June 2019 | Point of View

Keeping pace with digital transformation: Accelerating value from your minimum viable product

The rapid pace of digitally driven disruption strains companies—and the tech functions tasked with helping them transform to satisfy customer and stakeholder demands

  • Focusing on delivering the most essential features enables an organization to accomplish a key goal faster: Win customers by appealing to their evolving needs before competitors do, accelerate revenue realization, generate cost savings rapidly, and redeploy those savings to more strategic needs.
  • Overcome two common roadblocks to MVP by defining the MVP including your customers’ journey, technical maturity, and people and processes that will interact with the technology. The second key, just as important is maintaining the commitment to the MVP to deliver a faster return on investment.
  • Successful MVP’s require a new mindset and way of thinking by communicating the vision, encourage open dialogue, emphasize flexibility, operate with a product mindset, accelerate customer insights, and establish a governance to keep the MVP goals intact.

Introduction

The rapid pace of digitally-driven disruption continues to strain companies—and the technology functions tasked with helping them continuously transform to satisfy customer and stakeholder demands. Because of this, companies and technology development teams are attracted by the potential of developing a minimum viable product (MVP) to realize value—for example, accelerating cost savings or delivering innovation that wins new customers before competitors have the chance to do so. An MVP approach focuses on introducing something “good enough” in the short term, with the understanding that the organization can build upon and improve it over the longer term.

Some organizations struggle to execute this concept effectively. One reason is that they fail to ground the definition of the MVP in customer experience. Another common pitfall is that as implementation progresses, teams lose their focus on speed to market and instead fall back on the tendency to build the “perfect” solution or product.

Organizations that use the MVP concept successfully do have some common characteristics, including a clear sense of purpose, customer first orientation, open participation, flexibility, and a product mindset rather than project mindset. At the very core, teams and stakeholders understand that the MVP is the start of the journey, not the destination. This mindset enables them to get beyond the barriers and drive value faster than ever.

Chapter 1: Innovation and agility are high priorities for digital organizations

The stakes for delivering digital innovations that enhance customer (external or internal) experience and drive loyalty only continue to rise. For example, in a recent study, Temkin Group estimated that for a typical $1 billion company across 20 industries, a modest improvement in customer experience could produce $775 million in revenue over three years

However, the rapid pace of digital innovation continues to strain companies with more traditional development processes. In its “Worldwide CIO Agenda 2019,”IDC offered 10 key predictions for IT organizations through 2022. Among them: Three quarters of CIOs who do not shift their organizations to empowered IT product teams to enable digital innovation, disruption and scale will fail in their roles. Furthermore, 65 percent of CIOs will expand agile/DevOps practices into the wider business to achieve the velocity necessary for innovation, execution, and change. 

Our own research corroborates this mandate for greater agility. In a survey of Customer Experience Professionals Association members, “Adapt or Fail: The New Business Imperative,” 61 percent of respondents said their company’s ability to adapt quickly is a top strategic priority, but only 17 percent thought their company’s efforts to increase business agility were mature. Rather, nearly half characterized their company’s efforts as “preliminary.” Three in four said that fewer than half of their company’s teams use any sort of method to accelerate business agility. 

It is clear from this feedback that companies and their technology organizations must adopt new approaches that allow them to deliver digital and technology- enabled innovations dramatically faster than they have traditionally. 

Chapter 2: An MVP can accelerate innovation by limiting scope or allowing for multiple future versions

One concept that comes up with increasing frequency in our client discussions around the confluence of increasing expectations, rapid pace of change, and digital transformation is that of delivering a minimum viable product, or “MVP.” According to Eric Ries, author of The Lean Startup and originator of the term, a “minimum viable product is a version of the new product which allows a team to collect the maximum amount of validated learning about the customer with the least effort.” In other words, it focuses on delivering a new technology solution with sufficient features to provide value to users early on, with room to grow through future and iterative product enhancements.

In research adapted from “Scrum: The Art of Doing Twice the Work in Half the Time,” Gartner presents a value curve that illustrates how an MVP with a relatively small percentage (about 10 percent) of desired features can deliver a considerably greater percentage of the ultimate value (about 50 percent).

