CONTRIBUTOR
Director of Engineering,
Solvd, Inc

Digital transformation is an essential step for businesses today if they want to stay on par with the developing economic environment. The pandemic demonstrated this perfectly: Those who managed to quickly switch their business to the online model, which is part of digital transformation, not just persevered, but many prospered.

Organizations can benefit from an iterative approach to digital transformation. The Minimum Viable Product (MVP) approach is useful for this because it breaks down digitization into smaller, achievable goals, which are more affordable and manageable. In the future, organizations can adjust these goals in accordance with their needs. This also allows them to test solutions before investing time and resources.

The Importance of MVP in Digital Transformation

Digitalization brings about many things: People-dependent processes become automated, reducing the human factor risks. Automation helps to save valuable human efforts and speeds up many business processes significantly. Digital transformation allows businesses to scale faster and easier. Ultimately, it is extremely cost-effective, but it does take time, effort, many resources and management to implement. And time is of the essence here, because the business environment changes fast, and businesses can’t wait several years for the results. 

That’s the issue the MVP approach solves. It offers three essential benefits to businesses: Speed, cost savings and reassurance. It enables quick technology implementation by delivering business value with the minimum feature set possible. This results in lean value creation, as the MVP provides commercial impact with the minimum investment without non-critical features. Risk is thus effectively reduced by limiting the waste of resources, even in the case of failure. 

MVP Role in Scaling New Technology

Five steps lead to a successful digital transformation initiative:

Demo: This is the first step, where a new technology is showcased. A technology vendor usually facilitates it, using generic data to demonstrate the technology’s capabilities. 

Proof of Concept: An optional step that involves a small-scale implementation of the technology to evaluate its technical feasibility and potential applications; it also helps develop a value hypothesis.

Minimum Viable Product: This step involves setting up the technology in a production environment, addressing its primary use case, and implementing its base data model, design and user interfaces. This allows for design iterations based on feedback, confirms the value hypothesis and provides a template for optimized scaled implementations.

Production Hardening: The solution’s first functionalities are finalized and securely integrated into a production environment and server architecture.

Scale Up: The technology is expanded regarding functionality/features and adoption across sites and/or functions that are using it.

A successful MVP approach should blend an achievable technological strategy with investment cost, as well as the impact on the organization, working to create a valuable solution. You should consider three things to ensure that your MVP meets these criteria. First, it should address a specific pain point. Second, risks should be minimized during its development to avoid disrupting the organization’s operations or leading to user disengagement. Lastly, the deployment of MVPs should be swift and refined, since it is limited in scope.

Organizations can use an MVP-based strategy to develop a set of fundamental solutions that meet their digital transformation requirements without incurring significant developmental setbacks. Once completed, these products can provide significant value to the company, leading to increased customer engagement, better revenue growth and lower operational costs. Furthermore, they can lay the groundwork for the company’s digital business transformation, leading to a fully scaled and technologically empowered organization.

3 Reasons Why an MVP Adds Value

Investment decisions are usually based on more than demos and early proof of concepts (POCs)

Companies often rely on demos or proof of concepts when evaluating new technology. However, these approaches often miss essential aspects such as value, customizability, and the impact on business processes and organizational design. Consider using a minimum viable product approach to address this issue. 

By testing the value hypothesis early on, iterating frequently and pivoting based on end-user input, a stronger understanding of the value proposition can be developed before committing to a large-scale roll-out. This approach is described in Steve Blank’s HBR article on the Lean Start-up.

Before committing to full implementation, MVPs quantify the worth of competing options

A Proof of Concept helps determine if a technology suits a specific function. However, it does not provide information on which option is the best. A MVP approach, on the other hand, allows for the quantification of benefits and drawbacks to help make an informed decision. This provides the necessary data for selecting the option that provides the most value in both its primary scope and secondary benefits across the value chain spectrum.

Risks are minimized with MVPs

An MVP approach reduces the risk of overcommitting resources in the pilot phase. By carefully assessing a solution’s value and implementation implications, the subsequent path to scale-up becomes smoother and more predictable. The MVP is Agile, and the product team develops and releases critical solution features in short, repeated cycles with frequent reviews by key stakeholders to ensure that the solution tracks with major needs. This results in user-centric solution development, offering regular checks and go/no-go decision points before full-scale implementation.

Getting Started with Digital Transformation through a Comprehensive MVP Strategy

Digital transformation is a journey that requires organizations to balance two critical business objectives: Building a digital foundation that supports future use case applications and realizing immediate value in production. Prioritizing one goal over the other can pose risks and challenges to the digital transformation program. A comprehensive MVP approach is recommended to avoid these challenges. This approach merges foundational architecture with focused proof-of-value projects, creating digital proof points that quickly add value and are ready for enterprise scale. Thus, organizations can achieve a faster time-to-value and optimize the digital transformation program’s return on investment.

Real Life Example of a  Comprehensive MVP Approach

One of the world’s largest fast-food chains developed a comprehensive MVP approach to its digital transformation strategy. The company focused on creating a foundational architecture that supported multiple use cases across different business areas, such as mobile ordering, digital menus and delivery services.

The company also used focused proof-of-value projects to quickly add value and demonstrate the potential of its digital transformation initiatives. For example, the company introduced mobile ordering in select markets to test the concept and gather customer feedback before scaling it to other locations.

Overall, the company’s digital transformation strategy has enabled the organization to improve its customer experience, increase sales, and stay competitive in a rapidly changing industry.

Conclusion

Digital transformation is meant to increase value and optimize processes, not to create additional problems for businesses. To achieve  this, the ultimate objective should be minimizing the risk of failure whilst evaluating technological options throughout early stages. An MVP approach is a cost-effective way to do this, as it requires minimal investment compared to a full-scale implementation. It provides a chance to assess an idea against the entire company’s digital transformation investment portfolio and validate that no conflicting projects exist..

The MVP approach allows businesses to overcome several common digital transformation roadblocks: It helps to deliver a faster return on the investment in digitalization and to create a smoother transfer and user experience for their users who will interact with the new technology.

It’s time to change how your company transforms, not just its products and procedures. The benefits of adopting an MVP approach are tangible and can be experienced firsthand.