MVP & MBI in project management

The PMP certification underwent major changes in 2021. Unlike the previous years, the Exam Content Outline (ECO) now equally addresses the predictive, agile, and hybrid project management methods. In fact, the agile approach covers half of the 180 exam questions.

Among the new concepts introduced in the official PMI training support is the minimum viable product (MVP) and the Minimum Business value Increment (MBI), which are two popular Lean concepts.

The Minimum Viable Product (MVP) 

Definition and origin

In 2001, Frank Robinson invented the concept of MVP, considering it the result of a parallel product and customer development process. Robinson came to the conclusion that teams invest a lot of time adding nonessential features. Therefore, the solution was to find the right product size for both the company and the customer. 

In 2011, the term was mentioned by Eric Ries in his Best-Seller “The Lean Startup”, which presents his experiences launching startups. In his book, he defines MVP as a new version of products that allows the team to gather as much information as possible about customer needs and validate them by testing different hypotheses. The goal here is to minimize the effort and time spent on product development.

MVP also allows immediate feedback through considering clients’ interests and preferences rather than engaging in a tiresome and haphazard development process that may ultimately be out of line with their expectations.

MVP in project management

A Standish Group study about IT development projects conducted in 2013, shows that only 20% of created features get frequently used by customers, while 50% are rarely used. The other remaining 30% are occasionally utilized and do not help improve customer experience. The results are consistent with the Pareto principle, which is based on the 80-20 law, meaning that only 20% of the functionalities achieve 80% of customer satisfaction.

You should also keep in mind that the first principle of the agile Manifesto entails satisfying the customer by rapidly and consistently delivering features with high added value.

PMI finds that creating an MVP inspires the team to achieve the project goal. When the results are too abstract or too far apart, teams can get discouraged or overwhelmed. Minimally viable products create a sense of urgency and accomplishment in the short term.

The concept consists of ​​an iterative process to create a version of the raw product while soliciting customer feedback. As a result, required changes and conception issues are identified at the right time. Each cycle represents an opportunity to improve the product in an iterative and/or incremental way.

Therefore, you can now understand why, a few decades later, this concept was adopted in agile project management, being based on the prioritization and organization of functionalities in the Backlog as well as the segmentation of the product in iterations to constantly deliver added value.

Characteristics

  • Adequate value recognized by the customer: The MVP must create sufficient value for customers to encourage them to use it.
  • Assurance of future profits: The MVP must also retain customers, providing assurance and visibility of the development of the expected advantages.
  • Continuous Improvement: The MVP is an iterative process that promotes a continuous improvement process in which customers’ feedback is integrated into the product’s future development.

Successful MVPs through history

Zappos

Zappos’ launch in 1999 is a Lean Startup’s success story. Its founder had the idea of ​​selling shoes on the internet. It did not seem very promising at the time since shoes should be typically tried on before being purchased. Through a basic website, he displayed pictures of shoes from nearby stores. For each placed order, he bought the shoes, repackaged them, shipped them, and provided after-sales client support himself. When sales started to increase, he persuaded investors to fund his startup, which Amazon later purchased for $1B.

Uber

When Uber first started, it hired drivers to get people to their destinations. As it developed, the company added new features such as Uber Eats’ food delivery service, to fulfill some of its customers’ other needs. 

Airbnb

Airbnb was founded when two young designers heard that an important convention was being organized in San Francisco and that hotels were at full capacity. So, they rented their apartment rooms, offering basic services such as Air beds and breakfast, hence the company’s name.

Amazon

Amazon started out by selling books online through a simple web page before diversifying and expanding its services.

The Minimum Business Value Increment (MBI)

When projects seek improving products that are already in service, an MVP is not necessary to gauge interest. In this case, it is more viable to use the concept of Minimum Business Value Increment (MBI). MBI means the smallest amount (increment) of value that can be added to a product or service to benefit the business.

  • Minimum: The smallest amount of value that can be achieved. Focusing on a minimal value accelerates its realization and facilitates work management (time, cost, etc.).
  • Business: Providing value from a business perspective, aimed at customers and aligned with the company’s business strategy.
  • Increment: The realization is done in an incremental way to validate achievements and avoid waste and risk of non-conformity of the final product or service.

Characteristics

MBI provides a common guideline and direction for a company’s teams. Their effort is aimed at delivering a high added value increment. Thus, it is possible to sequence tasks based on their value realization as the basic criterion. 

The use of an MVP is therefore justified for discovering certain elements of value in the context of innovation; new customers, new products, or new concepts. An MBI, on the other hand,  is employed when you wish to improve an existing product.

Typically, an MBI adds value for the customers of the business, provides valuable feedback that the right functionality is being built in the right way, provides functionality that can be delivered and which can also be validated as being useful, enhances the ability of the organization to deliver value in the future, and contains all of the pieces that are required for value realization.

Example of MBI

Let’s use Facebook as an example. The creation of this social media platform was thoughtful with early conscious analysis and research of user behavior. As it began to expand its reach, Facebook users began to be more than just Harvard students but also other universities, high school students, and company employees.

The key for Facebook in terms of MBI was the addition of the Like button later in 2009, providing users with the possibility of liking a post, photo, or comment which increased interactions and influenced the algorithm of the posts displayed on users’ Home page.

Thanks to systematic observations and responses to customer needs, Facebook was able to expand its functions thoughtfully year by year. Such development results from the relevant analysis contained in the Agile methodology.

MVP vs MBI

MVPs and MBIs are similar in that they are both customer-centric, they’re considered as mindsets, and they use vertical slices of functionality to validate the work.

However, there have significant differences. For instance, an MVP is invested in to discover if a new product is viable whereas an MBI is used to get a return on investment by enhancing an existing product.

Customer-wise, an MVP creates a new product for early adopters while an MBI extends to a new market segment or solidifies offering to an existing market segment

When marketing an MVP, you have to focus your interactions on your prospective clients which is not the case with an MBI as you market it to an existing organization through existing channels.

As for the team needed to create an MVP, you can start with a small team focused on building the MVP. However, you are likely to require several teams to coordinate together unless a product alignment already exists.

When implementing an MVP, you can start with small features and expand. But, you should decompose an MBI into features that implement only its scope.

An MVP has a little direct impact on existing products as it’s new. Yet, it may interact with existing systems. An MBI on the other hand is likely to interact with multiple systems.

Risks-wise, an MVP may not have a viable market whereas an MBI may not be as valuable as an enhancement as it was anticipated and it may even affect other offerings.

Apart from MVP and MBI, there are other ways to check if your investment will find users and have sales potential such as the Minimum Marketable Feature (MMF), the Minimum Marketable Release (MMR), and the Minimum Marketable Product (MMP).