Lean Impact Jour­neyPrototyping phaseMVP developmentDevel­op MVP: Test­ing solu­tions for impact star­tups under real-life con­di­tions
Develop MVP: Testing solutions for impact startups under real-life conditions MVP on the test bench: testing the impact of an impact startup Developing a financing strategy for an impact startup Testing your financing strategy: Fit for the pitch MVP and financing strategy: validate, optimize, grow
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Devel­op MVP: Test­ing solu­tions for impact star­tups under real-life con­di­tions

After the pro­to­type comes the min­i­mal viable prod­uct (MVP): This makes it pos­si­ble to gath­er max­i­mum knowl­edge about your cus­tomers and tar­get group with as lit­tle effort as pos­si­ble and to test your solu­tion under real con­di­tions. The addi­tion of fur­ther impact indi­ca­tors also helps to record short and medi­um-term changes in your tar­get group. Impor­tant: Both the process of MVP devel­op­ment and impact mea­sure­ment are iter­a­tive and should be con­tin­u­ous­ly adapt­ed to the lat­est find­ings to max­i­mize impact.

You’ve come to the right place if …

  • you want to found an impact start­up or are already in the mid­dle of it with your team.
  • you can clear­ly iden­ti­fy your tar­get group as well as the prob­lem, solu­tion and impact.
  • you have devel­oped a val­i­dat­ed pro­to­type.
  • you have received ini­tial evi­dence of the impact of your solu­tion at out­come lev­el.
  • you have iden­ti­fied a mar­ket for your solu­tion and it is scal­able.
  • you have devel­oped an ini­tial busi­ness mod­el.

Not quite ready yet?
Then select the appro­pri­ate chap­ter here

This chap­ter helps to …

  • to devel­op a Min­i­mal Viable Prod­uct (MVP).
  • extend the impact mea­sure­ment for your solu­tion to the out­come lev­el.

This is about the tar­get group that will ben­e­fit from your solu­tion. In oth­er words, the focus is on mak­ing the solu­tion more effec­tive and social­ly rel­e­vant .

We deal with the busi­ness-ori­ent­ed and finan­cial area here.

MVP and pro­to­type: these are the dif­fer­ences

A pro­to­type and a min­i­mum viable prod­uct (MVP) are two impor­tant con­cepts in prod­uct devel­op­ment that dif­fer in sev­er­al aspects:

  • Pur­pose and func­tion­al­i­ty: A pro­to­type is pri­mar­i­ly used to visu­al­ize the prod­uct design and to test dif­fer­ent con­cepts. It has lim­it­ed func­tions and rep­re­sents the first tan­gi­ble form of a new idea. An MVP, on the oth­er hand, con­tains the essen­tial func­tions for a func­tion­al prod­uct and is used to test usabil­i­ty, design and over­all func­tion­al­i­ty.
  • Field of appli­ca­tion and devel­op­ment phase: Pro­to­types are main­ly test­ed inter­nal­ly in the start­up or by a small group of tar­get users. MVPs are test­ed on a broad­er mar­ket seg­ment and rep­re­sent the first edi­tion avail­able to the pub­lic. They rep­re­sent the sim­plest ver­sion of a com­plete prod­uct that already offers added val­ue to users.
  • Pur­pose and matu­ri­ty: Pro­to­types are used entire­ly for inter­nal test­ing pur­pos­es and are not used live. The ideas used are often not yet ful­ly devel­oped and are there­fore very error-prone. MVPs, on the oth­er hand, are test­ed in live oper­a­tion with real cus­tomers. Although they are min­i­mal, they are already suit­able and func­tion­al for use by cus­tomers.
  • Objec­tive: Pro­to­types are aimed at iden­ti­fy­ing sources of error and test­ing the dis­play on var­i­ous end devices. MVPs are used to quick­ly achieve ini­tial results on the mar­ket and gain expe­ri­ence for the devel­op­ment of the larg­er, com­plete solu­tion.

Devel­op­ment of an MVP and oth­er impact indi­ca­tors

Before you start, you should define which func­tions your MVP absolute­ly must have and which you can only add lat­er:

1. pri­or­i­tize functions/​aspects of your MVP

Cre­ate a fea­ture list and col­lect all poten­tial ele­ments for your solu­tion. Cat­e­go­rize the ele­ments accord­ing to the MoSCoW method andpri­or­i­tize the ele­ments in each cat­e­go­ry accord­ing to impor­tance.

