Posts Tagged ‘business’

MVPs – A vital bridge between Ideas to Businesses

Monday, October 29th, 2012

“Entrepreneurship in a lean startup is really a series of MVP’s”  … Eric Ries

If one really distills down the tenets to creating a business, it comes down to two basic things

  1. Understanding & addressing a customer need in a meaningful way
  2. Monetizing the product / service which addresses the above

That’s it! So, then the question arises, if it is so simple, why do so many start-ups fail? Why do so many innovative products / services fail to take off?

While working as a business coach, I have found that quite often it is because there exists a gap between the understanding of the need in entrepreneurs’ mind and the customers’ mind. This gap is critical and can be a matter of life & death for a start-up. At the same time, addressing this gap in a quick and cost effective manner can lead to significant competitive advantage in the marketplace.

Take the example of the very successful start-up RedBus. When Phani initially faced the problem while booking a bus ticket, his first product was a software for the bus operators, aiming to make an integrated ticketing system that would have made their inventory management more efficient and productive. However, not one operator was ready to use the software, not even for free!

Clearly the understanding of the need was different from both sides! While Phani was trying to increase efficiency and avoid the manual ticket management, the bus operators’ focus was on increasing sales and on first glance this software did not satisfy that need.

So, then the big question for start-ups / entrepreneurs is how to bridge the gap in the assumptions on customer need in a cost effective and quick manner? The concept of Minimal Viable Product (MVP) comes in handy in answering this question.

MVP is essentially is a bare minimum avatar of your final product / service which a customer can experience and therefore provide feedback to the entrepreneur to validate his / her assumptions on the fundamental business hypothesis.

In other words, a good MVP is something that helps answer the following questions

  • Is the Customer Need being met? If so, to what extent?
  • Will the customers be interested in using the product against other options available?
  • Will they pay for it?

So can only the prototype be an MVP?

MVP can take various forms. It could simply be a video / power point presentation which shows how your product works or a working prototype which a customer can use.

Drew Houston, founder of Dropbox, an extremely easy to use file sharing tool, wanted to test his business hypothesis much before his product was ready. He wanted to check whether customers would be willing to use his product if he provides superior customer experience in seamlessly & instantaneously syncing files across platforms. Building a prototype would have taken time and money. So, instead, he developed a video (similar to this) showing a mock demo of how the technology was meant to work. The simulation video became an instant hit and he could sign up beta customers even as his product was getting ready. His video MVP validated one of his key business hypotheses and rest as they say is history.

 MVP – a tactic or a strategy?

Thinking, breathing and building MVPs can be a way of life for an entrepreneur. It is not necessarily a one-time affair. As long as a start-up is trying to find their connect with the customer, they can use this process to get the product market fit validated via this Build-Measure-Learn cycle in a quick turnaround & cost effective manner.

 

Even in the later parts of a product’s lifecycle, MVP, as a process can play a role. Each additional feature or major upgrade can be launched with the same philosophy to validate the real value of new launch from customers’ perspective.

At the end of the day, it is the customer’s need which matters the most, sooner a business can connect with it, the faster they can build a viable business!

Recently I gave a talk on the same topic to entrepreneurs at Start-up Village @ Kochi. You can find the slides for the same here.

I am also doing a webinar on Nov 6th  on Building MVPs. Interested may register here.

Recommended Reads: The Lean Start-up by Eric Reis

Same article was also published on yourstory.in.

Do you have a CEO?

Wednesday, September 7th, 2011

Shyam, Rohit and Apara were good friends. They were passionate about doing something on their own. Very soon they figured out an idea which made them take the plunge. In due course, they worked on it and soon their on-line product was ready to take to the market.

Then came the first major hump. All of them favoured slightly different approaches to monetize their product especially where to draw the free vs paid line. Each had their own valid concerns and there was clearly no right or wrong choice. It was a difficult decision, but finally one of them prevailed on the other two and the process moved forward.

With time, the situation became more complex – the initial high of a new venture came down, funds started to run low and customer traction unsteady. These down turns further led to multiple discussions. Again, solutions were not always very obvious with all options having their own set of pros and cons. Critical choices that could change the course of their start-up needed to be made but sadly they could not reach a consensus time & again!

Someone or the other would always feel unheard. Slowly the camaraderie became a little forced and ego tussles started germinating. Ultimately the differences grew so much that a couple of years after the venture started, the founding team broke up!

In my experience of mentoring start-ups, this story is not that unusual –  a bunch of class mates / friends come together to start a venture with pretty much every one doing everything. Quite often, at some point, such teams find themselves in a quagmire with relationships souring and a sense of disharmony setting in. Often the risk of teams breaking up gets overshadowed by the other immediate risks a business is facing!

So the critical question is what could have been done differently?

In their pursuit of building their business, Shyam, Rohit and Apara deferred the decision of picking up the critical roles a little too late. They missed asking “Who should be the CEO / CTO / CMO…?” in the initial stages. The premise being that since all of them were good friends, they understood each other and could work out everything together.

In my opinion, the role definitions should emerge early on. All the partners can have influence and work together, but they still need to define a focus area for each one of them and be comfortable with the allocation of roles (for self and others). Assigning focus areas gives everyone in the team a sense of structure and their own home ground. So, if business strategy is in question, the CEO should make the final call and others must then support the decision, CTO decides on an impasse on technical architecture and so on…

It is much easier to decide this in a harmonious fashion right at the beginning than when the heat is really on and misunderstandings have already cropped up. It’ll be a tough discussion no doubt, but a critical one, especially amongst friends with similar background and experience. Since the CEO of an organization will be the first among equals, this role can create more heartburn in the team than the other ones and hence is the most important to decide upfront.

So, do you have a CEO? If not, choose one now!

PS: Interested readers can also read this blog post for more information on how to shape / perform the role of a CEO.