Minimum Viable Product (MVP)
A product development model created to satisfy early customers and solicit feedback
What is a Minimum Viable Product (MVP)?
A minimum viable product (MVP) is a product development model in which, initially, a product is developed with just sufficient features to satisfy early customers and solicit feedback for future product development. Generally, an MVP must possess the following characteristics:
- Sufficient value to convince a customer to purchase it
- Sufficient future benefit to retain
- Provides instant feedback for future product development
Note that a minimum viable product is not crude or unusable. It possesses enough basic features to be a working product and deliver some value to its early adopters.
The main goal of the minimum viable product is the collection of the maximum amount of feedback from customers with the least effort. The least effort implies a reduction in implementation costs, time savings, and avoidance of large capital spending. At the same, note that feedback is generated not by direct communication with the customers, but through observations of the customers’ interaction with the product.
How to Create or Develop a Minimum Viable Product
The development of a minimum viable product can be divided into several stages, such as:
1. Market research
The foundation for the development of an MVP is market research. The market research step is critical because a company analyzes the current trends in the market, recognizes its competitors, and identifies growth opportunities in the industry.
2. Initial design
Based on the information obtained through market research, a company can generate ideas on its minimum viable product. For example, the company determines a product’s initial design and basic features that will make the product viable in the market.
3. Product development
The next stage after the idea generation is product development. Using all the ideas developed in the previous phase, a company builds its minimum viable product. Note that this phase must be conducted as efficiently as possible to save time and resources for the subsequent round of product development.
4. Delivery to customers and collection of feedback
After the development of the minimum viable product, it is delivered to customers. A company collects feedback from its customers by observing their interaction with the product.
5. Analysis of data
After the collection of a sufficient amount of feedback, a company may start analyzing the data. The analysis step is the most critical because the insights obtained during the analysis phase will be used to generate new ideas for subsequent product development. Essentially, it is a learning phase for a company when it can assess the pros and cons of the design of a product.
Upon completion of one cycle, another similar cycle starts. The purpose of the cycles is to make progress from a minimum viable product to a final and complete product. Note that the cycles may also lead to situations when a developed product becomes non-viable.
More Resources
CFI is the official provider of the global Financial Modeling & Valuation Analyst (FMVA)™ certification program, designed to help anyone become a world-class financial analyst. To keep learning and advancing your career, the additional CFI resources below will be useful:
