Let’s analyze the advantages of MVP-based software development. Why should you invest in MVP development?

oston Consulting Group estimates that 70% of digital business transformation projects fail. If you look into the problem carefully, you’ll see that all the relevant reasons for failure: changing requirements, weak arrangement, insufficient investment and test activities — are somehow related to the lack of a common project goal and vision.

You can successfully prevent these problems by starting software development with a Minimum Viable Product (MVP).

Let’s weigh the pros of using this approach and consider why investing in a MVP is a smart move for business owners.

MVP: Test an Idea Before Investing In It

In 2010, businessman Joel Gascoigne came up with an idea to create an app that would allow social media users to plan the date and time of posting. The entrepreneur created a landing page to make sure that people would be interested in such a product and that it would be profitable.

Visitors were leaving registration requests, so Joel updated the page, offering one free and two paid subscriptions, starting from $5 and $20. The businessman saw that people were eagerly choosing a paid one and created the first version of the Buffer app within a week. When the product met users’ expectations, the entrepreneur continued to develop its functionality. Today, more than 140,000 managers are using this platform to grow their businesses on social networks. The firm has an annual income of about $20 million.

The first version of Buffer is a good software example of a MVP. This type of software is the basic version of a program that has a limited number of functions. It includes functionality allowing a product to work in the market and generate income. The development team receives feedback from users and adds a new relevant set of features in subsequent iterations. This increases the audience’s interest in the product.

Lean from the Trenches

Henrik Kniberg clearly explained the methods of MVP development in his book Lean from the Trenches. Imagine that a team works in the traditional style and builds a car. First, the developers create a wheel. In the next iteration, they add a chassis that connects the wheels. Through another iteration, the team will complete the car frame and the body part.

Henrik Kniberg clearly explained the methods of MVP development in his book “Lean from the Trenches.”

The MVP-based development approach looks different. First, the team finds out what problems users have and what needs to be done to solve them. For example, consumers want to get from one area to another. To begin with, the team will offer a MVP — a skateboard. Specialists will collect feedback and find out that not everyone manages to keep balance.

In the next iteration, the team will turn the skateboard into a scooter and collect feedback again. So gradually, step by step, the developers will build the most correct version of the product. In this case, a car. This vehicle will take users to their destination with minimal effort. That is, it will solve the problems of customers in a way convenient for them.

A MVP, as part of the lean development approach, allows you to act based on genuine customer interests and start with minimal investment.

MVP: More Value with Less Effort

Information Technology (IT) professionals around the world say that development that starts with a MVP solves the following project problems:

  • incomplete or ever-changing product requirements;
  • lack of investment;
  • incomplete team or poor management;
  • restrictions on test activities;
  • non-compliance with the terms of product delivery and so on.

With a MVP, the team is less likely to hit these roadblocks because it encourages participants to think about the development process carefully. Let’s consider the benefits of MVP development:

MVPs Allow Businesses to Test Ideas In Markets

In 2014, Hailo mobile app for calling a taxi failed. The platform that worked well in London could not survive in the competitive New York market. The ignorance of the state of things in New York, lack of smartphones for most yellow taxi drivers and focus on the premium segment were fatal. As a result, the more far-sighted Uber and GetTaxi forced the company out of the market.

Hailo could have avoided the failure if it had studied the target audience in New York and correctly formulated the value proposition. It should have probed the new American market with the help of a MVP. After all, the fact that something works in one market does not guarantee success in another.

To develop a MVP, a team researches the market and finds out the problems of the target audience.

Specialists decide what value and basic features should be implemented first to test the idea. After all, as Steve Jobs said, “People don’t know what they want until you show it to them.”

If the idea gets a response, then this will serve as a sign that the product needs to be developed. It is better to move gradually and test the market than create a business-perfect expensive solution that no one will need.

MVPs Save Time And Money

In 2022, the Protonn business startup platform closed after 6 months of operation. Although the startup raised significant investments ($9 million), the firm failed to find a product/market fit. The founders were unable to adapt their business model to the changing reality, and the firm closed.

With a MVP, you can avoid this because development begins after you have clearly defined which features will solve customers’ problems. Users buy a product when it makes their life easier and not because of extra features or super trendy design. For a MVP, you need to select 20% of the functions that will bring 80% of the profit. Extra options that require additional time and investment should be left for later iterations when the idea pays off.

If you create a “perfect” product, with a full range of features, it will take a lot of time and require a lot of investment. But all this does not guarantee that the time and money spent will pay off. If the implementation of basic functions will be faster by 25% and require minimal investment, the failure will be “cheaper” and painless. If the idea proves successful, the product will start to pay off in the early stages, “earning” funds for subsequent improvements.

MVPs Help to Build Customer-Centric Strategies

In the MVP-based development model, the customer is at the center. It is logical to focus on the opinion of interested users and not build an app by guesswork and conjecture. Development is built on the “create — evaluate — improve” feedback loop. Developers find out the opinion of users and implement vital features, release a product and evaluate the feedback, reviews, and comments of the audience. Then they finalize the software solution, consider suggestions for its improvement, and release the updated version. The cycle repeats until it reaches the maximum value.

This happened to UberCab, the MVP of the legendary taxi ordering service. Its creator, Garrett Camp, originally launched a mini version of the platform that ran three machines. Noticing the interest of users in the service, the entrepreneur raised $1.25 million and began to improve the platform.

Camp collected user feedback after each trip and gradually upgraded the app. So, users could pay by card, track drivers, estimate fares, and so on. Today, Uber continues to evolve with a customer-centric approach, and this ability is key to its success. This taxi service transports more than 75 million passengers, and the staff includes about 3 million drivers.

MVPs Help Improve Business Models and Processes

If Link Management System had known about the opportunity to test its business model with a MVP, it would not have closed. Employees cited the lack of sales, the overemphasis on technology, and the improper business model as the top reasons for bankruptcy. If managers had tested several business hypotheses, they could have directed investments correctly and developed the project even in difficult pandemic times.

With a MVP, all business functions can be tested to identify weaknesses and focus on improving them. By evaluating customer acquisition cost and customer lifetime value, it’s easy to track when you need to scale the product. Once you have worked out marketing approaches and sales channels in one market, it will be easier for you to develop your business in a new segment.

Investing in MVPs is about proving ideas can work

A MVP is a great start for projects whose managers try to think through every step in advance and carefully and rationally use money by investing only in proven hypotheses. A MVP allows you to bring a product to market faster, test the idea, get valuable customer feedback, and develop the basic version into a full-fledged app. It is a lean development tool that ensures against errors, failures, and bankruptcy.