How would you define the appropriate Minimum Viable Product (MVP) scope for a pilot launch?

Context

In most organisations, the Minimum Viable Product (MVP) represents the scale model of the aspirations set out in the organisations’ strategic roadmap, with regards to the launch of a new product or service. With the appropriate extrapolations, the MVP pilot testing phase is expected to provide clear data points to help decide to either proceed with the launch or shelve it in the wake of discerning concerns on the commercial or technical viability of the product or service. These decisions at either end of the spectrum need adequate clarity on the evaluation criteria, the adequacy of data points and insights from the experiment to ensure that the most optimal decision is made.

Problem statement

One of the key challenges faced in the past programmes was to ensure alignment and consensus amongst stakeholders on the definition of scope for the MVP for a product or service. With the potential to impact each stakeholder differently, bringing everyone to a common ground in terms of a reasonable and tenable scope for the pilot exercise was often a daunting task. Lack of consensus on the scope would render the pilot exercise inconsequential.

Suggestions and key considerations:

1.?????? Clarity on the hypothesis to be tested

As Simon Sinek states, ‘Start with a why?’ and communicate top down, this is certainly one of the powerful start points to define the objectives and scope for a pilot exercise. One of simplest yet powerful response to this question that I have come across, was from the erstwhile CEO of an enterprise, who stated ‘We are making this change to ensure safe, easy, and fast operations’. This almost became the mantra for the programme towards guiding the customer workflow design, business process re-engineering, solution design, system selection and thereby eventually defining the scope for the pilot exercise.

Some questions worth answering were:

• What is the hypothesis put to test as part of the pilot? Are we validating customer preference, bringing about behavioural change or efficiency improvement?
• What are the potential alternatives or variations that could help achieve the stated objectives?
• Will this pilot allow validation on all the necessary parameters that can aid decision to launch the product or service?

2.?????? Defining the target customer segment/ personas for pilot participation

The success of the pilot is dependent on clear identification and definition of the target customer segment? whose experience with the product or service and the subsequent feedback is crucial to the final decision on the pilot. In some cases, it may be prudent to commence pilot testing with a narrow target segment definition and thereafter expand the exercise to a wider target audience, rather than losing the required focus at the outset.

While piloting a new lending service to existing Wealth management clientele at a commercial bank, the defined target segment was existing customers whose portfolio value exceeded a pre-defined threshold. While this initiative made perfect sense to actively upsell the service to this segment, the temptation to attract and transition customers from other segments was resisted, a noteworthy exclusion in hindsight, considering the number of updates necessitated prior to the final launch.

A few considerations towards enhancing the quality of output of the pilot exercise:?

• Who is the target audience (in terms of existing relationship, number of facilities, net worth etc)?
• How do we engage them (pilot branch / outlet, restricted mobile app/ web interface)?
• How do we incentivise their participation in the pilot exercise (discount, fee waiver, add on etc) ?

3.?????? Ownership and accountability of the pilot phase

A pilot launch for a new product or service often involves multiple stakeholders in the organisation ranging from the Front line, Product development, Operations, IT, Risk management, Compliance, Legal etc and external stakeholders such as the customers, regulatory authority, etc. To start with, the buy-in from each stakeholder within the organisation is crucial with clear expectations laid out for each to launch the product or service.

While brainstorming potential uses cases at a financial institution, for piloting data analytics and reporting based on multiple internal and external data sources, the initiative failed to garner the support and thereby the required funding. Looking back, its was evident that while the possibilities of predictive intelligence sounded impressive on paper, none of the stakeholders in the room were convinced about the value it brought to their respective functions.

Some of the points to ponder to identify the stakeholders and their stake in the pilot are:

• Who are the stakeholders (internal and external) that will be impacted by this experiment?
• What is in it for them (in terms of tangible and non-tangible benefits)?
• What is their stake in this experiment (funding, level of involvement, extent of change etc)?
• Who will be influencers in the end decision (a potential to veto the decision)?

4.?????? Measure what matters

The narrative expected from the pilot phase is key to the decision- making process and has the potential to sway the outcome in either direction. Therefore, providing a balanced view that can narrate the story through numbers (sales, volume, turnaround times etc) and experience (customer experience, preference, perception etc) play a significant role in determining this decision. Clear identification and definition of these data elements? (numerical and experiential) therefore becomes key to providing a holistic picture on the pilot performance.

During a pilot phase for a retail outlet, one of the key objectives was to introduce an array of non-cash payment methods, designed to move customers away from their existing preference for payment by cash. While data from the pilot showed encouraging signs of the transition to non-cash payments, there was still a sizeable customer base that continued transactions in cash. The exercise could not provide the required data points to explain this phenomenon, which posed a challenge in the way forward.

Points to consider while reviewing the data points expected from the pilot:

• Are the data points to be measured, clearly defined (in terms of units, measurement method, time intervals etc) by the stakeholders?
• Are the data points sufficient and adequate to decide on the launch of the product or service?
• Is there a sufficient baseline (based on current practice) available for comparison?
• Does the data collected represent tangible and non-tangible aspects of the proposed product or service?

Conclusion

While the pilot exercise provides the required data points and inferences to facilitate decision-making, the approach to launch and scale up often gets overlooked in the fine print of the report or deck. Key aspects in the original business case related to cost of offering the product or service, profit sharing arrangements (if applicable), projected revenues, FTE savings, assumptions on RoI, etc will need to be revisited based on the pilot results.

Additionally, the launch would need changes to the existing operating environment in terms of:

• Changes mandated to existing policies and reporting (credit, operational risk, compliance etc)
• Impact on existing processes and controls (front office, mid office, back office etc)
• Change to existing roles and responsibilities and their potential impact
• Recognition of credit or incentive or alternatively allay fears related to job insecurity
• Changes to IT support and services

Disclaimer

Views and opinions expressed are based on empirical data from past Transformation programmes pertaining to banking and financial services and may not necessarily be in exact alignment with leading practices or established frameworks.