In the early 2000’s, Blockbuster was the real deal. Every day, avid film lovers would request DVD copies of movies from the company, and would soon after receive them in the mail. Blockbuster was one of the most successful and well known companies during this time period, and no other company was considered a worthy competitor.
At the time, Netflix—which is one of the most prominent entertainment and technology companies today—was still a work in progress. The company attempted to secure an acquisition by Blockbuster numerous times, as Netflix’s leadership believed that by creating and managing Blockbuster’s online presence, they would be solidifying their own role in the future of video distribution. However, Blockbuster demonstrated little interest in acquiring Netflix, as it did not view Netflix’s business model as a feasible one.
Over 15 years have passed, and to the surprise of many, Netflix and Blockbuster have had significantly contrasting fates. Today, Netflix is worth $125 billion and Blockbuster is no longer a household name. The company’s popularity began to decline in the mid to late 2000’s, resulting in the company filing for bankruptcy in 2010 and eventually closing all but one of its retail stores. Many experts speculate that had Blockbuster more thoroughly considered Netflix’s proposal, rather than dismissing it entirely, the company would not have gone bankrupt. The primary way Blockbuster could, and should, have tested the feasibility of Netflix’s proposal is through the use of a minimum viable product.
The Basics of A Minimum Viable Product
A minimum viable product (MVP) is a version of a new product that is publicly released so that the team can collect the maximum amount of validated learning about its customers with the least effort. Typically, MVPs are not fully developed prototypes. Rather, they comprise a series of foundational features, which are comprehensive enough to generate a satisfying user experience, while also producing insights around the product’s value. These insights are vital for future product development.
When a company releases a MVP, they usually do so in order to assess whether or not users actually need the product or not. As customers begin using the product, they will provide the company with feedback or concerns. Insights from these customers are then used to improve and refine subsequent products, and generate a broader set of features for the final product version. Although an MVP can refer to physical products, it can also include non-physical products such as websites and software.
Had Blockbuster released a MVP which was composed of Netflix’s proposed features, they would have been able to develop a more concrete understanding of the feasibility of and need for these features.
The Benefits of Releasing a Minimum Viable Product
As highlighted, MVPs enable a company to generate valuable insights and assess the value of a proposed product. Below is a more comprehensive breakdown of the benefits of MVPs:
- Market-Based Product Testing
While an idea may sound good on paper, the only way to truly understand whether or not a product is a feasible and sound business venture is by testing it in a real market. Markets are composed of and influenced by a series of different features. These include competitor companies, factors related to pricing, and market trends.
By making a MVP available in a real market, a company can measure and evaluate the performance of the product in a standardized manner, make a determination on whether the product is worth pursuing further, and obtain valuable insights for any future product development stages.
- Emphasis on key features
Oftentimes, users will purchase a product or piece of equipment that is incredibly complex. These individuals will typically spend a significant amount of time trying to acclimate to and understand this new product, which can prove to be frustrating, especially if the user only wants to tap in to certain fundamental functions. As a result of this convoluted process, products can lose their key value and companies can lose out on lucrative user groups.
MVPs are able to evade this situation as MVPs are designed so that they include only a key set of features. When a MVP is released, the production team can focus on assessing which of these key features are most valuable for users, and which appear to be unnecessary.
During later production stages the company can begin adding in additional features. However, during the MVP testing stage, the company is able to focus on the features that contribute the most to the product’s overall value. It is important to note, however, that just because a MVP is focused on key features, it does not mean that the MVP should be produced rapidly or with little consideration for quality. Before releasing a MVP, companies should be confident and proud of the product.
- Saves Time and Money During Production
Because MVPs are focused on releasing and testing the key features of a product, production teams are able to limit the amount of time and money they spent on the product.
The team will begin investing further time and resources into embedding additional features only after they are able to understand what MVP features are valuable, whether the product as a whole is valuable, and what the return on investment (ROI) is. In this way, the MVP lets teams manage the amount of time, personnel, and resources that are dedicated to proposed projects whose success is not guaranteed, and instead focus resources on projects that have been validated in the market.
- An Important Learning Experience for the Production Team
When a company releases a MVP into the market, they are able to obtain valuable insights around whether such a product is needed, and which of its features are the most valuable. In addition, this testing process allows the company to collect data on consumer reactions to product pricing, which can be used to influence the final product’s pricing.
When a company is releasing a new product, it is recommended that they engage in numerous iterations and testing phases. This will help them produce a refined final product that is responsible to user and market feedback.
As outlined, the use of a MVP can help companies test the feasibility of a new product by collecting a significant amount of validated feedback from customers, while conserving time and resources.
The deployment of MVPs is a way for companies to explore new products and ideas, and gain strong insights around how the company should be expanding and refining its offerings. This is an integral part of the product development process and it should not be overlooked. If it is, the consequences could be significant, and you may find that in a few years, your company will be the next Blockbuster.
Do you have a product idea in mind? Have you thought about your MVP? If you don’t know where to start, we’re here to help!
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