MVP is a Dangerous Illusion
How to cut your time-to-revenue by 75%
1. MVP is Not Enough
How you decide where and how much to invest isn’t working. Even worse, the flawed decision models you are using create the illusion of a high-value product. These decisions largely result in a massive waste of resources and a terrible project success rate.
First among these clumsy tools is the Minimum Viable Product (MVP). Although MVP revolutionized the tech industry with the concept of iterative development, it has not improved the innovation failure rate.
More than 85% of innovative projects in startups and enterprises are still failing.
A key factor in this situation is that teams are confusing viable with compelling. While customers are willing to adopt new solutions that are truly compelling, teams are building products that are technically viable, and even elegant. These efforts often fail to provide enough new value to inspire adoption.
Signs of Trouble: The Consequences of Focusing on Viable
There are many clear indicators and damaging outcomes when you are building expensive, technically elegant MVPs, instead of compelling offerings. And there are quite a few signs that you are in this risky, career-wasting situation, even before you reach your first release.
Strained Budgets: You are blowing through your original estimates.
Bloated MVPs: Managers and engineers keep adding edge-cases and scope-creep in the name of completeness and technical elegance.
Strained Resources: Even when you are not achieving your goals, you are also over-investing in many capabilities. Yet, you are not sure what is being overbuilt, or by how much.
Vague Central Theme: Fuzzy and/or complex value propositions are spreading efforts thin.
If you are in the middle of a project and you are seeing these symptoms, you need to act now, before another lackluster release fails to grow your business. But do not despair, there are simple, effective steps you can take right now.
But if you already launched an MVP, there are clear indicators that it’s not compelling:
No Revenues: People are not buying.
Sideways Adoption: People are using your product, but not in the way you intended.
Slow, Unpredictable Growth: Your revenue is not scaling with sporadic sales. You are in zombie mode.
Too Many Cycles: Endless releases and new sprints aimed at fixing deficits are driving up costs and wasting time.
Disgruntled Team: The team feels frustration from working hard to deliver elegant products that don’t succeed in the market.
Brain Drain: Your best people are leaving to find a winning team.
The Rise of the Priest: A development manager, often without direct reports, becomes the “go-to” source of complex decisions.
Do not be discouraged if you are seeing these consequences of a viable, but uncompelling release. Three simple questions will change your concept of value and lead you to compelling.
2. Compelling: The Fastest Time to Revenue
Achieve competitive advantage and transform your team by quickly delivering a continuous stream of compelling releases that customers are eager to pay for.
Win by delivering compelling in a fraction of the time
Imagine if your team could quickly focus efforts across many complex technologies and diverse skills to quickly create compelling customer value. Now imagine not wasting any efforts building unnecessary capabilities, so that you deliver this compelling solution with fewer resources in 25% of the expected time. Also imagine the soaring morale, resulting from seeing how team creativity directly impacts product vision and delights customers.
But just what is a compelling release? A compelling release solves a problem that matters enough that people will switch over from an existing solution.
A Problem Worth Solving: Help your customer reaching one of their top goals.
A Solution that is Better Enough: Deliver unique, delighting, and/or unexpected value with a big value gap vs. the current solution. It must be worth both the cost and the risk of switching from an existing solution. Creating this gap versus the status-quo often involves doing something unexpected, not just incremental improvement.
3. Viable is an Illusion
Root Cause: How People Value
MVPs aren’t working primarily because product teams just don’t know what it takes to be compelling. They mistakenly assume that viable is compelling. They also misunderstand what value is required to dethrone the status quo, and what constitutes “enough” value to get adopted and displace existing solutions.
The key concept of viability is at the core of this problem. ‘Viable’ is an inadequate concept for achieving ‘marketable’ clarity.
The root cause is twofold:
Awful Model: The model that R&D teams implicitly use to guide their efforts is fatally flawed. It does not match how humans will value their work.