The MoSCoW method

The MoSCoW method is a pri­or­i­ti­za­tion tool that helps you eval­u­ate the func­tions and require­ments of your MVP and rank them in order of impor­tance. The method divides the require­ments into four cat­e­gories:

  • Must have: Indis­pens­able ele­ments with­out which the MVP would not work. They are essen­tial for the basic func­tion­al­i­ty of the solu­tion or the ful­fill­ment of the core needs of the tar­get group.
  • Should have: Impor­tant ele­ments that offer added val­ue but are not imme­di­ate­ly nec­es­sary. Ide­al­ly, they should be inte­grat­ed, but can be post­poned if time or resources are scarce.
  • Could have: Desir­able ele­ments that are not cru­cial for the core func­tion­al­i­ty of the solu­tion. They can be added lat­er if time and resources allow.
  • Won’t have (this time): Ele­ments that are delib­er­ate­ly exclud­ed for the cur­rent ver­sion.

Con­cen­trate on the “must haves” first. Devel­op the MVP first with the most impor­tant ele­ments that have the great­est influ­ence on the suc­cess of your solu­tion. In the chap­ter “Solu­tion design for impact start-ups: real­i­ty check for solu­tion ideas” we use the impact-effort matrix, which you can also apply here.

Resource plan­ning for the con­struc­tion of the MVP

Plan what resources you need from the out­set. Good plan­ning will help you find the right bal­ance between over- and under-allo­ca­tion of resources. This is cru­cial to deliv­er a func­tion­al and valu­able prod­uct with­out over­stretch­ing the team or the bud­get

1. iden­ti­fies required resources

Break down your project into small­er, man­age­able work pack­ages and esti­mate the effort required for each one. Deter­mine which resources you need. Pos­si­ble resources are

Per­son­nel: e.g. devel­op­ers, design­ers, project man­agers, work­shop lead­ers

Tech­nol­o­gy: e.g. devel­op­ment tools, servers and licens­es

Finances: e.g. bud­get for devel­op­ment, mar­ket­ing and exter­nal ser­vices

2. plan your human resources

Dis­trib­ute the work pack­ages with­in the team, tak­ing into account the work­load of the employ­ees. Pre­pare for unfore­seen chal­lenges by build­ing in time buffers. By clear­ly allo­cat­ing resources and rec­og­niz­ing bot­tle­necks ear­ly on, you can make your work­flows more effi­cient and at the same time pre­vent over­load and long-term team absences.

3. cal­cu­late your costs

Cal­cu­late your costs by esti­mat­ing per­son­nel costs, addi­tion­al tech­nol­o­gy costs and any exter­nal ser­vice providers. A pre­cise cost cal­cu­la­tion will help you to set and man­age a real­is­tic bud­get. A detailed cost break­down will also help you in dis­cus­sions with poten­tial investors and increase your chances of obtain­ing fund­ing.

Devel­op­ing indi­ca­tors for the impact goals

The next step is to select the right met­rics to make the actu­al impact of the MVP mea­sur­able up to lev­el 6 of the impact lad­der.

1. focus on out­puts and out­comes

Mea­sure­ments up to lev­el 6 show whether the MVP actu­al­ly leads to a mea­sur­able improve­ment in the life sit­u­a­tion of your tar­get group.

Why mea­sure up to lev­el 6 here?

Evi­dence of actu­al change

You not only record changes in aware­ness and behav­ior (lev­els 4 and 5), but also con­crete improve­ments in the tar­get group’s life sit­u­a­tion (lev­el 6)

Ear­ly impact mea­sure­ment

Although the MVP does not yet have the full impact of the mature prod­uct, you can obtain ear­ly indi­ca­tions of the social impact (lev­el 7) by mea­sur­ing up to lev­el 6.

Val­i­da­tion of the con­cept

You can bet­ter assess whether the MVP has the poten­tial to bring about long-term change.

Rec­og­nize chal­lenges at an ear­ly stage

Met­rics up to lev­el 6 help to iden­ti­fy obsta­cles at an ear­ly stage.

Bet­ter basis for deci­sion-mak­ing

With data up to lev­el 6, you can make informed deci­sions about the fur­ther devel­op­ment or adap­ta­tion of the MVP.

Stronger argu­men­ta­tion for stake­hold­ers

Evi­dence of changes in the tar­get group’s liv­ing sit­u­a­tion (lev­el 6) is more con­vinc­ing for investors and part­ners.

Exam­ples of indi­ca­tors up to lev­el 6 of the impact lad­der:

Stage 1 — Activ­i­ties take place as planned

  • Num­ber of workshops/​trainings/​events held
  • Per­cent­age of project activ­i­ties imple­ment­ed as planned
  • Num­ber of employees/​volunteers deployed
  • Quan­ti­ty of mate­ri­als dis­trib­uted (e.g. fly­ers, text­books)
  • Adher­ence to the sched­ule for project mile­stones
  • Num­ber of prod­ucts devel­oped or man­u­fac­tured
  • Num­ber of trees plant­ed in a refor­esta­tion project

Stage 2 — Tar­get groups are reached

  • Num­ber of applications/​registrations for a pro­gram
  • Reach in var­i­ous com­mu­ni­ca­tion chan­nels (e.g. social media fol­low­ers, newslet­ter sub­scribers)
  • Num­ber of cus­tomers who know the prod­uct
  • Area of renat­u­ral­ized areas in hectares

