Sometimes we at Yarandin, Inc. are contacted by customers who are interested in creating a minimum viable product (MVP); we recommend that they instead start with the creation of a so-called concierge MVP—a minimum viable product that involves directly solving potential customers' problems. The concierge MVP has already been mentioned in our blog. In the post "How to Create a Successful Minimum Viable Product", I described an online reservation service for restaurants, OpenTable, the creator of which at the first stage worked with customers, directly trying to find out who was willing to pay and for what. However, the task of creating a concierge MVP is not at all obvious and requires a separate approach, if only because for many entrepreneurs the idea of serving customers directly is not obvious. In some ways, for them, this method contradicts the very essence of the lean startup methodology.
To really understand what a concierge MVP is, let's look at an example of a hypothetical catering business—a company providing food service to remote sites—to understand what problems its owner faces and how these problems can be solved using the lean startup framework. Our hypothetical business is very simple and consists of two parts: 1) a website for receiving and processing orders, and 2) agreements with local restaurants willing to execute orders, who in turn pay our business a fee. In theory, everything is simple. Moreover, it is safe to say that any marketing research will likely demonstrate a demand for the service offered. Does this mean that, following the principles outlined in the lean startup method, the next step is to test the business’s model with an MVP? At first glance, this seems only logical especially because all it takes is to contact Yarandin, Inc. and obtain a minimum viable website as quickly as six to ten days. What's the drawback of this approach?
The problem is that in this case the business model cannot be tested without a prior understanding of: - What do your customers want? - How do you find them? - How do they act? - How do you retain them? - How do you get their referrals?
Indeed, how do you know which functions will make up a successful minimum viable product and to which audience to promote it? Traditional MVPs—the ones designed to test business models—are not helpful in answering those questions. To obtain answers, you should turn your attention to the ones whose goal it is to disprove assumptions: constrained operations or concierge MVPs.
So, what is a concierge MVP? This is a minimum viable product that involves manually solving the customer’s problems. It is a process for transforming a list of services (that are at first very inefficient and/or unprofitable) based on customers' feedback into a product for which clients are willing to pay and which is profitable. In other words, the concierge MVP is a revolutionary approach to understanding what customers really want.
Regarding the example of a hypothetical catering company, the right approach from the lean startup point of view is to get out of the office and start serving customers directly, changing and improving your service until it becomes obvious “for what,” “how much,” and “who is really going to pay.” Only after you know the answers to these questions should you contact Yarandin, Inc. to create a traditional MVP to test your business model. You should also not forget that a concierge MVP, although effective, is not the only way to figure out what customers really want. There are many other techniques (such as interviews, prototype-making, blogs, crowdfunding campaigns, one-function products, etc.), many of which are able, under certain circumstances, to answer the same questions that concierge MVP ask.
The bottom line is that the concierge MVP is an extremely valuable and powerful tool. In many cases, without developing expensive technologies or writing a single line of code, a concierge MVP allows you to see if people are interested in your idea. However, the concierge MVP is not as simple and obvious as it seems at first glance. It requires careful designing, is not suitable for every project, and in some cases it can be replaced with simpler and more efficient techniques. The value of Yarandin, Inc.'s services is that by specializing in the lean startup methodology, we have sophisticated knowledge of different types of MVP. This allows us to develop solutions that are optimal for any type of business project.