much time on perfecting things, but run to the tune of “trial and error”. As soon as a function is developed, the product is ready for the market. If a feature works, you don’t wait until you have the perfect product, shop or app with multiple functions.
This makes projects not just faster, but also cheaper. After all, F&E expenditure is reduced and you get customer feedback faster. The entire risk is minimised because it becomes clear in the very early stages whether or not there is a demand.
If the experiment is worth it, then further investment can follow. More features are added, and you can employ more staff and look for more investors.
The disadvantage: fans needed urgently
The disadvantage: There are no bite-sized, stylish products here. You don’t have to just convince investors, but customers have to be brought on board as well. They have to believe in the project’s success. This is why it is so important to master the art of story-telling.
This doesn’t necessarily appeal to typical customers, who want a ready-made product. Instead, they have to become fans willing to follow the project and stay through numerous adjustments and updates. Rather than passive consumers, you need active supporters. These aren’t always easy to find and only constitute a small percentage of customer types.
Big companies can do MVP as well
It isn’t only aspiring start-ups, which are forced to these test by a lack of time and resources, who can enact this principle. The digital transformation of (large)companies is no cheap matter, and there are no certainties about what will work and what won’t. Testing will become a basic principle of action. Misses hurt less if you’ve invested less from the beginning and have started by putting out feelers at a lower level.
The MVP approach can also get rid of firmly established mental blocks: companies’ basic problem is often that they only think in rigid categories. For instance, that a large company automatically needs a high-end shop system. But it is more than possible to start with a cheaper open source platform, instead of pulling out all the stops with enterprise software – regardless of the size of the company.
In this way, B2B companies for instance, can test the “online channel” with a brand shop, a shop in a test land or a spare parts shop (even in stealth mode).This is the only way to find out how the customer will react