AKF Partners

Abbott, Keeven & Fisher Partners Partners in Growth

Growth Blog

Advice on how to fix broken $#*!

Definition of MVP

April 3, 2017  |  Posted By: AKF

We often use the term minimum viable product or MVP but do we all agree on what it means? In the Scrum spirt of Definition of Done, I believe the Definition of MVP is worth stating explicitly within your tech team. A quick search revealed these three similar yet different definitions:

     
  • A minimum viable product (MVP) is a development technique in which a new product or website is developed with sufficient features to satisfy early adopters. The final, complete set of features is only designed and developed after considering feedback from the product’s initial users. Source: Techopedia
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  • In product development, the minimum viable product (MVP) is the product with the highest return on investment versus risk…A minimum viable product has just those core features that allow the product to be deployed, and no more. Source: Wikipedia
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  • When Eric Ries used the term for the first time he described it as: A Minimum Viable Product is that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort.
    Source: Leanstack

I personally like a combination of these definitions. I would choose something along the lines of:

A minimum viable product (MVP) has sufficient features to solve a problem that exists for customers and provides the greatest return on investment reducing the risk of what we don’t know about our customers

Just like no two teams implement Agile the same way, we don’t all have to agree on the definition of MVP but all your team members should agree. Otherwise, what is an MVP to one person is a full featured product to another. Take a few minutes to discuss with your crossfunctional agile team and come to a decision on your Definition of MVP

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Build v. Buy

April 3, 2017  |  Posted By: AKF

In many of our engagements, we find ourselves helping our clients understand when it’s appropriate to build and when they should buy.

If you perform a simple web search for “build v. buy” you will find hundreds of articles, process flows and decision trees on when to build and when to buy. Many of these are costcentric decisions including discounted cash flows for maintenance of internal development and others are focused on strategy. Some of the articles blend the two.

Here is a simple set of questions that we often ask our customers to help them with the build v. buy decision:

1. Does this “thing” (product / architectural component / function) create strategic differentiation in our business?

Here we are talking about whether you are creating switching costs, lowering barriers to exit, increasing barriers to entry, etc that would give you a competitive advantage relative to your competition. See Porter’s Five Forces for more information about this topic. If the answer to this question is “No – it does not create competitive differentiation” then 99% of the time you should just stop there and attempt to find a packaged product, open source solution, or outsourcing vendor to build what you need. If the answer is “Yes”, proceed to question 2.

2. Are we the best company to create this “thing”?

This question helps inform whether you can effectively build it and achieve the value you need. This is a “core v. context” question; it asks both whether your business model supports building the item in question and also if you have the appropriate skills to build it better than anyone else. For instance, if you are a social networking site, you *probably* don’t have any business building relational databases for your own use. Go to question number (3) if you can answer “Yes” to this question and stop here and find an outside solution if the answer is “No”. And please, don’t fool yourselves – if you answer “Yes” because you believe you have the smartest people in the world (and you may), do you really need to dilute their efforts by focusing on more than just the things that will guarantee your success?

3. Are there few or no competing products to this “thing” that you want to create?

We know the question is awkwardly worded – but the intent is to be able to exit these four questions by answering “yes” everywhere in order to get to a “build” decision. If there are many providers of the “thing” to be created, it is a potential indication that the space might become a commodity. Commodity products differ little in feature sets over time and ultimately compete on price which in turn also lowers over time. As a result, a “build” decision today will look bad tomorrow as features converge and pricing declines. If you answer “Yes” (i.e. “Yes, there are few or no competing products”), proceed to question (4).

4. Can we build this “thing” cost effectively?

Is it cheaper to build than buy when considering the total lifecycle (implementation through endoflife)
of the “thing” in question? Many companies use cost as a justification, but all too often they miss the key points of how much it costs to maintain a proprietary “thing”, “widget”, “function”, etc. If your business REALLY grows and is extremely successful, do you really want to be continuing to support internally developed load balancers, databases, etc. through the life of your product? Don’t fool yourself into answering this affirmatively just because you want to work on something neat. Your job is to create shareholder value – not work on “neat things” – unless your “neat thing” creates shareholder value.

There are many more complex questions that can be asked and may justify the building rather than purchasing of your “thing”, but we feel these four questions are sufficient for most cases.

A “build” decision is indicated when the answers to all 4 questions are “Yes”.

We suggest seriously considering buying or outsourcing (with appropriate contractual protection when intellectual property is a
concern) anytime you answer “No” to any question above.

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