There are different approaches for developing an MVP. For example, the MVP may involve creating a new system for one line of business before building it out for the entire company (see “An MVP for a Bank’s Customer Relationship Management System”). This may be beneficial in cases where individual business lines have very different needs or system requirements. Limiting the scope of the project allows the team to focus strictly on the needs of that business line to accelerate progress. At the same time, the team can gather feedback from the initial set of users to identify additional features or functionality required during subsequent development phases.

Another approach is to build out the foundation for the new system with enough functionality to address a particular need (see “An MVP for a Manufacturer’s Predictive Analytics”), such specific analytic capabilities, with the acknowledgment and acceptance that subsequent cycles will add additional built-in features. After a grace period of using the system, designers can look at opportunities to further streamline and provide the desired level of automation or integration.

Delivering an MVP accelerates the time-to-market for new technology to a few months that may otherwise have a year or more, to introduce. Given the pace at which technology and expectations now change, companies that take a traditional development aimed at delivering an ultimate solution may find that when it is finally ready, it no longer meets expectations.

Focusing on delivering the most essential features enables an organization to accomplish a key goal faster— for example:

  • Win customers by appealing to their evolving needs before competitors do
  • Accelerate revenue realization
  • Generate cost savings rapidly and redeploy those savings to more strategic needs

In addition to equipping a team to meet accelerated delivery expectations, the MVP approach also provides them the opportunity to learn from stakeholder feedback and continuously innovate as they work toward the full solution. It is not uncommon for user priorities to become clearer during the course of the project—for example, they initially think they want the system to do “A” or that they want “shiny thing B,” but after interacting with the system they discover that it is really “C” that they want.

Over a short period of time, an MVP returns high value percentage (80-85%). When that value is reached, the MVP continues to add value over time. ”

Chapter 3: Overcome two common roadblocks to ensure your MVP approach is successful

The MVP concept has generated a lot of attention, and many companies now ask about it as they approach new technology initiatives. It sounds great, and straightforward—but there can be challenges when it is time to put it into practice. In our experience, an organization must navigate two key challenges to use the approach successfully. 

1. Defining the MVP

One challenge is around answering the question, “What is our MVP?” When we ask clients to tell us what they mean by MVP, we often hear several common themes: It’s about streamlining workflow, sticking to industry best practices, and limiting integrations to remove complexity and speed delivery time.

These are important principles that may drive delivery, but they are missing a critical factor: a grounding in customer needs, wants, and pain points. In fact, an initiative built primarily based on technology or process principles rather than a sound understanding of the customer runs the risk of missing the point of a minimum viable product, altogether.

To define your organization’s MVP, you will need to go through a similar diligent process of defining opportunities and priorities as you would for any technology initiative—starting from the perspective of both internal and external customers (or system users). Analysis should include:

  • Your customers’ journey

Before you can define your MVP, you first must have a sound understanding of the customer journey and any particular pain points. From this analysis, you can then design the “ideal” future experience, including where and how technology can enhance the customer journey. It is important to use methods that employ actual listening and empathy to understand that journey and not let internal biases and assumptions about customer needs cloud the picture. For external- facing innovations, customer service and call center data can provide useful input for this process.

  • Technical maturity and capacity

Budget and/or timeline constraints can affect your MVP definition. There could be other internal initiatives such as a core system conversion that is competing for time, attention, and resources. And there may be other technical considerations and questions to answer. For example, is there is a specific platform on which the solution must operate? Is it better to introduce the MVP to the whole organization at once (a “big bang”) or to one line of business at a time? What is the state of your data (quality, quantity of records, ETL in place), and are there any data quality initiatives that you would need to undertake prior to introducing new technology?

  • People and process

It is important to consider how new technology will impact people internally as well as customers externally. Are roles and responsibilities impacted or altered by the outcomes of this implementation? Is the workforce ready for the change? What existing processes need to change or evolve? Have there been other recent transformative changes that impact people’s work and workload?

These analyses will help you prioritize opportunities into a road map of quick wins, medium-term initiatives, and longer-term projects. It is during this exercise where you should be able to finalize and confirm the definition of your minimum viable product—that is, a solution that delivers significant new features with the minimum of effort. While it is important to establish some guiding principles that will shape the effort, such as streamlined workflow, best practices, and a minimum number of integrations, don’t lose sight of the fact that any MVP definition should derive from customer experience.

