26/10/2021
Banking Blog Business Insurance

What is Minimum Viable Product, and what are its benefits?

Altkom 7 min Read

MVP, or Minimum Viable Product, is a product (offer, service, software) that is to be further developed in the future, but the work is already advanced enough to be able to release its first versions on the market. If at the moment you are thinking: “why share something that is not finished yet?”, with today’s article we will prove that it makes sense. 

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Minimum Viable Product. Benefits both side

If we want to try something new in life, we rarely jump immediately into the deep end. Usually, our first rafting trip is on a rented kayak, the box diet starts on the trial day and the new software starts with the demo version. This is perfectly normal — we need proof that the product suits us. Thanks to this, we can better estimate the costs and risks associated with its purchase. Because what if the chosen car straight from the showroom is not what we are looking for? It is better to arrange a test drive, wasting at most waste a little time, and only after you have properly tested an interesting offer, decide on investment and purchase. 

Why not also use this approach in business? After all, an idea may only sound good on paper, and not work at all. The MVP approach allows entrepreneurs to perform the necessary tests and gather as much information as possible with a minimum of effort. Both sides benefit from this: the creator can develop his product according to the recipients’ expectations — or avoid a missed investment — and the clients receive a solution that responds to their real needs. 

Minimum Viable Product (MVP) and the risk of failure

A common mistake among entrepreneurs is to create very complex versions of products and wait until they are equipped with all functionalities before releasing them to the market. This is a lot of work without any guarantee that the idea will be accepted and thus sold. In this way, the risk of failure and loss increases, and the first real tests are carried out on the already finished product. Introducing any changes is more difficult and, as a result, much more expensive, because the entrepreneur pays twice — the first time for creating a solution and the second time for its modification. 

MVP means that the product is ready enough for the target group to be able to judge its value. At the same time, it is not a very early prototype that will not attract the attention of potential buyers or mislead them about the usefulness of the final product. After all, the point is for the potential customer to get to know it, test it and give valuable feedback. 

In this way, the MVP allows you to assess whether the idea makes sense and is worth investing in further. It’s always better to withdraw in the early stages than to finish the job and launch a mismatched offer. This will save costs related to the launch of logistics and large-scale production, marketing, sales, customer service, as well as potential image losses if the product turns out to be a failure. And while MVP may seem like a risky approach, it does help save you time and money. 

MVP does not mean that the product is unfinished

Information from a potential customer is one of the most valuable types of data in the product discovery and development process. The MVP approach allows the product to reach the recipient before it takes its final shape, and thus can be created together with its future user. Feedback allows further versions of the product to be built, which better and better meet the needs of customers. 

However, it should be remembered that MVP is all about presenting the recipient with the key features of the product. If, for example, we create an insurance application, the overriding value for the target group is the ability to remotely submit an application and sign a contract. The look of the website is less important because even the best refined with a view to UX will not show potential customers the mechanics behind the developed idea. As a result, they will not be able to test and evaluate it, and the collected feedback will not be valuable. 

For the MVP approach to make sense, potential buyers should receive an application to test that is still limited and may not be perfectly polished in terms of graphics, but fulfills its principal task: application submission. 

Minimum Viable Product (MVP) and legacy systems

MVP assumes launching products, collecting data, changes and creating new, improved versions. This approach will only work if the company can act quickly and flexibly. Legacy systems, where any change takes time, can effectively prevent the implementation of MVP strategy. In such a situation, the first step should be to find a tool that allows you to bypass system restrictions and thus speed up the implementation of new products. If you see such a problem in your company, you can learn more about the possibilities of unlocking business development with the help of Smart Decoupling. 

And if you work in the insurance industry, we encourage you to visit the article: MVP in Insurance, where we describe an example Case Study and present the possibilities of our proprietary product, AIS. This is a lightweight system that can exist alongside the company’s main system but can be used to quickly launch new digital products that are still being tested. And with it, you can quickly evaluate whether customers react positively to the new offer. If you are satisfied with the results, you can transfer the product to the core system. 

MVP and cooperation with a software house

At Altkom Software & Consulting, we want the technology we create to support our clients’ businesses. That is why we are happy to accompany them at the product discovery stage, and in cooperation, we place great emphasis on understanding their business goals. When implementing projects, we are happy to employ IT strategies in line with the MVP approach, developing products based on: 

1. Identifying the client’s needs. This takes place through dedicated workshops, during which we use various techniques of acquiring knowledge about the project’s needs, business goals and assumptions. Thanks to our partnership with the Kreatik strategic agency, we can start each project with Design Thinking workshops, which help in the discovery of a truly innovative product and define the shape of the MVP for further development. 

2. Agile methodologies. The MVP approach is to test frequently, collect feedback, make changes and retest. This is perfectly in line with our approach to work, i.e., developing software in stages and periodically checking whether it meets the client’s expectations. In this way, we can react quickly and introduce changes, creating systems realistically tailored to the needs of their recipients. 

Summary: the main advantages of MVP

Initially, the MVP approach may raise concerns that an unfinished product will be released to the market. However, a thoughtful approach allows you to create a “prototype” that will collect the necessary data and — if the idea is good — will be warmly received by the target group. 

The main advantages of MVP: 

  • Quick verification of the idea and project assumptions;
  • Identification of problems at an early stage of work; 
  • A better understanding of the target group; 
  • Save time and money; 
  • Creating better and more refined products.