In the realm of agile methodology, the significance of incremental releases cannot be understated. The core principle revolves around constructing a small-scale version of a product, releasing it to the market, assimilating lessons from its reception, and making necessary pivots.
However, achieving this iterative process necessitates a crystal-clear understanding of our objectives as well as the ability to effectively communicate them to the development team. This is precisely where the concept of Minimum Business Increments (MBI) comes into play.
What is a Minimum Business Increment?
At its core, a Minimum Business Increment (MBI) entails a concise depiction of the minimal amount of business value that can be actualized. It encompasses a comprehensive outline of all the necessary steps for its release and realisation. The key objective of an MBI is to identify the smallest feasible value proposition, facilitating speedy value realisation and simplifying project management while considering transaction costs.
While the focal point of an MBI is to deliver value from a business perspective, it remains cognizant of the customer’s needs while aligning with the overarching business strategy. Termed as “business value,” this approach is versatile and applicable across various contexts, be it in the realms of for-profit organisations, non-profit entities, or both product and service-based industries.
The primary goal is to expedite the realisation of business value, rather than using the MBI as an excuse for delivering less. Although there are similarities to Minimum Viable Products (MVPs), it is important to note that MBIs and MVPs are distinct concepts with their own unique characteristics.
What Are The Characteristics of a Minimum Business Increment (MBI)?
The concept of Minimum Business Increments (MBIs) comes into play when the value of an enhancement or a new product/service is reasonably well understood. It represents the smallest functional unit that can be delivered while still providing tangible value to the business. By focusing on MBIs, organisations can effectively prioritise and expedite the realisation of value.
Let’s explore the key characteristics of an MBI:
- Customer Value: MBIs aim to add value for the customers of the business, ensuring their needs are met.
- Feedback Validation: They provide valuable feedback to validate that the right functionality is being developed and that it is being built in the right way.
- Functionality and Validation: MBIs offer functionality that can be delivered and validated as useful, enabling quick value realisation. To learn more about how to validate your startup idea, click here.
- Future Value Enhancement: They enhance the organisation’s ability to deliver value in the future, considering aspects such as documentation, operations, and marketing.
Since the decision-makers and the development teams are typically not the same, the MBI serves as a crucial document to clarify the required work. While both parties contribute to creating MBIs, it is essential to view MBIs as the guiding framework for determining the work that needs to be done.
Creating MBIs begins by identifying the target audience and defining the scenarios relevant to the business objective. (Learn more about defining your target audience here)The focus should be on determining the minimum business increment required for the identified scenarios, forming the basis of the MBI.
To achieve the desired functional implementation of an epic, a series of MBIs is often necessary. By delivering MBIs incrementally, organisations can realise value faster and obtain valuable feedback, enabling more effective pivoting if required.
Value for the business can encompass various aspects, such as paying down technical debt, advancing agile transformations, or improving product platforms. It is the responsibility of the business to identify and prioritise these value-driven objectives.
Lastly, any potential adverse effects of an MBI on existing functionality should be addressed within the MBI itself, rather than burdening the development team responsible for the affected code. Determining the interdependencies between MBIs is typically the role of the business architect.
What Are The Advantages of Using a Minimum Business Increment?
The Minimum Business Increment (MBI) serves as a pivotal document, providing clear guidance on the required tasks. Let’s explore the advantages of adopting this approach:
- Early Descoping for High-Value Focus: By descoping non-essential elements, organisations can concentrate on manifesting the most crucial value. Smaller work units are easier to manage, aligning with Eli Goldratt’s insight that reducing batch size can restore control to a system. Delivering smaller pieces facilitates quicker implementation while prioritising high-value components enables efficient allocation of time and resources.
- Ensuring Completeness for Value Realization: MBIs encompass all the necessary work to realise value. They include non-development aspects such as user documentation, market support, and operations, offering visibility across the entire value stream. MBIs foster clarity within DevOps, enabling comprehensive alignment and understanding.
- Sequencing Work and Addressing Constraints: MBIs enable the organisation to sequence the list of tasks while considering shared services that may serve as constraints. This approach helps avoid initiating work until there is sufficient capacity to complete it, promoting effective resource utilisation.
