The Dangers of the Minimal Viable Product

A movement originating from the United States' West Coast has sought to transform the creation of new businesses from an art to a science. The intellectual leader of the movement is Steve Blank, a serial entrepreneur who now teaches at Stanford and the University of California at Berkeley. One of Blank's disciples, Eric Ries, turned his wildly popular Startup Lessons Learned blog into The Lean Startup, one of 2011's best business books.

I'm a huge fan of this work and suggest that all innovators study the movement closely. One area that deserves particular attention is the notion of the minimal viable product (MVP). The concept is pretty simple. Because it's next to impossible to be sure that your idea is good until you bring it into the marketplace, don't waste time trying to fine-tune a product that is destined to be wrong. Instead, put something "good enough" in the marketplace. Let real customers use the product and learn from their feedback (Henry Mintzberg dubbed this process "emergent strategy" in an influential 1985 article [PDF]).

Sometimes, though, a Minimal Viable Product turns into a Mediocre Value Proposition. A company might introduce a product in the marketplace. A few customers find it interesting (you can always find a few customers). Results fall short of expectations, but the company says, "Well, it's just a minimal viable product for learning." The company makes a few tweaks, scales up spending . . . and falls flat on its face.

Part of me wonders if this isn't what happened to Maghound. In late 2008, while prepping for a presentation to some magazine industry bigwigs, a colleague happened on a new venture that had been recently launched by Time, Inc. — "Netflix for magazines" — where consumers could get different magazines every month without having to have a fixed subscription to those magazines. Sounds great, doesn't it?

Earlier this year, Maghound shut down. One commentator said that it's a clear sign that the "Netflix of anything" model doesn't work. I think it shows the limitations of a "good enough" offering.

Maghound's catchy idea and relatively simple signup seemed attractive. After all, I often would pick up random magazines at airports and enjoyed flipping through esoteric titles left behind on planes or in doctor's offices. But after I signed up for the service, it took forever for a title to arrive. Instead of changing titles on the fly, it took weeks before Maghound's system registered a change so I could get a new magazine. Nor was there anything approximating Netflix's recommendation system to help steer me to surprising titles I might like. After a few months, I cancelled my Maghound membership.

"Good enough" is a great way to start the innovation journey because it enables learning in the most important laboratory of all — the marketplace. But it's hard to build a compelling business with something that's just barely adequate. Customers might be intrigued enough to try it once, but they won't come back.

How do you make sure your minimal viable product isn't hiding a mediocre value proposition?

  1. Ensure you have the right expertise on your team. Depending on your industry, that might require excellence in design, programming, chemistry, sales, or dozens of other areas. Raw potential can develop into world-class talent, but the portraits of most successful startups feature some gray-haired people who have "been there and done that."
  2. Think beyond the product to the full offering and business model. Competitive advantage comes from innovative ways of creating, capturing, and delivering value. Success requires fine-tuning more than features and functions.
  3. Act on the learning. One of the biggest warning signs for a new venture is a significant gap in product releases. An even bigger warning sign is when there isn't any plan to introduce an upgraded offering. Minimal viability descends quickly into mediocrity if there isn't an actionable plan to act on the learning.

Building mediocre products has never been easier. Building great products and, more importantly, great businesses, remains challenging. By all means start with something that's just good enough to garner feedback from the marketplace. Just don't stop there.

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