When To Focus On MVP vs When To Focus On ROI

When embarking on a significant internal operations project, organizations often grapple with the age-old debate of prioritizing a Minimum Viable Product (MVP) versus focusing on Return on Investment (ROI). While both frameworks have merit, the choice between them can profoundly impact project outcomes, stakeholder trust, and ultimately, the value delivered to the organization.

According to CB Insights, 35% of startups fail because they build products with no market need, underscoring the importance of aligning projects with value-driven outcomes.

This article will explore the nuanced differences, challenges, and best practices to help you determine the right approach for your next initiative.

Asking The Most Important Question: Why Are You Investing?

Before deciding between MVP and ROI, organizations must ask a series of critical questions to ensure alignment with their strategic goals:

• What is the core objective? Determine whether the project is aimed at experimentation, learning, or delivering a high-value, market-ready solution.
• Who are the key stakeholders and end-users? Understanding their needs and expectations will help clarify whether an iterative MVP or a refined ROI-driven approach is appropriate.
• What are the measurable outcomes? Clearly define what success looks like in terms of revenue, efficiency, customer satisfaction, or other metrics.
• How will this project impact the brand? Consider whether the initial release, particularly if low fidelity, could affect perceptions of quality and trust.
• What is the risk tolerance? For organizations with low tolerance for risk, ROI-driven approaches may be safer, as they involve more rigorous planning and validation.

By addressing these questions, organizations can ensure their investment aligns with both immediate needs and long-term ambitions. For example, if testing market viability is the goal, an MVP might suffice. However, if the project aims to revolutionize internal operations or provide substantial customer value, a focused ROI approach is likely the better choice.

Moreover, revisiting the “why” throughout the project lifecycle ensures teams remain aligned with the overarching goals, preventing scope drift and wasted resources.

Understanding MVP: Speed & Learning Over Long-Term Value

The MVP framework is centered around creating a product with just enough functionality to meet early user needs, allowing organizations to quickly test hypotheses and gather feedback. The MVP approach excels when:

1. Time-to-Market is Critical: MVPs prioritize speed, enabling teams to deliver something usable in weeks or months.
2. Learning Takes Precedence: Early releases allow organizations to understand user behavior, iterate based on feedback, and refine future plans.
3. Resource Constraints Are High: MVPs minimize initial costs by avoiding over-engineering, focusing on core features rather than high fidelity.

However, MVPs are not without their drawbacks. For large, high-stakes projects, a poorly executed MVP can:

1. Damage the Brand: Low-fidelity products risk creating a negative perception among key stakeholders and end-users.
2. Extend Timelines: What starts as a “minimum viable” solution often snowballs into an extended timeline as unforeseen issues arise.
3. Undermine ROI Goals: By prioritizing speed and experimentation, MVPs can divert resources from delivering substantial, long-term value.

ROI Projects: Building With Purpose & Precision

In contrast, ROI-centric projects begin with a clear vision of how value will be generated and delivered. This approach is better suited for large-scale projects requiring significant investment because:

1. Value Creation is the Focus: The emphasis is on generating new revenue streams, streamlining operations, or achieving measurable outcomes that justify the investment. In 2024, Deloitte released a report stating that organizations with strong ROI-driven strategy are 45% more likely to exceed revenue targets.
2. High-Fidelity Execution: Projects prioritize quality, ensuring the end product meets or exceeds user expectations and supports the organization’s long-term goals.
3. Risk Mitigation: ROI-driven planning involves anticipating challenges, aligning resources, and building a roadmap that maximizes returns while minimizing potential setbacks.

ROI-based approaches are ideal when the stakes are high, and the organization requires a polished, impactful solution. While they may take longer to execute, their precision and focus on outcomes often result in greater stakeholder satisfaction and sustainable benefits.

Key Challenges & Best Practices For Both MVP & ROI Projects

Both MVP and ROI approaches come with unique challenges that require careful navigation:

MVP Challenges

• Balancing Speed with Quality: Rushing to market can lead to technical debt and reputational risks.
• Scope Creep: MVPs often evolve into more complex projects, eroding the initial time and cost savings.

Best Practices For MVPs

• Clearly define the scope and stick to it.
• Communicate that the MVP is a stepping stone, not the final product.
• Use MVPs for low-risk initiatives or when learning is the primary goal.

ROI Challenges

• Longer Timelines: ROI-focused projects require meticulous planning and execution, which can delay time-to-market.
• Higher Initial Investment: The upfront costs of high-fidelity solutions can be significant.

Best Practices For ROI

• Start with a comprehensive business case that clearly articulates expected value and outcomes.
• Align stakeholders on the vision and roadmap to ensure commitment.
• Use phased delivery to demonstrate early wins while maintaining long-term focus.

The Path To Long-Term Success Starts With Orases

While MVPs can be powerful tools for quick learning and iteration, they’re often unsuitable for large-scale, high-stakes projects where brand reputation and ROI are paramount. In such cases, focusing on ROI ensures that the final product delivers meaningful value, aligns with organizational goals, and generates sustainable returns.

As you plan your next project, remember: it’s not just about building something quickly, it’s about building something that matters. Reach out to Orases today to get started with your project.