- Clarity in Alignment: MBIs provide a clear focus for all parts of the organisation, aligning efforts towards defining, implementing, deploying, and realising the maximum value as determined by business stakeholders. This shared understanding promotes collaboration and cohesive progress.
- Scope Constrained for Faster Value Realization: MBIs ensure that scope is consistently limited by the objective of expediting value realisation. While initially representing the minimum units of realisable business value, MBIs are further decomposed into features and stories. The scope of features and stories remains confined to that of the MBI, enabling teams to build only what is necessary for value realisation. This contrasts with traditional agile decomposition methods that often start with epics and then extract important features. By focusing on a more targeted audience or purpose, MBIs streamline scope and prioritise value.
- Effective Work in Progress (WIP) Management: MBIs aid in managing WIP, not only in terms of the amount of work being actively pursued but also in influencing the completion mindset. Teams understand the need to finish all stories within a feature and all features within an MBI. Smaller features and story sizes result from implementing only the components necessary for the MBI. MBIs minimise WIP by their inherently smaller nature, the decomposition of smaller pieces (features and stories), and providing a holistic view of completion targets.
- Fundamental Distinction from Epics: MBIs fundamentally differ from epics, which are agile constructs representing large stories without a direct connexion to value. MBIs, on the other hand, are business stakeholder-oriented and tightly linked to business value. They facilitate critical conversations to establish agreement on whether and when something should be built, fostering a value-driven approach.
Considerations When Creating Minimum Business Increments
When crafting an MBI, it is essential to consider the various scenarios in which the new capability can be utilised. These scenarios can be based on different market segments that will benefit from the capability. By identifying and understanding these scenarios, MBIs can be created with a focus on targeting specific markets to maximise the delivery of business value. As a result, multiple MBIs may be generated to address diverse value opportunities.
To optimise the organisation’s impact, MBIs should be sequenced based on their importance. By prioritising MBIs that deliver the greatest value in the shortest timeframe, a clear order of importance can be established. This alignment of MBIs according to their business value enables effective collaboration among disparate teams, as they work together towards building the identified capabilities in the determined order. This synchronisation enhances teamwork and ensures that efforts are directed towards the most significant business value, fostering efficiency and alignment across the organisation.
Minimum Viable Product (MVP) vs Minimum Business Increment (MBI)
MVPs (Minimum Viable Products) and MBIs (Minimum Business Increments) share commonalities in terms of mindset, the use of vertical slices to validate work, and their customer-centric approach. However, it is crucial to recognise the significant differences between them:
MVP: Focuses on discovering if a new product is viable, testing its market potential.
MBI: Aims to generate a return on investment by enhancing an existing product, targeting a specific market segment or solidifying the offering in the existing market.
MVP: Creates a new product primarily targeting early adopters in the market.
MBI: Expands to a new market segment or strengthens the offering for an existing market segment.
MVP: Involves focused interactions with potential clients to validate the product concept.
MBI: Leverages existing marketing infrastructure and channels to reach the target audience.
Teams Needed to Create:
MVP: Typically begins with a small team dedicated to building the MVP.
MBI: Often requires coordination among several teams, unless there is an existing product alignment in place.
MVP: Starts with small features and gradually expands.
MBI: Decomposes into features that strictly align with the scope of the MBI.
Impact on Existing Offerings:
MVP: Generally has minimal direct impact on existing products, as it involves new product development.
MBI: Likely to interact with multiple systems and may have implications for existing offerings.
Combining MVPs and MBIs
Here’s a recommended approach for utilising MVPs and MBIs effectively:
- MVPs for Value Discovery: MVPs are ideal when you are in the process of discovering if a product or concept holds value. They are particularly suitable for innovation-driven products. Therefore, when you are uncertain about the potential value, begin with an MVP before transitioning to MBIs. This approach ensures clarity by distinguishing between the discovery phase (MVP) and the realisation phase (MBI).
