The proof of concept (POC) is proof that a business idea is practically feasible and economically viable. The POC therefore plays an important role before the start of product development. Once you have completed the POC, you can start implementing your idea. In this article, we explain what the proof of concept is and how you can use it.
What is a proof of concept?
What is a proof of concept? Meaning and components
The term "proof of concept" (also: proof of principle or POC for short) describes a feasibility study. It is carried out before a project is developed in order to check whether the idea on which the project is based is feasible. The proof of concept thus answers the question of whether the theoretical idea can be implemented in reality according to the company's own ideas and assumptions. The POC therefore primarily serves to prove feasibility.
Another component of the POC is the proof of economic viability. In addition to feasibility, companies also test the economic viability of their idea during the proof of concept. For example, they receive information on whether their product is popular with customers.
An idea that is feasible but not profitable would generally be discarded or optimized until the proof of concept also provides proof of profitability. It only makes sense to start developing the idea once the proof of concept has been provided.
Initially, an idea is only based on assumptions. Starting project or product development on the basis of these assumptions would entail the risk of investing resources in the development of an idea that fails on the market. This is why the proof of concept is so important in project management to prevent risks and bad investments. The proof of concept should always be obtained before the further development of ideas in order to promote the efficient use of resources and a successful product launch.
When is the proof of concept used?
The proof of concept follows the idea generation and the formulation of assumptions. On our Discovery & Ideation page, we explain the process of idea generation when working with our company. In practice, ideation is carried out step by step as follows:
- Gathering ideas with knowledge of new technologies and trends
- Selection of the best ideas for the further project
- Further development of ideas into concepts, including by formulating a target group
- Visualization of concepts: results are viewed from a broad business perspective
- Formulating requirements so that the concepts prove themselves on the market and then deriving hypotheses
The assumptions formulated in the last step as to how the idea could be successfully turned into a digital or physical product need to be checked for feasibility and profitability. This is precisely where the proof of concept is applied.
How does a proof of concept work?
There are several methods for carrying out a POC project. One widely known method is market research. Companies pay service providers to carry out surveys. Alternatively, companies conduct these surveys themselves. Based on the participants' responses to the business idea to be tested, companies can draw conclusions about the feasibility of the intended product.
It must be acknowledged that market research is only based on surveys and does not include a practical test of the business idea. The quality of this proof of concept is therefore lower compared to other methods. A reality check of an idea using one of the following methods is much more informative than market research:
- Positioning the idea in a small market
- Creation of a landing page
- Prototyping
Positioning the idea in a small market and drawing conclusions
When positioning the idea in a small market, the project or product is only presented to part of the target group. Based on the reaction of this part of the target group, conclusions can be drawn about the feasibility and profitability on the market as a whole.
Creating a landing page and other methods from the IT industry
Creating a landing page is a popular POC method, especially for IT companies. For example, a website is created on which the idea is presented and customers may already be able to signal their interest. Feedback from customers and the evaluation of key figures on activity on the landing page (including visitor numbers, bounce rates, length of stay) can be used to gain insights into the feasibility and profitability of an idea. Other methods for proof of concept in IT are mock-ups and typeform surveys.
Prototyping
Prototyping is an important method of modern innovation management, both in software development and in the development process for physical products. Prototyping involves building a prototype of software or an object, for example.
The prototype visualizes an idea. Feedback from users or the team can be used to identify the strengths and weaknesses of an idea. This allows the prototype to be optimized. As an extremely rudimentary version of the intended end product, the prototype is a cost-saving way of testing a project idea. The results of the test make it easier to decide whether the project idea is feasible and economically viable.
The prototype is actually the first step in product development, which is followed by further steps and the creation of a minimum viable product (MVP). However, a prototype can also be used as a proof of concept method to carry out a feasibility test before the actual start of development.
Proof of Concept (POC): Advantages and challenges
The proof of concept (POC) is essential for convincing investors and other stakeholders of the success of a project. The company's internal and external belief in its success strengthens the probability of success of the project. Furthermore, the proof of concept process helps to identify the opportunities and risks of the business idea. This allows an idea to be discarded or optimized at an early stage.
When using the proof of concept, the biggest challenge is the technically correct implementation. On our page about validating business ideas, you will learn that it is important to define the right parameters for assessing feasibility and profitability in the proof of concept.
The right criteria for carrying out and analyzing the proof of concept vary depending on the POC project (e.g. prototyping, landing page). Companies are therefore well advised to work with a team or service company that is familiar with various POC concepts and their use in the innovation process to check the feasibility and profitability of their projects.
Examples of a proof of concept
In IT, mock-ups can be used for a POC. Mock-ups are demonstration models that can be used to test the design and/or functionality of an application. The data obtained from user interaction during the test phase is carefully analyzed after each test phase in order to predict the extent to which the finished product will be accepted on the market.
Another example of a proof of concept is a crowdfunding campaign. Anyone who presents their project via a platform and finds financial backers receives support. Under certain circumstances, this can serve as a proof of concept.
With the proof of concept (POC), you validate your idea and prove that it is technically feasible and economically viable. Checking the feasibility and usefulness of a business idea by means of a proof of concept is an essential step before starting the development of a product. By proving feasibility, you boost the confidence of investors and other stakeholders. Thanks to the results of the proof of concept, you also gain insights into what changes you should make to your idea.
FAQ
How do I create a POC?
You create the POC by developing a suitable method to test the feasibility and profitability of your idea. One example of a method is prototyping. Before the feasibility test, also define the parameters that you will use to evaluate whether the idea will prove itself on the market or not.
Why proof of concept?
The proof of concept is important in order to develop a marketable model or product that can be implemented under economically appropriate conditions and contributes to the success of the company.