In this exclusive interview, we talk with Brant Cooper, a business speaker, advisor and co-author of the New York Times bestseller The Lean Entrepreneur. Brant provides insight on how service firms and small companies can apply the concept of Minimum Viable Product to continuously learn and improve through testing and experimentation.
In The Lean Entrepreneur, you talk about the concept of a Minimum Viable Product (MVP). Can you explain this concept?
Brant Cooper: This refers to creating a product with the minimal set of features required to deploy and test the viability of the product in the market; the objective being to get the product in the hands of the customer – ideally, the early adopters – as quickly as possible so that measuring customer behavior and learning whether or not you are creating real value can begin.
The feedback you receive from your early adopter customers helps guide your product development and, in turn, you avoid building a product that generates little interest in the market. It will also likely improve the chances the product will succeed with a broader audience. It’s a scientific approach that involves a process of continuous learning through validated testing. You hypothesize, run experiments and iterate until you see the engagement you expect to see.
It’s a core element of the Lean Startup and is often associated with entrepreneurs and startups, but it is certainly applicable and effective for companies of all sizes.
How can small companies and service firms apply this concept?
Brant Cooper: Not to confuse the matter, but people also use “MVP” to describe experiments that test different aspects of your business model that aren’t necessarily their actual product. I call these “viability experiments.”
I tend to reserve the term “Minimum Viable Product” for the first time you’re trying to deliver value to the customer. Essentially, the strategy could apply to any circumstance where there is uncertainty – it’s your first take on trying to deliver a product or service that creates new value.
When running a viability experiment, you might be looking for signs of market viability (as opposed to technical viability or distribution channel). For example, if you’re a services company, you could test activity on a landing page to determine if there’s any viability by gauging whether targeted visitors respond to a specific call to action: “Download [new service] case study!”
The Lean Startup is about differentiating what’s known vs. unknown. Known is when a transaction has occurred in the market – value has been exchanged for some currency. If you are a services company looking to grow, you can take a look at existing companies in a similar space who have already shown success in the market. That success in a ‘known.’ You don’t have to independently verify that people are willing to purchase the value being offered.
If you want to do something brand new, however, that isn’t known, no matter how convinced you may feel about its worthiness. By focusing on what’s known or unknown, you don’t end up reinventing the wheel – you can model your efforts after proven success (assuming there’s room in the market for new players.) Or, if pursuing new turf, you can see what needs to be tested to prove viability, before wasting time, money and effort on a fruitless endeavor.
What mistakes do small companies often make when taking this approach?
Brant Cooper: The tendency for entrepreneurs is to over-plan. The only data points that really matter in the end come from the marketplace. The key is to keep experimenting and iterate quickly.
Small businesses should formulate a hypothesis and test that hypothesis to create actionable metrics, where each experiment informs the next one so you can continually optimize your strategy. The trick is to not fall into the trap of measuring your Return on Investment (ROI) too early. Clearly, you want to make progress toward the goal of growing the company. But if you measure the ROI from the beginning, you’re going to miss out on the bigger opportunities.
It’s important to remember that continuous learning is not just about creating products of higher quality; it’s equally about improving the process of creating those better products.
On a related note, small businesses could use a “Chief Experiment Officer” to drive such experimentation. This could be a business development person or similar role whose sole focus is through testing and market validation, discovering new problems that can be addressed.
Do you have any other advice for service businesses looking to grow?
Brant Cooper: When services firms are just getting started, the CEO is typically the one who spends a large portion of their time delivering the service, but an effective growth strategy is to train and empower others to deliver the service at an acceptable level. In doing so, you’re establishing a framework for effective customer service, while freeing the CEO to work on the business, not the services.