- Funding Considerations: MVPs require shorter cycles and smaller teams, making them suitable for initial funding focused on value discovery. Once the MVP is built, a decision can be made to continue, pivot, or halt based on the insights gained. It is also possible to release the MVP to a limited audience to assess its viability. In contrast, MBIs need to be fully funded as they represent increments of value to be realised. Keep in mind that an MBI is the minimum business increment, so the funding required may not be extensive. You can learn more about financing your startup here.
- Scale and Funding Alignment: MVPs are better suited for smaller-scale projects, while MBIs work well at larger scales. Understanding this alignment can help in making informed funding decisions based on the nature and scope of the initiative. Wanting to get funding for your business? Learn more about what investors are looking for here.
By strategically applying MVPs and MBIs, organisations can optimise their approach to value discovery and realisation. MVPs are instrumental in validating new ideas, while MBIs provide a focused framework for incrementally achieving business value. It is crucial to define clear funding strategies and objectives based on the stage of the project and the desired outcomes.
Minimum Business Increment Template
MBIs should strive to be as small as possible while encompassing all the necessary elements for value realisation. To facilitate this process, it is beneficial to adopt a standardised MBI template across the organisation, capturing the essential requirements consistently.
To get you started with your own MBI, have a look at our template below, which we’ve adapted from here.
Description of the MBI
- The anticipated benefit of this MBI
- How will we evaluate if we’ve achieved this
Initiative This Came From
- The target market for this
- Who are you building this MBI for?
- Do they have another customer this is for?
- Use cases to describe the value
- What’s needed to meet the organization’s definition of done
- Are there any system or application architectural issues to be explored?
- Has the business architect signed off on this?
- What help from architecture will be needed
What’s needed for release/realization
- Development teams needed
- Shared Services
- Who will be involved?
- When do they need to get involved?
Validating you have the smallest MBI
- Is there any subset of the MBI that can be delivered sooner? Consider: geography, market segments, language, or anything else you can think of.
- Is the MBI larger than it needs to be because of deployment issues?
- Are there any risks associated with not completing this MBI?
- Are there other MBIs dependent upon completing this one?
What is a Minimum Business Increment?
An MBI represents a succinct depiction of the minimum level of business value that can be achieved from a business perspective. It encompasses a comprehensive outline of all the necessary steps essential for its successful release and realisation.
What is a Minimum Value Increment?
MVIs serve as representations of any valuable increment to the software. The term “Minimum” highlights the significance of working in small increments and maintaining short feedback loops. The fundamental structure of an MVI consists of:
Value: This section describes the anticipated business value to be achieved.
Increment: Here, the actions and steps to be taken in order to generate the specified value are outlined.
What is the Difference Between an MVP and MBI?
MVP (Minimum Viable Product) primarily aims at validating product hypotheses and acquiring user feedback, enabling businesses to learn and iterate. On the other hand, MBI (Minimum Business Increment) focuses on delivering tangible business value to customers and generating revenue. Both approaches play vital roles in enhancing products and facilitating informed development decisions for businesses.
What is an MBI in Agile?
In my extensive experience spanning over 20 years of practising various forms of Agile methodologies, I have discovered the Minimum Business Increment (MBI) to be an incredibly valuable concept. The MBI represents the smallest unit of value that can be created, ensuring its realisation for both internal and external customers. This concept has proven to be transformative in driving business success and achieving agile objectives.
A management buy-in (MBI) takes place when an external manager or management team acquires a majority ownership share in a company from the outside. This acquisition results in the replacement of the existing management team with the new incoming team. The purpose of an MBI is to introduce fresh leadership and drive transformative changes within the organisation.
Minimum Business Increments (MBIs) offer a strategic framework that empowers businesses to prioritise and deliver incremental value to their customers. By breaking down complex initiatives into manageable units, MBIs provide organisations with the means to expedite time-to-market, validate assumptions, and gather valuable user feedback.
The adoption of MBIs nurtures a customer-centric mindset, ensuring that each increment contributes significantly to customer satisfaction and overall business growth. With the agility to adapt to evolving market needs and swiftly respond to feedback, businesses can harness the potential of MBIs to foster innovation, elevate product development practices, and ultimately thrive in the dynamic landscape of today’s business environment.