Poor Usage: Without an operational definition of market viability, development teams have:
Transformed “viable” into a powerful proxy for technically functional
Confused their work sequence with this flawed definition of priorities
The Missing Ingredient: A Decision Model that Represents How People Really Value
Traditional thinking about the concept of value is preventing teams from aligning their efforts to the value they create. This default approach often goes completely unquestioned.
The problem causing R&D mayhem is a poor understanding of how humans value. This miscomprehension is then used in investment decisions. The key prerequisite for building compelling (value) is understanding how people really interpret the value of the various parts of your offering. Without an accurate, precise, operational model for how people really value, investment decisions are simply a gamble.
The 1-Dimensional Model for Value is the Core of the Illusion
The ‘common-sense’ value model people use every day and take for granted is terribly wrong. This traditional, invisible model is a horrible platform on which to base your R&D investment decisions. Executives, project managers, R&D engineers, marketers, sales professionals are using this flawed model and intuition for high-stakes decisions.
Most teams assess features by a simple, taken-for-granted, one-dimensional, high vs. low spectrum. This creates a very big, hidden problem. Human beings simply do not conceptualize value in this way.
This approach has a track record of failure because it does not represent how humans actually assess the value of an offering or the value of the components within that offering. And more importantly, this value model doesn’t help teams organize and align their work towards a compelling outcome.
Many teams try to make this model work, often expounding on the value assessment as fundamental. Some “sophisticated” teams even assess the value gap. Stack ranking and allocating a point pool across the options are common examples. But the value model is still 1-dimensional, and it just doesn’t work.
Most people don’t even know they are using coarse, inaccurate, unrepresentative language and decision models.
How People Really Value
People perceive value through a much more complex and nuanced perspective than high vs. low. From the simplest of decisions, like selecting a candy bar or a barista -- to complex offerings like buying a car or a new software platform.
When you shop for a car, does the fact that it gets good gas mileage factor in the same as the fact that it has functional tires? What about the headlights? How do either compare to the fit and finish of the interior?
People only use high-low value models for these decisions for a small subclass of decisions. These ‘apples vs. oranges' comparisons are just not valid. People inherently know there are different ways to gauge value and use them every day. But we just don't have a common language to describe our thinking.
The one-dimensional model is not working because it does not reflect these nuanced assessments.
Though the concepts are complex, there is a simple, operational model that better represents how people value the capabilities within your offerings. With this new perspective, teams can prune backlogs to focus on only high potential items and create a coherent, concise development theme.
A customer value model that uses two dimensions much more accurately represents how people make value judgments. When you map the customer value of the different capabilities within an offering on two axes, you will soon see clusters and open spaces that manifest for every product. These clusters represent different types of value.
The 5 Types of Value
In practice, 2-dimensional value models cluster capabilities into 5 value types.
• Indifferent: People perceive that capabilities with this value type as not essential or expected.
• Detractor: People perceive that capabilities with this value type are not essential or expected. In fact, it is just the opposite -- these capabilities cause customers to have an adverse or hostile reaction. These features can be a deal-killer when present, and have only downside value.
• Must: People perceive that capabilities with this value type are essential or expected, so their absence would be a deal-killer. But performance beyond a baseline level of functionality offers no additional value.
• Linear: People perceive that capabilities with this value type are essential or expected. Their absence would also kill the value of the entire offering. Improvements to this capability can increase customer value perception.
• Delighter: People perceive that capabilities with this value type are not expected or essential, but clearly add value! This is the most important type of feature in a new offering, and the one that could delight your customer, be compelling, and differentiate your product.
Each Value Type Has a Different Role in Creating a Compelling Offering
We have all worked on projects where our work did not move the needle or create value, even when we did a great job. This is turd-polishing, and everyone knows it is a waste of time and money.
This is where the insights from different value types enable you to align and streamline your efforts to how customers value. Each value-type has a different relationship with effort, and how your effort (your investment) translates into market results.
And each value type requires different investment tactics. To maximize your team's impact, you can leverage this new approach to create a compelling product as quickly as possible.
