A Minimum Viable Product (MVP) is a product development strategy developed by Eric Ries in his Lean Startup methodology. A MVP is the smallest version of a product that requires the lowest effort and least amount of time to develop. It is also the easiest way to achieve a feedback loop of what Ries called a Build-Measure-Learn, which is the heart of the lean startup methodology.  Unlike traditional proof of concepts (PoC) or concept ideas, the goal of a MVP is not just to answer the technical feasibility of a product, but also to test its fundamental business hypothesis.

For example, instead of trying to develop a complete version of your product before launching it to the market, try to create the first one or two modules and have customers use it and provide feedback. It doesn’t matter if your product is perfect or all the features that you’ve envisioned are there. What is important is for you to know if your fundamental hypothesis, the things that you think will make your product “click”, are true.

In an age where market competition is stiff, it is a challenge for companies to launch first and iterate fast. The same can be argued in developing internal products aimed to increase corporate productivity and eliminate waste.  As such, IT business analysis plays a very critical role in realizing these strategic objectives the agile way.

What’s wrong with Waterfall business analysis?

The traditional approach of requirements gathering is often leaning towards the waterfall methodology-a big bang approach where everything is attempted to be identified in the beginning and locked down until project completion. A remnant of the project management principles of the construction industry, the waterfall approach has been proven to be wrong over and over. We see this in lots of products in the market. Countless applications, both enterprise and consumer, are packed with features that nobody seems to understand or see the value.

The lean startup methodology helps IT business analysts move beyond this stop block and develop requirements based on what Ries calls the learning milestones. An alternative to traditional business and product milestones, learning milestones are useful for entrepreneurs as a way of assessing their progress accurately and objectively.

In creating a minimum viable product, IT business analysis must use innovation accounting. According to Ries: “innovation accounting is a quantitative approach that allows companies to see whether its engine-turning efforts are bearing fruit”. There are three steps to lean startup methodology to create a MVP. Let’s explore them one by one.

Step 1: Use MVP to establish real data about the product

IT business analysis should focus on tracking “real numbers” after launching their MVP to the market. By using and tracking Funnel Metrics, or the behaviors critical to engine growth, Business Analysts (BAs) can measure and learn from user interactions with the application and decide from there which features to add or improve.

For example, funnel metrics can focus on customer registrations, application downloads, enrollment for product trials, repeat usage and purchase. Bear in mind that IT business analysis should also focus not just on cumulative totals of these funnel metrics. It isalso  important to do what Ries calls cohort analysis. This is done by analyzing data in context with the various group of customers who came into contact with the product independently.  By putting an acid test on real numbers through cohort analysis, BAs can focus on creating features that real users will find useful.

Step 2: Tune the product to move it to its ideal state

A common bias of technology companies is putting more importance on product optimization rather than learning. The lean startup methodology stresses the importance of making decisions based on learning milestones and not on mere executive or marketing insights of what they think should work.

To do this, IT business analysis should be careful about referring to Vanity metrics instead of Actionable metrics. According to the lean startup methodology, vanity metrics are like “theater tricks”. These are actions done to make a product’s gross numbers look bigger through advertisements, channel stuffing and demos-things that make customers use the product not because of its inherent value, but because of a hype. Instead, IT business analysis should zoom in “actionable metrics”.

These pertain to data that will allow an evaluation of the product and its learning milestones. For a metric to be actionable, it must have a clear cause and effect. Using actionable metrics from cohort analysis and split test experiments would allow BAs to move its current product to an ideal state. Tools such as Kanban can aid in IT business analysis, most especially in prioritizing which features to work on and which features to defer until further validation.

Step 3: Decide if the current product strategy is flawed and needs a serious change.

Validated learning will enable BAs to assess if the current MVP is no longer relevant and therefore needs a total overhaul. The pivot is a sharp turn of product course or strategy that will essentially change the product as a whole. There are different kinds of pivot: a zoom-in and zoom-out, customer segment, customer need, platform, business architecture, etc. For example, a zoom-in pivot will make IT business analysis focus on a previously single feature of the product as the core functionality, making a full turn, resetting all its current metrics and baselines.

Focusing on the Lean Startup Methodology, IT business analysis can leverage validated learning and innovation accounting of Eric Ries to create successful products. Releasing a MVP rather than a full feature product to the market will allow companies to quickly learn about their market and consumers, building products that they truly find to be useful.