Minimum Viable Products: How Social Enterprises Can Harness the Lean Cycle Process

$10 Billion. The estimated net worth of Dropbox (Investopedia), the world’s premier cloud storage company, which has a daily user base of 500 million with a traffic of 1.2 billion files. But, when it started out in 2007, it had zero infrastructure, zero inventory, and zero design. Drew Houston, the CEO of Dropbox, showcased how the product worked in a video of less than 5 minutes to gauge the market viability of Dropbox, listened to the feedbacks of the online audiences, and made further improvements according the feedback. The demo worked so well that the beta waiting list went from 5000 to 75000 overnight. This masterstroke can be defined in marketing terms as MVP (Minimum Viable Product).

MVPs are in fact processes, not products

A minimum viable product (MVP) is the most pared down version of a product with just enough features to satisfy early customers, and to provide feedback for future development that can still be released. An MVP has to have some key characteristics:

First, an MVP has to create enough value for early users to want to buy it or at the very least use it.

Second, an MVP has to demonstrate enough future benefits to retain the early users or adopters.

Third, an MVP has to provide a feedback loop that will guide future development of the idea.

The end goal of MVPs is to find the perfect solution to a particular problem of the users. But, to reach that goal, the entrepreneur needs to gather constant feedback from the users and make necessary adjustments and then send the back refurnished product back to the users. Rinse, and repeat- until the product or idea reaches a stable state. The idea is shaped and then reshaped until it matches the vision of the entrepreneur and the end users. So, you see, it’s a process- not just a product- that needs constant readjustment at every step.

The idea of Social entrepreneurships has completely changed and it’s because of MVPs

Eric Ries, the writer of “The Lean Startup” (2008), first introduced the idea of Lean Startup model- which includes MVPs as the most critical component- based on his personal experience of high-tech startups. But, this idea is perfectly suited for social businesses, not only because it involves minimal costs but also because it listens to the final beneficiaries-their needs, and their grievances- and includes them in the idea generation and development process.

Identifying the ‘typical’ beneficiaries or rather, the customers and their pain points is just the first piece of the puzzle. It’s Imperative to find out whether the entrepreneur’s vision of the problem and the customers’ vision of the problem match and the only way to ensure that is to go out to the customers and listen to them. The optimum solution can only be found when customers themselves assert how they deal with the problem and what they need to better cope with the problem. Talking to the relevant stakeholders, such as: community workers, employers, government representatives, and NGOs, is essential in that it will pave the way to where the entrepreneur wants to go- effectively.

Having gained insight on what the customers need and want, and what the single most important feature of the product or service offered needs to be, and what the impact– social and/or economic- of the product or service offered has to be, the entrepreneur now needs to set sights on the second and most important aspect of the solution and that is- designing the product and gauging how much and what kind of value would be created for the beneficiaries or customers through the product or service. This step, rightly called the Value proposition step, helps to outline the benefits that will eventually eliminate the pain points of the customers.

The third step is to build the MVP and go back to the early adopters or customers right away. The MVP has to be barebones in that it opens the road to further modification and tailoring to the customers’ needs. After gaining the feedback from the customers, the entrepreneur has to play the devil’s advocate and find out the extent to which the proposed solution is actually matching the hypothesized solution to the problem. If the MVP is in fact solving the customers’ pain points- even if partially, the MVP has to be further developed and matured so that it can be catered to the target market. If the MVP is totally opposite to what the customers actually want, maybe it is time to pivot (changing the way the MVP is designed to function or solve the problems of the customers).

One of the finest examples of the utilization of MVP in social businesses is Amul’s. The Amul Model of dairy development is a three-tiered structure with the dairy cooperative societies at the village level federated under a milk union at the district level and a federation of member unions at the state level. The reason behind the success of this model is that it has listened to the milk producers’ grievances and cut the middlemen out of the procurement, processing, and marketing operations and handed the reigns over to the producers (the farmers) themselves. Thus, a direct linkage between producers and consumers, lets the milk producers operate at a low cost and high profit margin.

The use of MVPs in social enterprises can especially benefit the BOP (Bottom of the Pyramid).  As MVPs function with very little or ’’zero design’’ concept and require little infrastructural support, they are able to operate at a low cost. If the target group of an MVP is the BOP, the needs or grievances of the BOP can be easily listened to and incorporated in the model. However, an MVP will only be properly functioning if the men behind the curtains are open to rapid changes and constant improvisation and improvement.

Author

Kazi Ahmed Arif  Fuad is a Junior Associate at LightCastle Partners. For further queries and clarifications, contact us here: [email protected]

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