Indifferent features do not affect customer value, no matter how much effort is applied. The color and type of a disposable coffee cup do not typically weigh into the decision to purchase coffee.
Detractors actually reduce satisfaction. If
adding perfume to a cup of coffee is losing you sales, adding more and different sorts of perfume is probably going to make it even worse.
Must type features have a binary relationship with effort. Below a functional level, the capability is essentially absent, and this absence is a deal killer. Once the capability is functional, more effort yields no additional value. Coffee generally needs to be hot or cold to be appealing (not lukewarm) but making it a precise temperature will not impact sales.
Linear features are a bit more complex. Like Musts, they have a minimum level of performance. Functionality below this level provides no value. Yet capabilities that are Linear may continue to yield increased customer value as greater effort is applied. In the coffee business this might be the flavor or quality of the beans. Better beans (quality) could yield premium pricing or more sales. But there is still a minimum bar for Linear features, so your coffee beans must still meet some threshold of palatability.
Delighters are the opportunity for differentiation and market success. These unexpected, nonessential capabilities delight a customer. For the coffee business this might be the unique comfort of the cafe itself, the foam art, or the variety of drinks offered. Including and improving delighter capabilities often has a disproportionately positive impact on value.
Determining Value Type
The existing methods for determining and acting on these nuanced value types are complex and cumbersome.
But there is a new approach that is a great fit for any R&D model – including Lean and Agile ceremonies. With this method, your team can act on these high-impact concepts and new insights immediately.
Customer Value Accelerator: Putting Value Types to work
With three simple questions, the Customer Value Accelerator (CVA) decision model leverages the 2-D value concepts. This new method works extremely well with Lean/Agile ceremonies by helping your team quickly identify and act on the value types for each potential capability.
For each capability in your backlog, walk through the successive nodes of the Customer Value Accelerator Decision Tree. At each node the model brings together your potential assets and leverages your customers’ perspective to make a quick, transparent, actionable decision combining:
What’s Possible: The team's backlog of what they could build – the vision of what can be created
What Customers Want: The customer scenario or job to be done – what the customer values
The Value You Could Create: The value type questions
What You Will Do: The prescription for how to invest in each capability
The CVA is composed of two simple, but breakthrough collaboration tools that enable your team to make key decisions and then immediately align your resources to take action:
The Decision Tree enables a team to quickly sort capabilities into value types during a normal meeting.
The Layer Cake enables a team to define a roadmap of compelling releases and align their work for each capability to how customers’ value.
Using the Decision Tree
The CVA Decision Tree is a remarkably simple, incredibly effective tool. Using it, you can determine the value type of each potential capability – often in seconds. In a Lean or Agile sprint ceremony, the Decision Tree quickly creates a precise, testable hypothesis of a compelling release.
The Decision Tree can be used in your planning meetings immediately:
First, clarify your target customer scenario (job-to-be-done) for this release.
Then take each backlog item and progress it through the decision tree.
At each node, answer the question for the target scenario.
This will give you the value type for that backlog item.
An individual can use CVA to make a quick decision, or a group can use it to come to a transparent consensus. Instead of a battle, the CVA model gets a team on the same page. The activity becomes a morale event that identifies opportunities, resolves hidden conflicts, and unleashes creativity.
As a team works through the Decision Tree, they place the capabilities on the next tool, the CVA Layer Cake. This model aligns the team’s efforts to how a customer will value (those efforts).
Customer Value Accelerator – Layer-Cake
The CVA Layer-Cake model helps a team allocate resources and plan a release schedule using the results of the Decision Tree. Teams use the Layer Cake to visualize the offering’s capabilities across the customer value layers, assessing dependencies between capabilities, and aligning work to the value of each capability. It also provides a method to plan and sequence the team’s work across releases. And finally, the model clarifies which capabilities should be created now to deliver a compelling offering, and which should be delivered later.
Planning Investment by Value Type
Different capabilities provide different customer value for the same effort. To maximize the impact of your efforts you must treat each value type very differently.