Lev­el 3 — Tar­get groups accept offers

  • Par­tic­i­pa­tion rate in events/​programs
  • Com­ple­tion rate of cours­es or pro­grams
  • Pur­chase or usage rate of ser­vices or prod­ucts offered
  • Sat­is­fac­tion rate of the par­tic­i­pants
  • Recur­ring use, pur­chase or par­tic­i­pa­tion in offers
  • Sur­vival rate of new­ly plant­ed trees after 6 months

Stage 4 — Tar­get groups change aware­ness or skills

  • Num­ber of par­tic­i­pants who have gained new knowl­edge about a spe­cif­ic top­ic
  • Change in the tar­get group’s atti­tude towards a top­ic
  • Num­ber of peo­ple who can demon­strate new skills after a train­ing course or work­shop
  • Increased moti­va­tion to change one’s own behav­ior through extrin­sic or intrin­sic incen­tives
  • Increased num­ber of oppor­tu­ni­ties to apply own (new) skills
  • Num­ber of cus­tomers who can cor­rect­ly describe the prod­uct char­ac­ter­is­tics after pur­chase
  • Increase in bio­di­ver­si­ty in renat­u­ral­ized areas

Stage 5 — Tar­get group changes its actions

  • Num­ber of peo­ple who adopt a new behav­ior as a result of par­tic­i­pa­tion, use or pur­chase, e.g. more sus­tain­able con­sump­tion habits
  • Num­ber of par­tic­i­pants active­ly involved in new ini­tia­tives or projects
  • Num­ber of new col­lab­o­ra­tions or part­ner­ships con­clud­ed as a result of the ini­tia­tive
  • Return of endan­gered species to the ecosys­tem

Stage 6 — The tar­get group’s life sit­u­a­tion changes

  • Per­cent­age of the tar­get group whose social or eco­nom­ic sit­u­a­tion has improved (e.g. through a bet­ter job or bet­ter edu­ca­tion­al oppor­tu­ni­ties)
  • Num­ber of peo­ple whose income or finan­cial sta­bil­i­ty has increased as a result of par­tic­i­pa­tion, pur­chase or use
  • Improve­ments in the health or well-being of the tar­get group
  • Improve­ment in cus­tomer sat­is­fac­tion with regard to the prob­lem area addressed
  • Improve­ment of air qual­i­ty in a city mea­sured by par­tic­u­late mat­ter and NO2 lev­els
  • Increas­ing CO2 seques­tra­tion through refor­est­ed areas

2. sets clear goals

Set clear, mea­sur­able, real­is­tic and time-lim­it­ed tar­gets for your impact indi­ca­tors by for­mu­lat­ing them accord­ing to the SMART cri­te­ria:

  • Spe­cif­ic: must be clear­ly defined and unam­bigu­ous.
  • Mea­sur­able: must be quan­tifi­able.
  • Attrac­tive: must be rel­e­vant to your goal.
  • Real­is­tic: must be achiev­able with your avail­able resources.
  • Sched­uled: must be lim­it­ed in time. Set a time frame of two to four months.

3. deter­mines a base­line

The base­line is the ini­tial val­ue that serves as a ref­er­ence point to com­pare the state before and after your mea­sures (e.g. num­ber of peo­ple with aware­ness of the impor­tance of healthy eat­ing or with skills in stress resilience).

Ide­al­ly, you should set the base­line using offi­cial sta­tis­tics and not by self-assess­ment. This could increase the risk of impact wash­ing.

4. imple­ments a mea­sure­ment sys­tem and cre­ates a data col­lec­tion plan

By defin­ing objec­tives, indi­ca­tors, data sources and respon­si­bil­i­ties, you cre­ate a sol­id foun­da­tion for your MVP and ensure that all impor­tant aspects are tak­en into account. You can cre­ate the data col­lec­tion plan in Excel, for exam­ple. It should have the fol­low­ing columns:

Goal

Indi­ca­tor

Base val­ue (base­line)

Tar­get val­ue

Data source, e.g. inter­nal doc­u­ments, sur­veys, obser­va­tions or exter­nal sources

Sur­vey method, e.g. ques­tion­naires, inter­views, obser­va­tions or doc­u­ment analy­ses

When/​how often is it col­lect­ed?

Who col­lects the data?

Who ana­lyzes the data?

Next chap­ter: Real­i­ty check

You are now well posi­tioned to devel­op an MVP that not only works, but has a real impact.

As soon as the MVP is ready, we rec­om­mend doing the real­i­ty check. You can do this in the next chap­ter by col­lect­ing reli­able data on the accep­tance and effec­tive­ness of your solu­tion and check­ing whether and how it is scal­able.