In phase starting product development, as startups are faced with the use of various terminologies such as MVP, prototype, POC. However, they are often applied incorrectly. It is essential that these terms are correctly interpreted in order to allow the entrepreneur to identify which one or which to use. Thus, common mistakes are avoided, from defective functionalities to the elaboration of a product or service that doesn't fit the market.
These definitions will also allow the idea to be well received by both customers and stakeholders (such as investors), thereby increasing the likelihood of business success.
O product development must be focused on achieving product-market fit, whatever the stage that the startup find yourself. This path represents the construction of a strong validation of the idea by the market, involving the various types of development that will be covered in this article.
In general, an initial market validation allows an answer to the question “Do people have this problem?”. A proof of concept (POC) represents confirmation of whether or not the entrepreneur can create the solution. A prototype demonstrates how the solution will be created and a product viable minimum (MVP) demonstrates that this solution must be created. Finally, Product-Market-Fit (PMF) confirms whether the hypothesis is correct or not.
Proof Of Concept (POC)
A proof of concept is an exercise in order to determine whether an idea can be turned into reality. That is, the viability of the idea is checked or whether it can be implemented as planned. At the development software, POC determines whether the idea is operationally viable.
This approach is often used to capture the attention of stakeholders (such as investors) at a very early stage of startup. Thus, it will not be shown publicly to customers, as it is only a theoretical demonstration of the concept.
A lot of time and resources should not be invested in developing a POC. This only serves to demonstrate the practicality of only part of the system, which means that certain projects will have to develop several POCs to test different components.
Issues such as functionality, performance, usability, scalability are not addressed in this exercise. Instead, its focus is on providing concrete evidence that there is an opportunity with a lot of potential. It can also help the entrepreneur to detect possible technical and logistical problems that may interfere with the success of the startup.
In conclusion, a POC answers the question "Is this idea feasible?" Getting the answer, the entrepreneur can abandon the idea or be used to obtain financing to create prototypes.
While the POC defines whether the idea can be made or not, a prototype demonstrates how it will be developed, how it will look and how it will be used. That is, it is like a very early draft of product that turns the idea into a very small version. Thus, it allows to test and evaluate usability, functionality and design.
Startups use prototypes as the first iteration of its product in order to test the hypothesis of solving the identified problem. However, this model does not yet represent a product viable from the customer's perspective. A prototype is not expected to have all the functionality of the product, even if it has all the usability and aesthetics already defined, but rather a sketch of what the product end can be.
Creation of a prototype
In the case of a software project, a prototype typically includes the following topics:
- specifications product;
- Expected functionalities;
- Personas consisting of a fictional representation of the ideal client for product;
- User journey map, diagram that visually illustrates the user's navigation flow before a product, reporting the experiences lived when interacting with the product;
- Flowcharts to explain in a very simple way a process or several processes surrounding the preparation of the product.
And this should be developed by the founders of startup, designers and engineers, to ensure that the idea is conveyed clearly.
The main advantage of using this type of product development is the prior collection of feedback from customers or other stakeholders. This allows to correct or adapt the concept before its practical implementation. These corrections for possible errors are cheaper and faster at this stage than when the product to be developed, which reinforces the importance of developing this model.
In short, a prototype is an interactive model of product which allows you to see how it will be done, what it looks like and what the user experience will be like. All of this without having to go through the entire process of product development. Through this the first “look and feel” of the project is presented to the interested parties. It is a good way to obtain stronger market validation than previously obtained.
exist various types of prototypes, from a sketch on a piece of paper to a more detailed representation of the product to develop.
Minimum Viable Product (MVP)
It is defined as an early version of a new product only with the fundamental characteristics to capture the first customers. Thus, it is possible to collect the maximum amount of feedback with the least amount of effort made. The goal of MVP is to avoid costs of development unnecessary. For this, the product as quickly as possible in the hands of customers and, through these, the minimum project functionalities are defined and developed.
The MVP is not a product that the startups decide to launch on the market, but rather a phase of development this. It is achieved when the market says so. It represents a process of construction, measurement and learning where several iterations are made based on the feedback obtained by the customers. Unlike a prototype, the result of this process must be a product viable for the customer, containing the minimum functionalities to assign value to them.
This approach development it allows you to learn how customers will react to the project before investing a lot of money and develop features that they do not need. Although prototypes solve problems during a phase prior to development, this MVP phase is designed with the objective of identifying the clients' pain points when the product is really tested on the market.
The main advantage of this model is the possibility of checking the feasibility, hypotheses, usability of the product as well as market demand. Other advantages are the speed to market, less associated risks, greater flexibility and adaptation, assigning value to the opinion of customers and preventing waste of resources (time, money and efforts).
In conclusion, an MVP allows the product development with minimal functionality. Iteratively creates a better and more robust version of this, taking advantage of customers' opinions to make the best possible decisions.
Product Market Fit (PMF)
This is the process that occurs after being hit MVP and is the most important factor in determining the success or failure of product. Despite being a vague concept, the PMF represents having a solution that solves a problem for a significant number of independent customers.
The Product Market Fit is achieved when a startup finds a scalable and repeatable model that generates demand. That is, when it does not need to attract customers and convince them to use or buy their products, and these arise on their own initiative. After launching the MVP, you can feel when and if the PMF is happening.
Some signs are obvious, such as when customers praise the product or when the frequency of sales increases. Others are not so obvious, so it is necessary to use some metrics, such as:
- “Must-have” questionnaire: consists of a questionnaire of 1 to 2 questions and the question “How would you feel if you could no longer use the product? ” must be placed. Sean Ellis states that if 40% or more of customers respond “very disappointed”, then the startup it may be before a PMF;
- Recommendation questionnaire: consists of asking the question “How likely is it to recommend the product to a friend? ”;
- Recurring Monthly Revenue: Brad field He developed this metric that assesses the monetary growth startup. According to this, a company that presents a growth year after year of more than 50% may be facing a PMF.
It is necessary to understand that most companies do not reach Product / Market Fit from one moment to the next, after reaching some metrics. On the contrary, this is an ongoing process. It gets stronger as improvements validated by customers are made, not only in the product, but also in sales strategies and marketing adopted.
PMF as a constant search
A misconception, but common in people, is that once the PMF is reached, forever PMF. It is necessary for the entrepreneur to be aware that nothing is guaranteed and we are constantly changing. Technologies change as well as the wants and needs of customers, which implies that the product need to keep up with these changes in order not to allow competition to overtake them.
In conclusion, this concept is essential to dictate the success or failure of a project. It is necessary to evaluate the market size, hire specialized working team, define operational and sales processes, improve product while testing new features to establish a good company direction.