This is the first preview of my upcoming book The Leader’s Guide, available only on Kickstarter for eight more days. Since it’s so early, you’ll see REDACTED in the place of companies, names, and products. These names will likely be revealed by the time the book is out — and, rest assured, many more details will be included. But we wanted to give you a first look, even though this is such an early excerpt.
The product development team from REDACTED came to one of my recent workshops not long after they’d completed an intense research project. The space they wanted to play in was huge — they had identified at least 25 potential markets — and they’d just conducted their large-scale study to determine which spaces would be the most profitable.
After months of market research, they identified the five segments they wanted to target.
“it was a very crazy time,” their marketing manager, REDACTED, said. “because people are talking to customers, you’re not really telling them what you’re doing, they’re wondering why you’re meeting with them. Meanwhile, this is all top-secret because we don’t want to tip off our competitors.”
They presented their complex business plan to me. “We were very proud of it and thought it was excellent work,” he said.
But one of the first things I suggested was that they could drastically reduce the complexity of their strategy if, instead of launching in five segments, they piloted in one.
Having their business plan picked apart like that was a bit like “freefalling,” said REDACTED.
“The whole world changed,” said REDACTED.
Had their months of market research been for nothing?
Traditional market research can, in fact, be valuable when it comes to identifying new markets and opportunities, for analyzing market and industry trends. In fact, the REDACTED team used their preliminary market research as a starting point for launching in one segment. “Thankfully,” said REDACTED, “at that point we were very well-positioned to go fast in one segment.”
But once you’ve done your initial homework, no amount or research or forecasting can take the place of someone literally purchasing your product. The Lean Startup methodology was formulated to help you understand how people really behave so you don’t have to rely on forecasts.
So how do you get this learning?
By building what I refer to as an minimum viable product or “MVP.”
An MVP is the smallest version of a product you can use to start the process of learning from customers. Think of it as the first experiment or in-market test of our ideas. It needn’t be the full product; often it’s a version with elements removed or one made using a simpler production process. It can be as simple as marketing materials or a brochure.
(Or an early excerpt from a book with “REDACTED” in places of the names of people who have yet to confirm that you can use their quotes.)
I use the term “Minimum Viable Product” as a reminder to people with a product development background that we are going to build something. We are going to take something to the customer that is real as we can make it, but we’re not going to overdo it by trying to do something too elaborate.
What separates MVPs from traditional market research is that it is a deliberate experimentation approach based in customer behavior, not opinion. MVPs are designed so that the customer takes some action and exchanges something of importance that need not be monetary — such as time, space, or other resources.
Why is this so important?
Because until there is some exchange of value with the customer, you cannot say with certainty that your predictions are accurate.
When people hear the phrase “Minimum Viable Product” they often ask: Minimum in regard to what? They worry they’ll need to do the same amount of work in less time by cutting corners.
This is a misperception of the concept of the Minimum Viable Product. Minimally viable does not mean operating in a sloppy or undisciplined way or ignoring safety concerns. As you consider building your own minimum viable products, let this simple rule suffice:
Remove any feature, process or effort that does not directly contribute to the learning you seek.
REDACTED founder REDACTED shared this story about the early days of the company that highlight his belief in the importance of thinking really hard about what “minimum” means when it comes to building the first version of a product.
“My four cofounders grabbed me in a room and said, ‘We cannot launch yet because we have to launch this feature called REDACTED”
Without it, they feared people would never know what to do with the site.
If they didn’t add the feature, REDACTED asked, “Will the site work?”
“Will people be able to send out invitations?”
“Will people be able to search? Will people be able to communicate with people?”
“We’re launching,” he said. “And if it so happens to be that on [the day after we launch], that’s the feature we need, we’ll start building that.”
REDACTED years and REDACTED million users later, they still haven’t built the feature.
But what if you show the customer something th
at is too simple? What if presenting a Minimum Viable Product makes it seem as if your team doesn’t know what you’re talking about?
This is a fear that many teams I’ve worked with have had to face. But in fact, finding out that your minimum viable product is too “minimal” is good news. You can simply apologize, and use the customer feedback to build a new version that does meet your customer’s needs.
“When [customers] have an opportunity to contribute to the development of a particular technology,” said REDACTED, a healthcare entrepreneur, “I think it makes the product acceptance and product adoption a lot better when the final product comes into the market.”
“They were so happy to be part of the product development process,” he added. “You could almost feel a sense of a ‘This is almost my baby.’”
Common strategies for MVPs
- Reduce volume/Tackle fewer use cases. Many teams begin with a grand vision of launching new products in a number of markets or rolling out a new process throughout their entire organizations. The Lean Startup method provides an antidote to this risky strategy: piloting in one or a few regions or segments can help you test whether your strategy will drive the outcome you seek before you start scaling.
- Change materials. When a team from REDACTED determined that plastic tooling was the part of their manufacturing process that slowed them down and cost the most, they used a combination of laser fabrication and 3-D printing to cut down the time between MVP launches. Parts that once took the team 18 weeks to create now took 24 hours, allowing them to iterate much faster.
- Take early prototypes to customers. In order to get regulatory approval, many businesses produce fully functioning prototypes. Some teams I’ve worked with have begun experimenting with taking the prototypes they were planning to use for internal regulatory purposes directly to the customer for feedback.
- Do what you’re planning to do later… now. One way of coming up with MVPs is asking yourself: What would you do with your product once you’re done building it? What if you did that now instead? A team from REDACTED has begun creating brochures based not on their finished medical devices but rather on their proposed design in order to gauge the level of interest for the product. They’ve also discovered the importance of enlisting the help of legal and regulatory experts to help them devise strategies for discussing products with potential customers.
- Take advantage of early adopters’ willingness to try a new product. Many teams I’ve worked with have found that customers are eager to experiment with partnerships and co-creation opportunities. Such collaborations can provide you with valuable in-the-field learning early into the process. Teams must be vigilant about knowing when it’s time to scale beyond their initial customer, market or region; often, the advantages in terms of price and services you can offer early adopters in exchange for early learning are not scalable.
- Strategy: Adopt a customer service mentality: A corporate IT team from REDACTED has begun to think of themselves not simply as the creator of a new process, but as a customer service provider working with internal customers to ensure they’re creating a product that has real business impact. Rather than “handing off” the plans for the system to another team, the plan is for the design team to be actively involved in working with their internal customers.