Indifferent capabilities should be cut unless needed for compliance/legal reasons. Including them unnecessarily complicates your product, and can lead to a confusing, negative customer experience. If actually needed, then these become Musts.
Detractors are usually there for a reason. The team thinks they are required for some user role or scenario, but other roles (often a decision-maker) find them a negative. So, the conflict must be mitigated. Typically, this involves enabling a customer to govern or throttle a new capability.
Must capabilities should be given the smallest investment possible. Find an innovative way to quickly achieve the minimum functionality required, then stop investing.
Linear capabilities are similar to Musts, and should be built to at least minimum levels of functionality because their absence is a deal-killer. This is usually sufficient for an alpha. In subsequent releases, raise the level of functionality uniformly across the collection of linear capabilities.
Make sure there are no dramatic “sore thumbs”:
No crippling under-investments that devalue the whole offering
No over-investments that no one will pay for
Delighter capabilities are the only ones that get “gold-plating”. More effort here generally pays off. Also, concentrate your marketing messaging and selling efforts on these compelling themes.
Deliver Compelling Releases 4x to 6x FASTER
At this point, we have the models to drive decisions that will create a compelling release quickly. We know:
that people think in a 2-dimensional value model, not just one.
that there are five value types, each with a different return on your efforts.
how to define ‘compelling’ value.
how to use that knowledge to better streamline the effort to value, which speeds delivery by 4x-6x, and results in paying customers and a happy team.
Big things can and do happen with a new, more representative, precise language and perspective.
When you start thinking beyond ‘How’ and incorporate the rigor and discipline of ‘What’, you can streamline your time-to-market with a compelling release, and avoid building things that don’t matter, now.
These new perspectives and language for 5 types of value (and what you build to create that value) will have impacts well beyond a first release.
Next, we’ll review how these concepts impact your entire business, beyond a single release, by extending the CVA tools into broader contexts.
4. Scaling CVA: Beyond your First Compelling Release
CVA concepts can be extended to impact your business at several levels: Building a high-frequency roadmap of compelling releases, aligning tactical and strategic implementation, and improving project management. The concepts also scale up to team configuration and portfolio strategy.
A Rapid-fire Roadmap of Compelling Releases
All projects are ultimately composed of many releases. CVA concepts help you minimize the work to deliver a series of releases, where each and every one is compelling to customers: a compelling roadmap.
The first step to building this roadmap is to use the CVA Layer-cake to identify each of your potential MCO themes – one for each release. Each will have a single Delighter theme and a Layer Cake of required supporting Musts and Linears.
The next step in this process is to create a sequence of compelling releases based on the speed of delivery. The delivery of your first Delighter capability is your Minimum Compelling Offering! And because you are building your fastest Delighter, this is the shortest path to deliver compelling value to customers.
You then sequence your road map to release MCO’s as quickly as possible, minimizing the work between each compelling release, aligning your investment precisely with your growth strategy. This allows you to start testing hypotheses as soon as possible and re-sequence your releases according to market demand.
By planning one Delighter at a time, you get a sequence of compelling releases that accomplish business goals in a stream, rather than shooting for the moon with large, untestable big bets. The next release should always be the quickest one to deliver to your target market.
This approach provides clear and uncluttered criteria for selecting and developing your required Linear and Must features. Team conflicts on schedules and investment levels will resolve as new insights and language allow the team to focus on supporting ONE clear and singular ‘delighter customer value’ goal. A key part of this is deprecating what is not needed now.
Building and developing capabilities with CVA is analogous to the Russian nested doll. Start with the simplest package and then grow capabilities to the next level, adding new capabilities to achieve a new, compelling release.
Each release will contain a new Delighter and support a new scenario. This will both generate new revenue and maintain business momentum.
Project Management:
Deliver Faster by Focusing Development on What Matters Most
One of the biggest impacts of a precise value model is the effectiveness of project management.
CVA provides the concepts and language for teams to precisely define and describe the appropriate effort for a specific capability (by value type). It turns out that the sequence in which this work is executed makes a big difference in coordinating a delivery.
A More Effective Approach to Work Sequence
Most teams make a straight association between work sequence and the blunt instrument of a 1-dimensional value model. As a result, they typically use a problem-solving paradigm of working on the biggest issue first. This implicit model is very high-risk. For example, Musts, often end up low on the priority list, because they don't have any upside opportunity. However, neglecting Musts is dangerous, because their absence will break the offering.
This is not the best strategy within the context of a release. Breaking the implicit association between prioritization and work sequence enables new paradigms for creating value and managing risk.
CVA offers a different approach to work planning: Sequence your work items so that the Delighter for a given release is built later, after the foundation of Must and Linear capabilities has been laid. This bottom-up technique results in a clear, usable work schedule that is easier and less risky to execute.
Managing a Release: Allocating Resources within a Release
CVA makes the challenge of managing a complex project much simpler and less stressful. But how do you adjust your investment in each capability within a release to make your schedule and other constraints? The answer begins by understanding your total capacity.
Capacity for any release = Must’s + Linear’s + Delighter
For a given release, the prescription and principles for delivering a compelling release are simple. Two key value-types are essentially fixed for a given release, allowing for management to adjust simple variables to meet constraints:
Must’s are fixed: You only deliver the minimum functionality needed to support the compelling theme – in the most innovative way you can.
Delighters are fixed: You allocate resources to deliver a fantastic delighter capability, but at some point, more resources do not result in a better outcome. In fact, additional resources may detract. The level to build a Delighter theme for a given release is usually fairly clear.
The Linears are your key variables: The level of investment in the collection of Linear capabilities is your primary variable in delivering your product within your constraints.
Your goal is to minimize your investment in these capabilities yet still deliver a compelling, delightful offering.
For an alpha release, you can treat these capabilities just as you would a Must, with a minimal implementation to support your Delighter. Advance the level of your Linears as you progress through the development cycles, enough.
Business and Product Strategy Challenges are Much Easier
Use CVA/Layer-cake to Configure and Build the Right Team.
The CVA concepts can help you build a team with the skills that are best suited to creating and maintaining your competitive advantage.
Build and embellish your teams’ skills profile to correspond to the capabilities that customers find most compelling. Focus on building your team to support Delighter, differentiating capabilities, while less critical capabilities (Musts and many Linears) can often be outsourced or bought “off-the-shelf”.
Be the Change Others Follow: Drive Market Evolution
Make your competition chase the shifts in market expectations that you create.
As markets mature, the value type of critical capabilities naturally changes: Delighters evolve into Linears, and Linears become Musts.
Use this insight to gain a competitive advantage. Drive your investment by focusing on the high value, high return market opportunities.
Don’t wait passively for your markets to evolve. Build a team and a roadmap designed to drive these evolutions to your strengths. Create Delighters (MCOs) that no one else in your market can match and make these capabilities the new norm, driving them down the layers to become Linears in your market.
Winning Growth Strategy with a Compelling Portfolio Strategy
Portfolio investment decisions can also follow CVA principles. How do you expect to grow? What part of your portfolio will help you achieve these goals? What products are Delighters – for which you can deliver unexpected value?
You can greatly increase the impact of your investments and simplify your portfolio management by directly applying the CVA Layer Cake model and corresponding principles at the portfolio management level. Just as feature investments support a compelling release, your product portfolio supports your business strategy.
Treat each product or potential offering as if it was a feature on the product CVA layer cake. What value-type does a product in your portfolio offer? Is it a Delighter or a Linear? How should you invest in it? These decisions follow the same approach as release planning with CVA.
This process also includes understanding how Delighters will devolve into Linears over time, so portfolio decisions can both “predict” the future, drive the evolution, and be reevaluated over time.
Even Greater Secondary Benefits of the Compelling Approach
Team Communication that Builds Esprit Decor
Team dynamics and culture are impacted just by using the CVA. Knowing the value type for a specific customer and the challenge they want to address creates alignment across the whole organization, not just the different skills within a development team.
When CVA is used regularly, teams begin to experience a ‘virtuous loop’ of effective progress.
CVA bridges roles and teams across an organization, creating a cultural impact by enabling creative conflict resolution. Both visible and hidden conflicts naturally resolve themselves with more precise language each skill set can act on. People with different skills and tasks get on the same page – and this builds trust within the team and between the teams.
CVA does this with built-in conflict-resolution tools that are easy to learn and use. Hidden conflicts often hamper teams, because good people are often (unknowingly) trying to build a product for slightly different target scenarios -- and they don’t know it. CVA can reveal and resolve these kinds of conflicts in minutes.
Precise language democratizes challenging, complex management decisions and clears the fog away, precisely focusing each release on a specific scenario. The tools and language translate many elements from the subjective to the objective, allowing teams to focus on areas where their skills and judgments really count. Using the new concepts rapidly results in empathy and culture change, which in turn boosts overall morale.
CVA also lowers stress and puts the team at ease, knowing they can communicate and evaluate value using common language and measurements.
Ultimately, this cycle enables and motivates teams to try new things and take calculated risks.
Two days after my first planning meeting with the new team, I sat down with the CEO to do a debrief. We had found three hidden releases within the one they were working on. He quickly found one we could release in six weeks instead of nine months. We then called up Gateway Adopter decision-makers and verified that they did, indeed, find the simplest concept compelling.
Two days later our conversation shifted to team impact as we acted on this new direction. I asked if the team was actually executing on the new insights. The CEO took a long pause and quietly mumbled “So, Patrick I'm really not sure I should share this.” After another long pause, he said, “Yes. They are acting on it. When you walk into the door of our office it's like a morale event. The team doesn't actually know what you're going to do since they haven't seen it before. They just know when they see you walk in the door, they're going to be a lot better off.”
Stronger Market Engagement
Use the new value concepts to engage your market to precisely understand how they value.
A key benefit of using CVA is that market validation is built into every aspect of the toolkit. These breakthrough insights into market value empower you to ask new questions that will create revelations in how you build new capabilities. Market insights your competition can't even perceive are unlocked due to new and sharper perspectives.
CVA allows you to better understand what the market values most. Use more precise language to ask the right questions in the right way to help read the market signal faster and more clearly. New, constructive questions validate value types and the level of work that is sufficient for a given release.
Potential customers quickly adopt the value taxonomy. They have often been looking for a way to describe what is and isn't valuable to them. They are often very enthusiastic about using the new language to tell you what they really want. The conversation becomes almost therapeutic.
Far more precise qualitative and quantitative Q&A with early customers can be used to validate assumptions before big commitments are made. This typically produces highly actionable feedback. You can validate ‘good enough’ levels for Linear and Delighter features, which are often less obvious than Must capabilities. Teams can take action with confidence that they are working towards outcomes that potential customers consider compelling.
Marketing messaging can also leverage validated knowledge to clearly and precisely communicate what delights your target buyer.
Win Now: Leverage CVA and MCO In Your Next Planning Meeting
You can quickly conquer the challenge you face right now with these new decision models, and then grow the impact of the new concepts as new challenges arise.
CVA will not change the way you develop — it changes the way you make decisions. And you can train on-the-job on the project you are working on right now. Where are you stuck or challenged? Those are the areas that you want to apply the CVA/MCO tools first.
Your team does not need a long and elaborate training process to get the CVA/MCO tools working today. You can start quickly delivering more compelling releases in one standard planning meeting! You will immediately cut the time to your next compelling release. You can then expand your use of CVA into more advanced applications, one step at a time. This new perspective will help you quickly reach an effective solution on your next high-stakes value decision.
If you would like to know more - please contact Patrick Hogan at Patrick.Hogan@GatewayAdopters.com