Tuesday, December 03, 2013

MVP is a most valuable principle

A few weeks ago, I wrote about the tendency of many start-up companies who try to sell their wares to hospitals to ignore the needs of the various constituencies and therefore fail to make sales.  I concluded:

It is possible to sell great new ideas to hospitals, but they need to satisfy the interests of several constituencies in those organizations.  They must improve the work flow of the staff on the floor and units, making day-to-day life easier and not harder. They must improve the safety and quality of care, but in a manner that does not expose the hospital to greater liability: Indeed they should help reduce liability. Finally, they should demonstrate cost savings and be priced in such a manner as to allow the hospital to show cash flow improvements rather than be a drain.

I was reminded this week by Caren Weinberg, senior lecturer of invovation and entrepreneurship at Ruppin Academic Center in Israel, that even this prescription is not necessarily going to result in a successful product roll-out.  The element that I neglected to mention is the Lean concept of minimum viable product.  Taking off on the practice of PDCA (plan, do, check, act) cycles, Ash Maurya notes that "the basic idea is to maximize validated learning for the least amount of effort. After all, why waste effort building out a product without first testing if it’s worth it?"

Coincidentally, this message was reinforced at an MIT Enterprise Forum at Tel Aviv University, where Wix founder & CEO Avishai Abrahami was providing advice to entepreneuers.  Here's one of his slides:

Over time, he explained, the firm can add incremental features and improvements, all the while testing them with customers.

The alternative approach that I have seen is for a firm to spend inordinate amounts of time and effort designing a spectacular technological fix to a series of problems without testing early concepts or prototypes against customers' needs and wants.  It enters the market with a perfectly engineered product, only to discover that it is off track from what the market demands. Having depleted the company's capital, it falls into a financial hole and has trouble digging out.

Thanks to Caren for the reminder that MVP stands for a "most valuable principle!"

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