Introducing the MVP of Digital Transformation

As companies look for ways to leverage digital technologies to enhance and transform the way they discover, create, make and sell new products, they find a rapidly growing number of technology options at their disposal – including Artificial Intelligence (AI), Internet of Things (IoT), Augmented Reality (AR), Blockchain, Robotics, Digital Twin, RFID, 3D Printing and more.

We often see early adopters rapidly develop solutions and evangelize these technologies to drive enthusiasm, but then struggle to realize value when their Proofs of Concept (POCs) and pilots turn into point solutions that fail to scale in production.

Enter the Minimum Viable Product (MVP) – the right balance between value justification and technical feasibility that can accelerate time-to-value for digital transformation initiatives both big and small.

An MVP is a Critical Bridge to Scaling New Technology

The journey for a successful Digital Transformation initiative follows a five-step approach:

• A Demo serves as an initial demonstration of a new technology and is often facilitated by a technology vendor with generic data
• A Proof of Concept is an optional step to evaluate technical feasibility, executed in the shape of a small-scale implementation of a new technology to demonstrate its technical feasibility and potential application; it also provides a base to develop a value hypothesis
• A Minimum Viable Product (MVP) is established in a production setting to address the idea’s main use case and implement its base data model, design and user interfaces; it allows for design iterations based on feedback, confirms the value hypothesis, and provides a template for optimized scaled implementations
• In Production Hardening, the solution’s first functionalities are finalized and embedded in a production environment and server architecture in a secure way
• In Scale Up, the technology is expanded in functionality/features as well as adoption across sites and/or functions using it

A good MVP combines a technologically feasible approach with a focus on investment cost and organizational impact to find the solution that brings the most value. In addition to technological development, it addresses the following questions:

How do we set the foundation for scale?

• How will this fit into and/or impact our technology landscape and system interfaces?
• What will it take to incorporate this technology across multiple locations/functions?
• How will we expand the feature set to support additional use cases in the future?
• Who are the people affected, and how do we ensure they will become champions of the technology?

How do we justify the go/no-go decision for scaled implementation?

• Has the technology proven to address our use case?
• Is there confidence the success criteria for measuring the technology’s value can be met?
• Is the longer-term potential of enabling subsequent use cases on a common platform understood?
• Are the quantitative benefits of the technology/use case understood, and is this worth the investment?

3 Reasons Why an MVP Adds Value

1. Demos and initial proofs of concept (POC) alone usually do not provide enough insight to make investment decisions

Whether it’s a demo or a POC, the focus typically is on new features that are offered by the technology and/or their feasibility to be implemented. However, they often fail to quantify the value the technology will bring, consider current ways of working in tailoring the solution, or address other impact to the business process and organizational design. Additionally, given they focus on features instead of value, a demo or POC rarely results in a clear and accepted business case for the new technology.

Focused on tracking impact and comparing to baseline measures of current ways of working, a good MVP both verifies the technical feasibility and aims to answer the question, “What will the cost and benefits be if we roll this technology out company-wide?” Early testing of the value hypothesis, frequent iterations, and being able to pivot based on end-user input (as described in Steve Blank’s HBR article on the Lean Start-up) enable a much stronger understanding of the value proposition before committing to a large-scale roll-out.

2. An MVP quantifies the potential value of competing options before committing a full implementation budget

A Proof of Concept is meant to indicate if a given technology will work (or not) for a specific functionality; but this still means that afterwards you must choose between a number of options that could work because a POC does not provide insight into which one will work best.

Defining and executing an MVP after the initial POC gives an opportunity to quantify benefits and drawbacks in as many aspects as required. What results is the necessary data to make an informed decision and choose the option that provides the most value, both in its primary scope and in terms of secondary benefits across the value chain.

3. An MVP minimizes program risks

When companies move immediately from a Proof of Concept to a full-scale implementation, it often means that one pilot site is the first go-live of a solution that has only passed a technical evaluation. As a result, the POC-to-Scale approach leads an organization to consider committing to scaling a solution that has not passed change impact and value delivery tests, this decreases the likelihood of success and rather puts the concept on a less stable foundation.

An MVP approach helps minimize the risk of overcommitting resources in the pilot phase. By carefully examining a solution’s value and implementation implications, the subsequent path to scale up becomes smoother, more predictable and controlled. The MVP also is designed to be Agile, where the product team develops and releases critical solution features in short, repeated cycles with frequent review by key stakeholders to ensure the solution tracks with the major needs. The result is user-centric solution development that offers frequent checks and go/no-go decision points before the full-scale implementation is complete.

How to get started

A comprehensive MVP strategy accelerates time-to-value

Organizations at the start of their digital transformation journey need to balance two business objectives:

1. Build the Digital Foundation. Establish a digital foundation capable of supporting the development of a wide range of future use case applications.

2. Realize Value in Production. Prioritize a high-value use case and deliver a “quick-win” solution to add immediate value and generate enthusiasm for scaling the program.

Prioritizing one objective over the other can lead to program risks. With a Foundation-First approach, the digital foundation must be built and configured before users can start developing value-add applications. With a Use Case-First approach, the initial POCs and demos can feel disjointed in production if their integration with the broader enterprise system architecture is not considered.

Based on our research and experience supporting clients with digital initiatives, the businesses that realize the greatest rate of return are those that take a comprehensive MVP approach. They merge the foundational architecture with focused proof-of-value projects, creating digital ‘proof points’ that quickly add value and are ready for enterprise scale.

Here are three real-world examples at leading digital businesses to highlight the benefits of incorporating a comprehensive MVP into your digital transformation roadmap:

Example A – Foundation-First Approach

A global pharmaceutical manufacturer seeking to standardize on a new system architecture for generating detailed batch reports took a foundation-first approach to digital transformation. The company started with a POC and then attempted to scale directly into a production pilot. After nearly a year of struggling with the configuration and failing to demonstrate value from the initiative, they regrouped to address narrowly defined use cases to drive the implementation. With clearly defined requirements based on engaging with end users, the company was able to configure the new system and release value-add applications in under 90 days.

Example B – Use Case-First Approach

A global automotive and tire parts manufacturer began a digital transformation journey committed to demonstrating value in production early in the program. The result – an AI-enabled machine capable of reducing non-operating time by nearly two-thirds. However, after the initial proof point on the initial production line, the rate of return on the program was limited by delays in the scaled production rollout. This was because the solution required special configurations to the foundational system architecture at additional machines and sites throughout the company’s global operations, which weren’t accounted for in the initial pilot.

Example C – Comprehensive MVP Approach

A global medical device and health care company developed a comprehensive MVP approach for connecting devices in the field to enable remote features. They initially conducted an MVP project to evaluate multiple competing solution architectures and several capabilities, concluding with a value-based analysis of the various options.

After quantifying the value opportunity and selecting the preferred IoT platform, the company proceeded to connect devices on the common platform while developing an initial set of remote capabilities. The result – a digital transformation strategy based on quantifiable benefits realized during the MVP project, and a roadmap for rapidly proving and scaling new capabilities across the product line.

The Bottom Line

In the end, the goal is to achieve maximum bottom-line value from Digital Transformation Initiatives. An MVP approach enables you to evaluate technology options in the early stages, requires less investment than a full-scale implementation, and minimizes the risk of failure. It also offers the opportunity to evaluate an idea against the entire company’s digital transformation investment portfolio and verify no conflicting projects exist, and if they do, take advantage of the opportunity to harmonize them to maximize value before large-scale investments are made.

It’s time to transform not only processes and products, but also the way in which you transform your company. Adopt an MVP approach and witness the benefits firsthand.