Forget MVP. Think MVO.
How To Use The Minimal Viable Offer To Create A Compelling Product Offer
In this article, we will cover…
1. 3 Types of Risk in Product
2. Mitigating Value Risk
3. The Pitfalls of The MVP
4. Defining your MVO statement
One of the frustrations of my client work was that every sales call followed the same pattern:
Somebody comes along with some idea they are super-excited about. They are convinced it will be “the next big thing”.
So they’ve already decided to run before they can walk, committing €100k to developing a custom-built app & 3–6 months just to get a basic proof of concept, with no team or strategy or nothing in place even if the concept does work out!
In this article, I am going to teach you how to walk before you run & validate your product ideas extremely quickly & with minimal effort.
Whether you are starting a new product, or improving an existing one, this is an essential skill for any aspiring product leader.
To do so, we need to understand one key concept — and how to apply it:
The Minimal Viable Offer.
But before we jump in, just a little bit of info on me for context:
I’m Henry Latham.
Since my first business failed back in 2012, I’ve been obsessed with understanding why some products succeed, whilst others fail.
Over the last 8 years, I’ve worked as a founder and product consultant helping make ideas happen, as well as publishing my first book, Why Your Startup is Failing, last year.
Now I create value as founder of the Prod MBA, a 6-week, hands-on training programme designed to fast-track PMs and POs to Head of Product.
In that programme, we’ve used the concept of the MVO to deliver real, tangible results.
This isn’t to pitch the programme, but to simply show that it works:
We’ve had 4 students actually generate revenue within 4–5 weeks & a majority who have been able to rapidly validate interest with their product offering.
3 Types of Product Risk
When managing product, we need to remember that our role is not to reinvent the wheel.
It is, instead to mitigate risk.
This is what really lies at the heard of great product management.
As Marty Cagan, the godfather of Product Management states:
“First, you need to discover whether there are real users out there that want this product… Second, you need to discover a product solution to this problem that is usable, useful, and feasible.”
Specifically, that means 3 kinds of risk:
- Value risk: Will our target customer buy it, or simply choose to use it? Will they believe our promise?
- Feasibility risk: Can we deliver on our promise? Do we have the time & skills? If we are building digital or complex physical products, do our engineers have the time/skill/technology?
- Usability risk: Is it too complex and confusing to get to the core value?
In large organisations, we also need to contend with “Business viability risk” i.e.whether this solution also works for the various aspects of our business e.g. should we be launching a baby clothing line if we are Facebook? Probably not.
Note that stakeholder value risk is not part of this equation.
It is not effective Product Management to try to deliver value to our stakeholder in the form of meeting expectations — delivering features on time, building what they want quickly, etc.
This is purely a distraction — a necessarily evil in many jobs — that must be navigated so we can focus on what really matters:
Delivering value for the customer & value for the business.
In this article, we will focus on the two big ones: value & feasibility.
Value Risk
The BIGGEST mistake new businesses and new product teams make is failing to build something that delivers enough value to a niche so that the niche is willing to use — and ultimately pay for — that product.
It is even estimated that 42% of companies fail because they focus on building an exciting solution that does not solve an acute problem — or any problem at all, according to one study of 101 startup post-mortems conducted by CB Insights.
Avoiding falling victim to the trap of building a product nobody wants is surprisingly straight forward if we understand the right practical framework to use to mitigate this risk.
The part most people will forget to or not bother to do is actually applying this framework to our product ideas in practice as they just jump straight in to building a solution — out of excitement or stress or a combination of both.
In almost every MBA programme, it is taught that, to ensure we build something a specific audience wants, we use the Blue Ocean Strategy Canvas to evaluate our offer.
Blue Ocean Strategy is essentially a framework we use to strategically differentiate ourselves from the competition (i.e. to be very different from the other products that service our niche whilst staying relevant for our niche).
Why “Blue Ocean”?
Because what we are attempting to do with any product is avoid getting caught up in the Red Ocean of intense competition, where all the sharks are competing against each other for scraps of food.
Rather than being stuck in a race to the bottom, with prices pushed down & a constant need to reduce cost & a constant battle to push out features to match our competition, we aim to find a new market — a Blue Ocean — where there is no competition.
