Friday, January 30, 2015

Focus On Business Outcomes And Drop The Features

By Christian Dahlen & Oana Olteanu

On the road to defining a minimum viable product (MVP), individual customers would be expected to have a very limited frame of reference. By definition, they cannot imagine what they don’t know about emerging technologies. Even the visionaries should not be trusted to come up with solutions, rather, customers should be asked only for outcomes, i.e. what a new product can do for them. Otherwise, one of the dangers of listening too closely is the tendency to make incremental improvements.

The product owner articulates her best hypothesis as to what value will drive customers to adopt her product, the business model to deliver the product, and which customers the product is most relevant to. The business values are defined and periodically measured to verify that the practice is working. The business value can be determined by ranking the relative importance of the business value/outcome for the customers. In one case, the customers were given $100 in play money which they could allocate to the business values they wanted most and the results were stack ranked to yield the most important elements.

To minimize feature creep, the product owner needs to understand how upset the customer would be if a feature would be taken away. In one case, it turned out that 80% of the planned features were not related to any of the top business values requested. A final word of caution: For certain types of solutions, business value is only created if people actually derive some personal value from using the solution.

For new versions of existing products, it is not about what a particular customer thinks is important to add. Instead, the product owner needs to focus relentlessly on studying the live use of the business value metrics - what matters is what actually moves the needle on the metrics that matter.
We have heard of one executive who uses a very low fidelity MVP to identify the initial price point. She then picks a number - say $50 thousand - , and asks a customer whether they are willing to pay that amount. Before the conversation with the next company, she doubles the price, until she hits the ceiling. She does this by talking to as many companies as needed, typically between 10 and 20. By overpricing and underselling, she can gauge the level of gain customers experience via the amount that they are willing to pay.

Read next: How to engage with users and with buyers.

Special thanks to Allen Bannon, Ryan Nichols and Riley Scott for their insights.

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