We’ve worked with hundreds of startups. In this time, we've found that those that win their markets tend to get three things right: the tools, the talent and the timing. What this means is that winners make sure they have the tools to spur co-creation with their customer base, the talent that is flexible enough to develop new skills on the fly, and the steady nerves to scale up at a slow but consistent rate.
Market success for a startup is a complex 3D chess game and the minimum viable product (MVP) is the queen. She is unquestionably the most valuable piece in play, but she must be protected until she is prepared to decisively take control of the board.
We’ve condensed our own practical observations and experiences along with the data compiled in the Startup Genome Project, which gathered inputs from 10,000 businesses around the world. The result is this guide, which will introduce seven best practices in MVP management in the form of three dos, three don’ts and one metric.
Winning startups decide what problem they are going to solve and who will benefit most from the solution before writing a line of code. The intensity and detail of research is a strong determinant of future success. In this early research phase, according to the Startup Genome Report 2017, 60 percent of stalled startups try to validate their solution, while 80 percent of winning startups are entirely devoted to discovering the boundaries of problem space.
The obvious competition is not the real competition. Look beyond the vertical. In an age of disruption, competitors are appearing overnight from all over the planet and in unexpected industries. Kissmetrics recommended that taking just a few simple actions can save millions in wasted investment dollars by offering insights into demand and competition at the same time, such as:
A. Set up a landing page to collect emails for updates on the future launch.
B. Go where the customers are and ask for their opinions.
C. Find examples of similar ideas that failed in the past.
D. Dig into Google search volumes on related ideas and competitors
The best innovation processes and cultures seek to rout out assumptions. Most of the time, people can’t even articulate what assumptions dictate their beliefs. A great example is a furniture delivery company that threw out old gender and role assumptions about truck drivers. This startup trained their delivery truck drivers on interior decorating theory and practice. As a result, their furniture rejection rate dropped from 10 percent down to 1 percent.
Hurry slowly. That seems to be an oxymoron, but it is more subtle than that. Think of the story of the Ancient Greek general Themistocles. One of his rivals warned him against an attack saying, “At the Olympic Games, the runner who starts too early is whipped.” Themistocles answered. “Whipped, yes. But the one who starts too late will never win.” Even though 74 percent of internet startup failures were due to premature scaling, those that were able to scale up at a steady pace with all their internal systems in balance tended to grow 20 times faster overall than those that scaled before they were ready.
This is closely related to the above point but deserves special attention. Danny Inny, founder of Mirasee, told Inc. Magazine how he wasted months on perfecting an innovation that nobody wanted in the end. Generate an MVP based on a hypothesis, test it with beta users and shut it down or improve it. Deciding on when to shut down an innovation instead of improving it is a difficult call. This is the best place to bring in professional advice from investors, venture studios and serial entrepreneurs.
Steve Jobs built Apple into one of the world’s most recognized brands twice. Once when he was co-founder in the 1970s and again when he was rehired to turn around Apple’s fortunes in the 1990s. In a speech on marketing, Jobs said, “What we're about isn't making boxes for people to get their jobs done, although we do that well … Apple is about something more than that. Our core value is that we believe that people with passion can change the world for the better.“ Nike doesn’t sell shoes, it sells Excellence in Sports. Coke doesn’t sell soft drinks, it sells friendship. Say what feeling you sell in three words or less. That is the heart of your customer appeal.
In introducing the concept of the MVP, Eric Ries, author of "The Lean Startup," recognized that it is easy to take any these concepts to extremes. Release early, release often (RERO) can end up destroying a startup's reputation if their MVP is released before it is really functional. That’s the importance of the word “viable” in the center of the term. Some entrepreneurs keep their teams on target by referring to it as the minimum billable product (MBP), with the emphasis on something that works well enough that customers would actually pay for it as it is.
To help entrepreneurs follow best practices, Ries suggested deploying the Three Halves Metric: When you settle on what you imagine as the ideal MVP, cut the number of features in half. Then half the features two more times. Customers may hate the MVP that is only one-eighth as functional as you think it should be. That’s OK. Whatever they collectively agree on as essentials will determine your roadmap for the future. Early adopters tend to be visionary and understand their own needs far better than entrepreneurs do.
Co-create with early adopters and beta testers to refine the MVP and scale up slowly to build something truly great.
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