Article

Minimum Viable Product: Its Use in Software and Business

March 07, 2024

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Emily May

Whether you work in software development or the business world, you’ve probably heard the terminology ‘minimum viable product’ thrown around in conversation over the years.

Thanks to rigorous industry competition, everyone is looking for a way to make their products or ideas faster and more tailored to the customer–a minimum viable product aims to accomplish both in a way that enables rapid incorporation of feedback.

This article explores the definition of a minimum viable product, its application in software development and business, and how it contributes to increased organizational agility.

What is a Minimum Viable Product?

A minimum viable product, or MVP, is an early version of a product that includes the essential features to be marketable and functional. For example, a scheduling app in the MVP stage will have enough capability to book meetings, but advanced features and capabilities will not be available.

The idea of a minimum viable product originates in the software development industry and has since made its way to other sectors.

The purpose of releasing a minimum viable product is to test the product vision with real users and learn about their needs and preferences. Teams can validate their ideas and gain insights before investing in an actual product, resulting in more effective resource allocation and an innovative end-product that resonates.

Key Benefits of MVP

  • Enter the market faster
  • Idea validation
  • Continuous product testing and improvement
  • Customer feedback collection in early product stages
  • Tailored products and features
  • Data-driven decision making
  • Adaptability
  • Resource savings

Steps to Apply MVP

  1. Identify a marketable product idea or business model change
  2. Determine the target audience
  3. Define the idea’s minimum key features for functionality
  4. Build the minimum viable product
  5. Release the product to the target market
  6. Analyze user behavior and collect feedback from customers
  7. Create user stories
  8. Implement user feedback in iterations

MVP Meaning in Software Development

In software development, a minimum viable product represents a digital product with just enough features to meet the needs of early users. It contains the core features necessary to complete its marketed function, excluding all non-essential elements.

Agile development teams aim to release their MVP to customers as soon as possible to incorporate user feedback in the early development phase.

The iterative process relies on collecting anecdotes and learning about customers to improve the core product features before all else–and provides valuable context to add complementary capabilities later.

MVP empowers an efficient agile development process, as product managers can prioritize team initiatives based on core functionality first, ensuring a software solution built with ultimate customer-centricity from top to bottom.

Further, by performing product testing before investing in a full-fledged product, organizations can save significant time and money while utilizing customer insights throughout the creation of the product.

Companies That Leverage MVP in Software Development

Facebook: Facebook was initially released with its core feature as a simple networking website where college students could build basic profiles and connect with other students. Today, Facebook is a top-performing social networking site with many capabilities, including photo sharing, event and business pages, a marketplace, video calling, messaging, and much more.

Dropbox: Dropbox first launched as a digital product for basic file storage and sharing. Based on user stories and feedback, the Dropbox team added features such as document collaboration, device backup, screen recording, and a new AI product in beta called Dash.

Airbnb: It’s hard to imagine, but Airbnb started as a site called ‘airbedandbreakfast.com,’ where three roommates in San Francisco would rent an air mattress in their apartment to make extra money. Today, Airbnb has morphed into a program that travelers worldwide rely on to book accommodations and find local experiences.

MVP Meaning in Business

The minimum viable product concept doesn’t just apply to software development–business leaders can leverage the approach to test changes in areas outside the digital space, such as a physical product idea or a way of doing business.

Let’s use an startup company on Kickstarter as an example. Not only is the crowdfunding platform helpful in generating funding for a new physical product, but early backers often serve as product testers who provide valuable feedback on the MVP before its release for purchase to the public.

Just as its application in software development, business leaders can utilize the customer feedback on their MVP to fix and adapt the product according to the wants and needs of the consumer.

By testing a new physical product or business model early in its development phase to learn how potential customers engage with it, companies can create products and ways of doing business that cater to the unique needs of their audience–and save resources along the way.

Companies That Leverage MVP in Business:

Zappos: Zappos started with a business model of selling shoes only. As they collected customer data in the early phase of business, the Zappos team learned about the preferences and behaviors of their customers and used these insights to expand their offerings in the fashion and lifestyle markets.

IKEA: Before a full-scale rollout and mass production of a new product, IKEA releases an MVP in a limited number of stores. Based on sales numbers, customer reactions, and feedback, the IKEA team can validate that the product will be a sound investment for the brand.

Coca-Cola: When the famous beverage company introduced its “Freestyle” vending machines that allow customers to mix and match their favorite drink flavors, the concept was initially tested in a few select locations to gauge interest before a swift rollout.

MVP & Agility

The minimum viable product strategy contributes to business agility by promoting customer-centricity, productivity, and adaptation.

MVP allows teams to provide value to their user base faster by launching quickly and collecting groundbreaking insights that speak to the real-time user experience.

Teams then use this feedback to improve the product's basic features in iterations, prioritizing exceptional core functionality. When customers are happy with the implementations, businesses can use the same MVP model to collect feedback on new features.

The feedback collection process is integral to optimal adaptability. Businesses stay privy to the evolving needs of the industry, competition, and, most importantly, the customer. Swift adaptability leads to innovative ideas and more distinct market differentiation.

Conclusion

Whether applied to software development or testing changes to an established business model, utilizing a minimum viable product provides significant market opportunities for companies of every size. An MVP helps teams create customer-centric products and ideas that are quick to the market, adaptive, cost-effective, and distinguished in a competitive market.

Learn how to support your team in delivering an MVP with an Agile Product Ownership certification or begin adopting agile principles across your organization more broadly with an Agile Team Facilitation certificate.

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TAGGED AS:
Foundations, Agile Fundamentals, Business Agility Foundations, Agile Team Facilitation, Agile Product Ownership

About the author

Emily May | ICAgile, Marketing Specialist
Emily May is a Marketing Specialist at ICAgile, where she helps educate learners on their agile journey through content. With an eclectic background in communications supporting small business marketing efforts, she hopes to inspire readers to initiate more empathy, productivity, and creativity in the workplace for improved internal and external outcomes.

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