Remember that when you are defining your MVP, you are making decisions about what to defer. It is critical to do this with an eye toward what is most meaningful to users and critical to business goals. Design approaches such as rapid prototyping help sketch out the concept so that everyone understands what the MVP looks like. Make sure, however, that you validate that design with actual system users—otherwise, your approach is not truly customer centric.

2. Maintaining commitment to the MVP

Defining your MVP is a critical step. But what comes next is equally important and will determine whether you can deliver a faster return on investment.

A more common pitfall is moving away from the MVP as business stakeholders begin to focus on the bigger picture, which requires full automation or integration.

Initially, these stakeholders may agree that “out-of-the- box” functionality will be good enough for bringing a step change in customer experience. But as the project progresses, gaps in the functionality appear, and stakeholders begin requesting additional “nice-to-have” features that add complexity and increasingly move away from the initial core principles of the MVP.

The MVP concept is rooted in starting quickly, introducing a meaningful change, and then enhancing it over time. Rather than trying to solve for every need, the project team must find ways to remain focused on the most important 50 percent, 70 percent, or 80 percent and then build toward the 100 percent solution in subsequent phases.

Chapter 4: Successful MVPs require a new way of thinking, which requires change

Maintaining the right focus on delivering the greatest business value requires a foundation in an adaptive mindset, combined with key tenets of organizational change management. Together, these skills allow teams to keep business users focused on adapting to the future while adoption new solutions. In our experience, companies that are most successful in deriving benefits from MVPs do several things:

  • Successful companies communicate the vision and MVP approach widely to build and maintain support. Emphasizing a clear vision and communicating the end goal (“our North Star”) is a critical starting point for telling users what to expect in future iterations. Continuous communication reinforces that the MVP is just the beginning of the journey, not the ultimate destination. Setting KPIs that recognize small wins (for example, a small gain in efficiency) along the larger journey can help bolster this mindset.
  • They encourage open discussion and validation of what is changing, giving people a chance to be curious, ask questions, raise concerns, or submit potential configuration requirements early in the process. When employees believe they are being heard and recognized for providing viable feedback, they feel part of the planning effort—whether for the MVP or a future enhancement. That is a win for all parties involved.
  • They emphasize the need for flexibility and for being willing to test, learn, and then iterate. Starting with a minimum viable product requires business users to be more flexible in their requirements, understanding the development process will differ from what they have experienced in the past. Making people aware that this is an expectation—and that they will have a chance to learn and submit requirements for future iterations—will help drive adoption.
  • They work toward adopting a product mindset versus a project mindset for new technology initiatives. This promotes continuous management: Whereas products have defined schedule, budgets, and resource allocations, products are managed continuously throughout the lifecycle. Gartner research projects that by 2020, three quarters of digital business leaders will have pivoted from project to product portfolio management, up from one third at the time of the report (2017). Additionally, organizations that have embraced the product model will outperform the competition that has not, both in customer satisfaction and business results.
  • They increase the velocity of customer insights. Gone are the days when an annual or bi-annual relationship survey was enough to provide a pulse on customer or client sentiment; the world is moving too fast. Today’s tools—including voice-of-the-customer systems, data mining capabilities, and other digital tools—increase the speed at which companies can gather and use customer insights to design and then continuously refine products from the perspective of the customer.
  • They establish a governance structure to enact and manage the product roadmap to keep the project focused on its goals and the MVP concept intact. A strong governance process gives the users confidence to speak up, submit ideas, and build together for future improvement. Every organization is different in terms of its technical maturity and capability. We help clients define the right process for requirements gathering and development, while sharing leading practices for environment management and deployment.

Conclusion

Adopting an MVP approach can help your organization deliver new technology capabilities and enhanced customer experiences faster and at a pace relevant for today’s digital marketplace. It also encourages adopting a cultural shift toward digital growth. Moving rapidly to deliver something that is “good enough” and can be improved and enhanced over time is rapidly becoming the standard rather than the exception.

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