Where we are free to determine our own pricing. Our own solutions. And even define a whole new market.
The Blue Ocean Strategy Canvas itself helps us achieve two things:
- Most importantly, to pause & quickly, but effectively, critique where there are opportunities in the market to differentiate ourselves
- To be able to convince external shareholders — maybe your boss or potential investors or even co-founders — that the product vision you have makes good business sense
Here’s how we use it:
1. We research our competition & identify 5–6 strong competitors that are currently serving our niche
2. Plot 5–8 competing factors on the x-axis (these could be technical features, such as “an easy payment process” or, better, points of value creation, such as “great customer service” or “a compelling offer statement”)
3. Add an “x” where you feel each company scores on each of these factors
4. And then place an “x” where you feel your business could really do better on some of these factors? (Feel free to add a few new factors as you consider different solutions you could offer)
NOTE: Your true competition is NOT who you think they are, but who your customers think they are. I am less interested in listing well-known competitors we often build into our investor pitches and more interested in identifying how customers deal with their problems today (existing alternatives).
For example, say we are launching a new project management tool. We may list obvious ones like Jira or Trello, but we should also list Google Sheets, which some teams hack together for this, or even meetings.
Here’s the Blue Ocean Strategy Canvas we used when planning the Prod MBA programme itself:
- We don’t even try to compete on project management — like Scrum — and lining you up for getting your first junior role
- There are programmes better than ours on the theory of all that
- Network and business skills — great on some programmes, like Product School. Other solutions probably better on direct stakeholder management
- Where we obsess over is this blue ocean:
- Effective leadership skills — foundation of yourself — dealing with uncertainty failure — and leading your team effectively, rather than just managing them
- Customer delivery in theory and — importantly — in practice
- Product strategy
- Actually experiencing the full product lifecycle — and taking something from zero to one
One student recently asked me,
“How do we determine pricing?”
You might notice pricing is not even on here!
Our goal is to really obsess over creating a Blue Ocean. We could include it here at around the same benchmark €2–5k of other high-level training programmes, but it’s actually not necessary in this case.
Why? Well…
Competition can at times be a distraction and can in fact drag our business — and the ideas we have for a solution, such as pricing — in a specific direction that may not make sense for us.
Remember: The goal is hyper-differentiation.
If we started to trying to be the best at project management, the other areas of our business would start to suffer.
We just need to stay focused and:
To signal incredibly clearly and incredibly specifically with our message and with our offer that this is for you. Not for them.
To resonate so strongly with our niche’s wants & desires, that they cannot resist clicking through to our offer.
To be so different that our niche cannot resist exploring our offer and ultimately, paying for our offer out of their need to achieve their desired outcome.
If we can nail that, we don’t need to compete on price. We can experiment at a high price point and see which price is optimal.
This is how we at the Prod MBA went from testing an idea to profitability in 4 months.
Finally, we need to be very careful about what kind of different we aim for.
A very common — and very dangerous — error many teams make is, in an attempt to raise investment or purely out of excitement for the idea, they pitch something exciting and NOVEL, rather than focusing on being truly INNOVATIVE.
As Peter Thiel, founder of Paypal notes, ask yourself:
“Is this intersection valuable?”
If we pitch a film, using Thiel’s example, saying, well “it’s got sharks and it’s got zombies and it’s got hackers, so it’s REALLY different and people will LOVE it” is not that helpful. It’s still just a film.
In business, something could be novel, like “a leadership training tool, but with AI”, but if the experience is simply worse than “leadership training from real people”, then our intersection is not valuable & the innovative technology we use is irrelevant.
It’s just an overly-complex app that nobody uses.
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Blue Ocean is a great framework in evaluating ideas, but it has one huge limitation — a limitation completely skipped over by many MBA programme:
How do we actually come up with a nuanced, differentiated idea in the first place!
That’s the hard part. And that’s what we’ll cover when we come on to the MVO in the 2nd part of this free training.
Feasibility Risk
But before that, let’s look at the 2nd major risk we need to mitigate:
Feasibility risk.
