MDMV in a nutshell
Metrics-driven market validation is a efficient way of understanding the startup - customer relationship in B2B and B2G contexts.
To summarize the MDMV approach:
Essentially, a customer that buys from a startup does so because they want to improve a business process. Therefore, the startup must demonstrate that the improved process is significantly better than the old version: The achieved result is worth the investment to buy and implement the solution.
How can this be demonstrated? The easiest way is by understanding how the customer measures the performance of their current process. Sometimes, the customer uses some process-specific KPIs but ultimately, they assess the cost, time, and/or risk of the process (the latter two indirectly affecting cost). So, the startup needs to show that it significantly improves the process KPIs and thusly reduces the cost, the time needed, or the risk - or a combination of these factors.
These process improvements are the basis of a "business case" for the customer - a comparison between the cost and effort for the new solution and its (financial) benefit. If this case is very attractive, the customer might consider working with the startup to implement it.
MDMV suggests now to build such a business case for the customer and validate them with potential target customers; if they like what they see, they might be ready to actually invest in the case (e.g., pay for building a solution).
The overall MDMV process is about building a set of hypotheses about the benefit of the business cases and testing these hypotheses by talking to potential users and customers, and, ultimately, agreeing to have a paid pilot project with them. The aspect of the pilot being paid is important since it increases the interest and commitment of the customer.
Need more information? Reach out to j@janfuelscher.ch.