Dancing Giants: Why large companies should embrace the minimum viable product

By Adam L. Penenberg , written on April 18, 2014

From The News Desk

There are lean startups, then there are startups that exist to help large and small companies act more like startups -- like 3Pillar Global. Based in Fairfax, VA, the company sells software to help businesses create their own software and "quickly turn ideas into value" through the entire development development lifecycle. As such, its founder and CEO, David DeWolf, is a big fan of the minimum viable product (MVP).

Recently, I caught up with DeWolf to talk about ways that old, musty, established corporations can borrow the concept of the MVP to more quickly bring successful products to market.

Along with “lean,” “iterate,” and “pivot,” the "term minimal viable product" has become synonymous with startups. How can large companies make use of MVPs?

Large enterprises are being challenged to keep up with the level of disruption coming out of startups. As opposed to the old form of market research, where we did a bunch of studying and guessed what customers wanted, building a minimal viable product has become the most capital efficient way to innovate. You build something, whatever it is, in the smallest amount possible, and put it in front of customers to get honest feedback.

Big companies have seen the success of that model and been anointing in-house “intraprenuers,” who are basically individuals who possess an entrepreneurial spirit. They ask questions like: How do we innovate? How do we take our deep understanding of technologies and the engineering that goes behind it, and apply it to real market opportunities? What solutions will resonate with markets and help change the way we live, work, and play? That’s what these enterprises are doing.

405x650_Homepage_Tower_DGDo you have any specific examples of enterprises doing this?

Capital One Bank spun off “Capital One Labs” into a separate division with the intent of moving it outside the bureaucracy of corporate America. Its mission is to incubate ideas and come up with brand new concepts. It looks to leverage technology in new ways that may not be confined by the traditional bank or traditional mindset. It has used the concept of the MVP to quickly get products to market and put them in front of customers, which places them outside normal enterprise constraints that would normally bog down an enterprise and prevent it from innovating. 

Another example is Marriott and its Marriott Labs, which has done something similar. It has two labs: one that is innovating with technology, the other with actual in-room experiences in the physical space. This addresses how you achieve a level of innovation within your enterprise without having to acquire this ability from startups.

Can you walk me through any specific examples of products that came through the MVP process?

One would be PBS. When it decided its digital media division would play in the interactive media space, it became focused on building rapid prototypes and putting them into the hands of customers, then allowing their feedback to influence the direction of the products themselves. It started with a couple of small platforms, and over time, has expanded its portfolio to become a suite of products -- like its award-winning iPad application, or its iPhone apps, or even its website. A lot of the different media streaming services it provides were incubated out of that methodology: starting with something you put in front of customers, iterating, and growing it over time.

Is this something every company could do?

I think the challenges are all in the mindset. The biggest things that prevent a lean startup approach or lean innovation model from working in a large company are struggles with the actual risk-reward equation and the perception within an enterprise on how to minimize risk. Of course, the whole idea of the MVP is to minimize risk by rapidly iterating to meet market expectations. But in traditional mindsets, which characterize most enterprises, all of the processes and procedures are built around reducing risk in a different way. That is, the more planning we do, the more apt we are to hit the nail on the head. The more thought we put in upfront around designing the next product, the more apt we are to hit the mark.

Unfortunately, history has shown the exact opposite occurs. If you build something and put it in front of customers and use real data either by measuring the adoption or the usage of that product or getting feedback directly from the customer about their experience you’re able to craft that product and organically build it in alignment with your customer base. That actually ends up reducing the amount of waste because you’re validating hypotheses along the way, as opposed to building a business model or a product based on a bunch of large assumptions.

What prevents every big company from doing this?

They’d have to change the way they work around typical procurement cycles, the typical governmental models, the typical policies and procedures that exist within large organizations, and truly trust the people who are touching the customer. Then they have to learn how to handle the feedback they get to evolve and make little tweaks along the way so that something organically grows in the way the customer wants, as opposed to what executives think the market would embrace.

The key for enterprises is to truly understand the nature of the MVP and what it’s used for, then get out of the way and encourage innovation. Their employees won’t leave to start their own companies if they can taste that level of innovation internally in the first place.

A lot of companies have what I call an IT mindset: How do we keep the lights on? How do we build things that solve very defined problems? What they also need, though, are experts that specialize in building the unknown. Building products that will disrupt industries, that solve big problems, and to do that you need to innovate continuously. That’s a startup mentality, and part and parcel to that is the MVP, which can help a large company get there faster and with fewer missteps along the way.

[Note: The "Dancing Giants" series is being sponsored by Atlassian, so you'll only see their ads around these pieces. But the series was conceived, commissioned and edited entirely by Pando. Atlassian had no input whatsoever in the editorial. For more on our policy towards single sponsor series like this one, see here.]

[Featured image courtesy Len Spolden Photography. Dancing Giants illustration by Hallie Bateman for Pando.]