Once we’ve understood where we want to position ourselves to deliver value to our customer & differentiate our business, we need to look at the feasibility of how we can deliver that value in practice:
I.E. What can we actually build for our niche
This is a really important differentiator of our approach, so let me just outline why we suggest looking at risk in this order and with this approach:
Conventionally, companies would try to understand a market in theory, identify some clever ways of differentiating themselves, raise investment by pointing to the opportunity their solution presented, then jump straight to building a usually-digital MVP (Minimal Viable Product).
However, there are four serious risks with this approach:
In theory, the Minimal Viable Product is defined, acccording to The Lean Startup author, Eric Ries:
“That version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort.”
However, because of many teams misguided concept of what a product is (I.e. features, rather than the whole customer experience), we see the following problems:
1. The MVP is rarely minimal, dragging on for months, from our initial estimation of a week or two in order to build out full technical features. This made it harder & harder to pivot away from the MVP if it turned out not to resonate with users when we went to market because of the pressure of delivering quick results
The Minimal of the MVP is misused by many companies ,to sometimes justify an MVP take months or even years to build, rather than starting with a more simple solution! If, for example, we want to build an MVP of an AI tool, for example, is going to take years! So they are just focusing on a “minimal version of that solution” rather than “a minimal solution to solve the problem”
2. The MVP is rarely viable, usually becoming simply a poorly executed version of a more complex digital solution we wanted to build in future. Again, maybe that cool sounding “AI product mentoring tool” was just generic & robotic, not delivering any value whatsoever. Or the team just wasn’t technically capable, so the MVP of the app or website was just a mess. Thus we end up with something that just doesn’t really solve anything for anyone, but with teams committing — in error — to what they hope would become a viable version of their solution
MVPs are, in most of our views, necessarily digital products
3. Many MVP customers seem to derive value from is not necessarily one we can generate revenue from, as many popular, but free, apps have found out to their downfall only after they’ve already committed all their resources to build the product (sometimes over years)
In fact, the word MVP has become so misused that many product experts — people with a lot more gravitas than myself simply refuse to use the term.
Melissa Perri, author of Escaping The Build Trap, possibly the most popular book on product management, refers to it as a prototype. Hacking Growth author & godfather of “growth hacking” Sean Ellis, refers to it as a Minimal Viable Test.
For the purpose of our trainings, we refer to each thing we build as simply an experiment, to emphasise the uncertainty of what we are doing.
4. Furthermore, the MVP & the context it was conceived in — during Eric Reis’ time as founder of IMVU — was one of a development-led, highly technical team.
Jumping in to just build out some initial features with high-quality, scalable code, effective analytics tracking & a quality user experience may have come naturally to IMVU, but it’s much harder to deliver for most teams.
To mitigate feasibility risk, we want to be as realistic & pragmatic as possible to ensure our product is able to:
1) Deliver a lot of value to the customer and to the business in the form of revenue and
2) That we are confident, but realistic, that we can actually deliver that product to a necessary high standard as quickly as possible
We want to avoid actually coding anything at all costs — even if we come from a technical background! — until we have validated there is truly a need for the specific solution we are offering so we avoid:
1. Something that isn’t minimal and drags on for months to validate — starting the train moving in one direction and finding it difficult to pull back and change course
2. Something that isn’t even viable because we ran into technical obstacles
3. Something we aren’t sure will convert to revenue
Therefore, particularly if we are thinking of launching a new venture by ourselves — or with very limited resources within our existing business — we need to plot a realistic first step before think of building out a digital solution.
Netflix is a great example of this in practice:
Netflix’s vision statement is:
“Becoming the best global entertainment distribution service.”
However, Netflix didn’t start as the streaming service we now know.
Instead, they started non-digital, facing very different competition to the likes of Amazon Prime or Disney we see now.
Back in the early 2000s they were a simple film delivery company, just like Blockbuster
However, they realised the future was digital, but the technology wasn’t there yet
So what was the strategy for Netflix?
1. First, conquer the film delivery industry.
2. Next, sell a streaming product.
3. Finally, do that globally, which arguably, at this point in 2020, they have pretty much achieved
And that first strategic step determining what you can feasibly get to market and make money from may be something you haven’t thought of before:
- Consultancy
- Courses or trainings
- E-commerce
- Rather than building a custom app, maybe just creating a video of a no-code digital prototype to test demand, like Dropbox.
