Tag Archives: lean startup

Minimum Viable Product revisited – the MVP Curve?

My professor once introduced me to a concept he called FRUST – an acronym for frustration. Its premise is that products should be built solving a problem or pain for the customer. So is the minimum valuable product (MVP) a systematic, disruptive approach to product marketing. Google, Twitter and Spotify apparently get it. Say no more.

At its shortest, Eric Ries coined the minimum viable product:

.. the minimum viable product is that product which has just those features (and no more) that allows you to ship a product that resonates with early adopters; some of whom will pay you money or give you feedback.

In this Venture Hacks interview with Eric Ries, it is put even more simple:

The minimum viable product (MVP) is often an ad on Google. Or a PowerPoint slide. Or a dialog box. Or a landing page. You can often build it in a day or a week.

More recently, voices of the Customer Development/Lean Startup community have made an excellent effort in elaborating the idea, e.g. Andrew Chen; Minimum Desirable Product and Ash Maurya; How I built my Minimum Viable Product.

If a picture is worth a thousand words, then the minimum viable product would deserve its own least common multiple. Adapting the Featuritis Curve, here is a conceptualization as a basis of discussion.

Minimum-viable-product-illustrated-methodologist1

The MVP Curve questions whether resonance with Early Adopters is relative to the number of features or amount of complexity offered. The minimum viable product does not necessarily mean that the product should be dead simple. Rather, the resonance with customers should peak when the product offering is designed to solve their core problems or jobs-to-be-done, as suggested by Clay Christensen. In accordance with the Customer Development model, this implies not only listening to the customer, but getting out of the building and carefully studying the customer.

I leave to you the question whether the minimum viable product can be conceptualized. In different use cases, what would be the pitch of the curve? Further, the curve might be tested by applying metrics to it: how to measure resonance with early adopters over features, and are there alternative variables?

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How to design your Business Model as a Lean Startup

If you spend time exploring innovation methodologies and models, you know that configuration of such frameworks largely apply new ideas, assembly and build upon previous work (hat off to science). I have come to explore conformity of two emerging frameworks; the Business Model Ontology by Alex Osterwalder and the Lean Startup methodology by Eric Ries. The result, the Lean Startup and Business Model Canvas mashup is illustrated below.

With the Business Model Ontology Osterwalder proposes a single reference model based on the similarities of a wide range of business model configurations. With the business model canvas (used as basis for the illustration above) Osterwalder describes nine building blocks that form a meta-business model.

On methodology, Eric Ries coins the Lean Startup, a practical approach for creating and managing startups using principles of Steven Blank‘s Customer Development  methodology alongside Agile Development methodologies.

The Lean Startup Business Model Pattern adopts principles of the Lean Startup (i.e. agile development and customer development) with the building blocks of the Business Model Canvas. In his recent book, Business Model Generation, Osterwalder uses the notion of Design Patters alongside the ideas of Christopher Alexander and Tim O’Reilly among others, to describe common configurations of business model components. Hence, it could be considered a Lean Startup Business Model Pattern.

The Lean Startup Business Model Pattern aligns with three main pillars that constitutes the Lean Startup methodology; Customer Development, Agile Software Development and Technology Commoditization.

Illustrated above the template using arrows, one key tenet with the Lean Startup methodology is the understanding of Product-Market fit, which optimally results from Agile Product Development, the solution offered, to match with Customer Development, the problem that is solved for a customer.

The Customer Offering or Value Proposition component of the template can be understood with the Minimum Viable Product concept used with Lean Startup method (see also whole product or doughnut diagram in Crossing the Chasm). The Customer Segments in which the Minimum Viable Product is offered, typically is characterized by early adopters or lead users in the social system.

With the Technology Commodity Stack, one of the main principles with the Lean Startup, Eric Ries speaks of how free and open source software (FOSS) availability and user generated content reduce startup costs. This is typically recognized with the Key Resources component. That is, knowledge of and access to open source software is a key resource to a Lean Startup. Similarly, open web hosting services are recognized with the Partner Network component, and convenient search engine marketing with the Distributions Channels component. Social media could as an example be a aligned with the Customer Relationship component enabling user generated content and interaction with customers.

Data-driven approaches based on customer-centric metrics applies to Distribution Channels, but may be considered a key activity as well. Among the Key Activities of the pattern are Agile Software Fevelopment methods and techniques, and the use of Metrics (e.g. Dave McClure‘s AARRR, Startup Metrics) for a startup to measure performance and adjust its directions accordingly. Although “listening to customers” would be recognized as a technique with the Agile Development methodologies, this is central not only to the Customer Development, Agile Development and the Lean Startup methodologies – it is also central to the Business Model Generation (Emphatic Design), Disruptive Innovation (Jobs-to-be-done), Lead User innovation and Voice of the Customer among other customer-centric innovation frameworks.

The conformity of the frameworks is not straightforward though. One such problem is that the level of abstraction differs. Think numerator and denominator. How do we distinguish between tactics, process, strategy and concepts herein? According to Steven Blank’s Customer Development methodology (slide #29 in this presentation), Product Development and Customer Development can be viewed through the tactical lens, while the business model view could be viewed through the strategic lens. Osterwalder understands business models as a facilitator between business processes and strategy. Myself, I would start from the premise that strategy or goals often comes as consequence of continuous learning in early stage ventures where resources are scarce and uncertainty is extreme.

One challenge to consider is how the pattern might express iterative development and internal feedback loops that are fundamental to Lean Startup methodology. It is in my understanding that when working with models and methodologies there is a general challenge in uniting behavior (process) and structure. That is, to what extent are the two frameworks integratable in terms of methodologies and notations. Borrowing from areas such as software engineering and system dynamics, future work would envision a tool that aid in entrepreneurial learning and aggregates key metrics in order mitigate risk in new-product introductions.

For starters a fruitful discussion would consider what are the principles with the Lean Startup methodology that should be included in the Business Model Pattern and where they belong. Later, I will address how a startup would use the pattern to validate their business model as a part of their lean methodology. Stay tuned.

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