PoC vs MVP in the new Low-Touch Economy

Covid-19 is a stress-test for startups and post-Covid19 the startup ecosystem will be shaped by an economy based on new habits, new regulations, and reduced close-contact interaction – the low-touch economy.

What will be the key success factor for a startup? – to ensure that founders understand their customers’ new lifestyle and problems.

How to do that? – the obvious way is to build an MVP and test it out with real users.

What is an MVP?

Minimum = the least amount of features needed to be built to demonstrate the value proposition.

Viable = it needs to fully demonstrate the core value proposition by clearly highlighting the problem and the solution offered.

Product = it’s a working product and not a prototype i.e. the users would be able to use the product and derive all the benefits offered.

What is the cost of doing an MVP?

Often people confuse between MVP and prototype and also have a misconception that MVP needs to be cheap. Every startup is different and targets different industries. Depending on the target market, the minimum needed to be built will vary. E.g. Building a digital bank MVP will cost a lot more than building a news MVP.

 

How do founders build the MVP? – there are generally two ways of doing it:

A) Developing a PoC: Startups are all about taking risks, but measured risks. Hence, the easiest thing to do is to limit the risks at the beginning, especially when founders don’t know much about the target market. As the cost of MVP could be high in certain industries and a lot of founders don’t truly understand the technicalities, it’s better to fix the budget and develop the Proof-of-Concept. However, the key is to not build many features but to build a few core features – really well. Founders may want to de-scope a lot of unnecessary features that can be planned for later. As soon as the PoC is launched and tested with customers, founders can see the feedback and decide on the next steps.

B) Developing a user-focused MVP: This approach is suited for founders who have already done some form of PoC and understand their users very well. They know their core Value Proposition and need to move faster. Also, the industry they target is well established and the users will expect a lot of ancillary features. In this case, it’s better to first execute an in-depth discovery phase to map out all these core and ancillary features, all the non-functional requirements, and a mid-long term technology strategy. Once founders know the full picture, they can prioritise the product roadmap to build iteratively and incrementally. Check Innovify’s case studies – LandbayPayzilch that took this route.

What’s the key difference between the two?

What’s the key difference between the two? 

  •  In the first approach, founders are limiting their costs and it’s recommended especially when there is a big unknown, whereas the 2nd approach is suitable for founders who have well researched their market and know their strategy to win.
  • In the first approach, founders are delaying some of the tech investments later – knowing that cheaper now could be expensive later. Whereas in 2nd approach they are bringing forward these investments – knowing expensive now would be cheaper in the long run.

 

Which approach is better?– both the approaches are different and suit different founders and the startup they are building.

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