- Maybe even freelancing to hone your skills if you’re looking to launch your own business
This may be an uncomfortable realisation for many of you.
It goes against the main narrative, particularly in the startup world, that we need to build something big with a HUGE impact… with business leaders trying to rush straight to the final step — achieving their vision with some exciting, high-tech, AI-driven solution — as quickly as possible.
But to actually make ideas happen in practice — to actually deliver value — we must simply focus on offering something people want & that we can actually deliver on.
Usability Risk
Finally, usability risk: As we attempt to validate our offer, which I’ll come on to next, we don’t want to add more risk!
Therefore, we will keep our offer so simple that we don’t need to address usability at this stage.
So, to recap:
1. Our job as a product leader is to mitigate risk
2. We can try to mitigate value risk with frameworks like the Blue Ocean Strategy
3. And we can address feasibility risk with the MVP
Limitations of the MVP & Blue Ocean
Yet both have serious limitations.
1. In a highly competitive world, we must come up with highly nuanced solutions. Such solutions do not come from sitting down and filling in a theoretical framework. They come from gaining & evolving a deep understanding of a specific niche — a specific target customer
2. An MVP already hints at a concrete solution, a concrete “product”, rather than on the offer — the specific points of unique value we believe our niche desires
And that’s where the MVO comes in.
Ask yourself:
What is the thing you could offer that would deliver a huge amount of value to your niche? Something that would deliver the result — that desired outcome — they are desperately looking for?
Don’t worry about questions of acquisition or cost or revenue. Instead, we just start by trying to validate what — on a high-level — our niche would love.
That’s really what the MVO is.
Specifically, we use the following framework:
- Clearly call out who you are targeting e.g. frustrated junior sales reps based in NY
- Promise them their desired outcome e.g. career development, happiness, status, wealth, etc.
- Add your offer — what, on a high-level, is the vehicle for delivering that value e.g. a 6-week, hands-on course… Or “ with just 2 minutes a day using our app” or “weekly coaching sessions”
Now, the MVO itself doesn’t help you come up with a great offer. That comes from a lot of discovery calls — conversations with your niche — in the build up to crafting an MVO.
The topic of ideation is one I cover in detail in a previous training, which you can watch here.
But, once we have an MVO that we believe will resonate with our audience, the process of validation is surprisingly simple:
The outcome we are looking for is to see that people from our niche are willing to engage with our offer, measured the % of people we contact completing a simple survey:
Validating Your MVO
1. So, step 1 is simply creating a landing page with our MVO. We use Typeform Welcome page for this. Below isa real one from a student, Dan
2. Then, depending on where our niche gathers — maybe it’s a profession, so we go to LinkedIn. Or maybe a niche based around a shared interest, so we find a relevant Facebook group
3. Once we find our niche, we reach out to 50 people from that niche, using a simple message stating what we offer & a clear call-to-action, such as:
“Hey [NAME],
I’m working on a new product to help [NICHE] achieve [DESIRED OUTCOME] with [OUR OFFER].
Would you be interested in joining our exclusive waiting list to test the product for free?
If so, you can sign up here:
[URL]
4. On the Typeform itself, we add survey questions to gather more data from our niche — on the problem space, how acute it is, maybe what solutions they have tried before — but, actually, this isn’t essential
All we are looking for is to see that, of 50 people we contacted, how many engaged with us, how many then hit our landing page & how many of them actually clicked start and engaged with our landing page & survey.
If, of the 50, we get 5 that click “Start”, then — as a rule of thumb — it suggests we have something that resonates with our niche, otherwise they wouldn’t bother visiting the page in the first place, let alone putting the effort in to engage with a random survey.
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It is as simple as that to validate what is really your product vision — the desired outcome you are promising — as well as your initial product strategy for achieving that vision — your offer.
Once you have validated that your MVO resonates with your niche — and only once this has happened — should we commit time to building out a more concrete solution & really addressing questions of feasibility.
Because if we cannot prove that what we are offering is of value, then nothing else matters.
