By Adam Ayers, Accelerator Lead at ING, IDCP* participant 2017-2018
When it comes to Business Model Innovation a Minimal Viable Product (MVP) is not enough; to learn about the Market, to be ready for scaling you need to build a Minimal Viable Company (MVC).
Know your enemy
It is common sense that if you want to paint your house you don’t get a hammer, you get a paintbrush. Likewise if you want to discover, validate and scale new business models you should not seek to test those assumptions with a MVP.
Typical innovation projects tend to be focused on Product Innovation, this makes sense when you have a strong product with a healthy business model.
Product Innovation serves your existing customers, it may mean that you are developing a new product, or developing refinements & improvements to an existing product.
In this context it makes sense to test the product (or enhancements) with the customers to ensure that the new solution adequately solves their problems. We have a fantastic tool for that, the MVP.
Minimal Viable Product: the 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. – Eric Ries MVP Guide
Business Model Innovation
Not all business models have a strong future, they may be under threat from potential disruption or the growth is flat lining. Innovators turn to the terrific tool by Alex Osterwalder, the Business model canvas & Business Model Portfolio.
Businesses need a way to measure and assess if the existing portfolio is healthy; if their business is prone to disruption; and ultimately, to help companies make better investment decisions. – Alex Osterwalder
The assumptions are far broader, the affect all aspects of the business, such as: The companies identity, core resources, target customers, channel strategy, value propositions and supply chain.
Right tool for the Right Job
Minimal Viable Company (MVC)
MVC operates in units of validated learning, called market pilots
- MVC aims to tests as many aspects of the complete business model in each market pilot
- Value is created, delivered and captured in each market pilot
- Example – Zappos Wizard of Oz was a MVC not an MVP
What is an MVC?
I would like to take the liberty to define a Minimal Viable Company (MVC):
a minimum version of your company that will validate the key elements to make your business model sustainable and ready for scale.
Practically building a MVC will allow you to test all aspects of the Business Model canvas by brining your solution to real paying customers.
Why is it important
It is important that you not only testing payment but you test all aspects of the business model in the market, failure to do so may mean that you may miss key implementation challenges, such as a tense partnership relationship (Samsung is a key supplier for Apple and also a key competitor) which may impact your chance of success.
How do you get started
You start first by validating your key assumptions on:
- Customer Segment
You then need to turn your attention to validate brining that value to paying customers repeatedly. Practically this means setting up pilots with your customers, testing the other key aspects of the Business model (such as partnerships, costs, revenues, etc).
This means that you will then start iterating in order to understand and validate the complete business model, this means:
- Operations– how do you support your business, customer support, etc
- Channels– how do you effectively deliver value to your customers?
- Partners– will partners be able to support you at scale?
The goal is to find a repeatable way to create, deliver and capture the value. When you can comfortably do that you are ready to scale.
A minimal viable company is the missing link for business model innovation.
This opinion piece is one of the deliverables of participants of the *Innovation Driver Certification Programme (IDCP).
Author: Adam Ayers, Accelerator Lead at ING, IDCP participant 2017-2018
Also published on: http://ayers.co/blog/2018/4/7/minimal-viable-companies-the-missing-link-in-innoavtion
Disclaimer: This is a personal opinion piece. Any views represented in this post are personal and belong solely to the author and do not represent those of people, institutions or organizations that the owner may or may not be associated with in professional or personal capacity.