Moving from product to minimum viable business

In October 2012, I was already writing about the Lean Startup and the whole MVP fallacy. As I still get many questions about it, it's probably worth translating the article from French (with some cleaning up) and sharing it again.

Moving from product to minimum viable business
Photo by iMattSmart / Unsplash

Of all the difficulties startup founders face, the worst is often overcoming the innate biases that they often carry with them. They're convinced that their solution is the best thing since sliced bread and throw all their energy into building it without considering whether it actually addresses a critical problem for their potential customers.

This is where a consultant's clinical perspective can make all the difference. They ask the tough questions: is there a real problem that needs solving? And if so, can we create a solution that effectively addresses it? Nothing surprising for those who read this blog (if only from time to time).

A now well-known and supposedly powerful method to address this issue is to challenge the startup team to design a minimalist prototype that addresses 80% of the customer's needs. This approach will raise tough questions that force the startup to consider the essential attributes that the final product should include. And this rigorous process can be integrated into a work program that prioritizes the development of a "minimum viable product," or MVP after the technological roadmap has been thoroughly vetted.

This concept was somehow branded (and became very popular) as long with the word "pivot" following the publication of Eric RIES and its trendy "Lean Startup Management." The core thesis of the book is quite sexy. Start without preconceived ideas and quickly produce successive prototypes to be challenged by the market, correct what doesn't work, reinforce what is loved, rinse and repeat until you have innovated.

On paper, this makes so much sense. And it brings elements of Darwinian logic and engineering to the unbelievably messy process of startupping.

The thing is, after years on the battlefield, I haven't met a startup capable of successfully applying this method to launch anything of value (beyond, ironically enough, using it to simply sustain its own confirmation bias). However, this magical method has received favorable press and even gained a devoted following among founders. Not to mention... corporates.

The Mean Startup, How GE Failed at Doing Innovation By The Book – Innovation Copilots
General Electric (GE) was founded right after the American civil war at theearly stage of the industrial revolution. Today, with around 300,000 employeesworking worldwide in a dozen markets, from home appliances to energy andaircraft engines, GE is still a force to be reckoned with. Think of
Lean startup in the industry? We tried at scale, and it's pretty ugly.

Before we discuss this further, let's be clear: the MVP can be a solid tool as a critical checkpoint to scrutinize or bolster the technological choices of a given product reaching final approval. But, at best, it's a tweaking tool, not a full-on strategic driver. And the reason should be damn obvious! The product is never the heart and soul of a startup's strategy. Creating your startup around a product idea is the first (and deepest) pitfall any seasoned startup advisor will try to help you avoid from day one.

On top of that? Good luck implementing this approach if you're not a pure B2C web player, if only because you're not going to MVP your micro-satellite startup with fast enough explore/learn/iterate cycles  And don’t get me started on biotech. The whole MVP-lean business theory essentially works for founders betting that having an intriguing website attracting traffic could land you an acquisition offer without even figuring out how to generate revenue. Welcome to 2012! For the rest of us? We have to discern where innovation is likely to occur and devise ways to generate and retain (wait for it...) revenues.

Also,  we might want to remember  that innovation doesn't have to be based on technology or even a product. It might be extremely powerful through distribution disruption, unlocking innovative partnerships, rethinking monetization, or lowering barriers to entry for new customers. Innovation is not confined to the product; it spreads to the full extent of what a business model can be.

As such, getting in the market fast and iterating your offer is a perfectly sound startup strategy (as in, 'it's pretty much the only one possible!'). But it's not about the Product part of the equation; it's all about focusing on the Problem/Added Value part. As soon as the startup focuses on the product, we defocus the innovation mindset. And an irrepressible physiological reflex kicks in: let's launch something and immerse ourselves in a development roadmap. Where are the key elements of value? How much is our potential innovation worth to the market? Where are the canaries in the coal mine and the first market's beachhead? Who cares? Let's develop!

The way out of the lean startup/product pitfall, would you ask? Don't think in terms of MVP but of MVB, as in Minimal Viable Business. Test the shit out of your problem/value proposition, question who should the first customer (the ones with the most problems to be solved), try offering your value as a service before building anything (if possible), etc.

And above all?

Test pricing from day one.

If you launch a startup, you're not a designer, a scientist, a marketer, or a belly dancer anymore. You're in business. How much potential customers would be ready to pay for you to solve their problem ends up being the single most important question to solve. Not because it will allow discussing monetization strategy or --god forbid– a business plan, but because the "will they pay?" test is the only real test of market acceptability for any innovation.