Smallest Viable Market

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Back to the fundamentals — Focus on your customer and not your MVP

Have you ever set out to define features for a Minimum Viable Product (MVP) and ended up worrying about frustration from your colleagues because you could not include the features that everyone wanted in a launch, or worse, indifference from your customer?

You are not alone.

I have been in this situation throughout my career, both as a product manager, and consultant. A common challenge is the desire to cater early product launches to everyone, which, naturally makes it hard to prioritize features since there will be segments of your “target” audience that value different features. Over the years, I have found a way to address these worries — delight your customers (and your colleagues) by catering to the “Smallest Viable Market” (SVM).

Smallest Viable Market

One way to re-think the concept of Minimum Viable Product (MVP) is to review the fundamentals around who it’s for, what problem it solves, and what the solution or product offering is that solves the problem for that person. In order to gain clarity around the right features in the ‘solution’ here, Smallest Viable Market starts with being very specific around the ‘who’.

To get started down this path, identify and align on the target audience. These are the customers most likely to buy or engage with your offering. ‘Early adopters’ typically have identified that the problem exists and seek to solve it. They likely also have a propensity to try new products and are not as fearful of failed attempts. You would be doing this segment a favor by offering them a solution and thereby enabling them to focus on their own priorities.

1. Segment your market based on your constraints. It is valuable to segment based on demographics (age, gender, location, employment status). I recommend challenging yourself to try and define your segment based on criteria like personality, values, behaviors, attitudes, and interests to take a psychographic-based segmentation for online products. Try to identify the customers who may already be trying to solve the problem themselves or at least acknowledge the magnitude of the problem.
2. Identify the specific problems that people in this market segment find most valuable to solve
3. Identify the specific solutions (features) for those problems that hit the best mix of high value to people in the market segment and low effort for you to build

Once you have identified the target segment and the associated feature-set, launch the product by prioritizing your resources and efforts to this market. Prioritizing features will be easier when you have a specific segment in mind.

Validation: It is extremely powerful to validate each of the above points (market, problem, solution) every step of the way by talking to customers within the segment or using other validation techniques like contextual interviews and Wizard of Oz tests. Assumption validation is a foundational lean principle.

Once you identify the launch set of features for your V1.0, prioritize the rest of your product roadmap by repeating the above steps. A framework like Ansoff’s matrix can be very helpful here. This will help you identify whether it is more valuable for you to expand your offering to new markets, or to solve new problems for the market you have already catered to.

There are at least 3 benefits to this approach:

1. Delight the audience — Starting with a focus on a smaller market allows you to expend more energy and resources toward delighting customers and dramatically increasing the likelihood of repeat customers and referrals
2. Limit risk by creating information — Focusing on a smaller group of customers also allows you to gather valuable insights and feedback to enable you to place bigger bets and make bolder decisions
3. Increase Speed — This approach limits the effort required to launch and ultimately allows you to get to market faster

An example from a product that we built recently

May Mobility — We worked with the self-driving shuttle team in 2019 to launch a redesigned, re-engineered in-vehicle infotainment system. Rather than spreading ourselves thin with catering to all of their deployments, we focused on the unique problems faced by their deployment in Grand Rapids where they had over 20 stops (video below). This allowed us to launch quickly in Grand Rapids and enabled the May team to add functionality to support their other deployments in Detroit and Rhode Island.

Pro-tip: Engineering methods such as test-automation, continuous integration, and SOLID technical design principles will minimize the cost of change as you add more functionality and sophistication.

Focusing on the Smallest Viable Market (SVM) is especially important today due to the uncertainty created by the pandemic and its impacts on budgets and timelines. The impact of the lockdowns and heightened sensitivity toward hygiene and health have also created a lot of new behaviors and problems. For businesses, these challenges represent meaningful opportunities to innovate and come up with creative solutions.

I love hearing stories around teams navigating the dreaded “MVP” conversation by changing the conversation to the Smallest Viable Market and I want to hear yours. Have you or your team had success in launching a product earlier than planned by targeting a smaller audience? Share your stories in the comments below or by reaching out to me on LinkedIn or Twitter.

Ashok Sivanand is the CEO of Integral, a Detroit-based software consulting firm that focuses on building great teams that build great products. Ashok is a student of lean product management, human-centered design, agile software engineering, theory of constraints, organizational behavior, and cooking with a smoker. Integral is offering pro-bono software clinics to help navigate technology decisions. Sign up here if you’d like to talk about identifying the Smallest Viable Market for your product or service.