Proof of Concept (POC)

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What is a Proof of Concept (POC)?

A proof of concept (POC) is a business tool that helps managers determine the revenue and profit potential of a new product. In the technology sector, it’s the first of three initial phases in product development.

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Project managers rely on POCs to clarify which features of a product are likely to be most attractive to a potential buyer and the costs that will need to be controlled in production. Ultimately, POCs determine if an idea for a product or service has the potential to deliver commercial value.

What is a Proof of Concept (POC)?

Key Takeaways

  • A proof of concept helps companies evaluate new product ideas and separate the good from the bad.
  • POCs demonstrate the feasibility of a product idea and its potential for making money.
  • By conducting research and testing ideas before they go into production, companies avoid wasting resources.
  • POCs can guide project managers as they take an idea forward.
  • Creating a POC according to best practices will vastly improve its usefulness.

POC Value

Completing a proof of concept before embarking on a product development process helps a business optimize resources in three important ways:

It establishes feasibility
A proof of concept helps determine at the outset whether company resources should be allocated to a new product idea.

It removes barriers and secures buy-in
A successful POC will convince key internal decision makers like finance – and external stakeholders like investors – that an idea is worth devoting time and money to.

It reduces risk
A POC helps identify technical and financial limitations and determine ways to address or overcome them.

Key Components of Proof of Concept

Key Components of Proof of Concept

  • Clarify how you will collect data for the idea, determine how long the process will take, and list any costs related to testing or information gathering.
  • Identify success criteria and the metrics that will prove the idea has potential and addresses a market need.
  • Prepare a list of the proposed product’s core features.
  • Test the concept and gather user feedback against initial designs or rough formulations of an idea.
  • Evaluate the concept by measuring feedback and results against the success metrics.

Proof of Concept vs. Prototypes

The term ‘proof of concept’ is sometimes used interchangeably with prototype or minimum viable product (MVP).

While all three happen before a new product is launched, each is actually a distinct phase of the product development lifecycle:

  • Proof of concept is phase one, where evidence is gathered to determine if an idea is feasible – profitable, with potential for sales growth. A working model may not be necessary. POCs are often presented in document form.
  • If the business case detailed in the POC is accepted, a prototype or working model of the proposed product is created to test its functionality.
  • If the prototype shows enough promise, a product development project begins and a minimum viable product is created. This is a fully-realized working model that demonstrates major features and proves the product’s real-world effectiveness.

6 Tips on Creating a POC

These are the six key components of a successful POC:

  1. Break the PoC down into individual tasks.
  2. Add time estimates for each task.
  3. Use checklists to ensure all criteria for acceptance have been met.
  4. Assign tasks to project team members for completion.
  5. Include start dates and deadlines for each.
  6. Create any necessary custom fields to capture information unique to your POC.

POC Examples

POCs can look very different across different industries.

Here are some examples:

  • A software developer might have an idea for a project management tool that meets the needs of a specific industry like healthcare, or addresses a vertical within a bigger sector like manufacturing. The POC would establish that a sector-specific tool delivers greater value than a generic alternative.
  • A company purchasing software to make content management faster and more efficient might create a proof of concept first to prove the feasibility of the idea. If the POC is compelling, it will justify spending money and devoting internal resources to implement and train staff on the new tool.

Proof of Concept in Software Development

In software development, a proof of concept maps the path from idealized product or service to market-readiness. It clarifies the market need and explains how an application or platform would function.

A strong POC in software development would help developers align a piece of software with user behaviors. It should be clear about potential challenges and list important end-user requirements.

Proof of Concept in Business Development

Proofs of concept can be used to support business development, or ensure products are being created in alignment with business development objectives.

For example a new business-to-business (B2B) product or service idea might be shown to a trusted customer to get their feedback, while a manufacturer might present early POC findings to a retail or wholesale partner to gauge market interest.

Proof of Concept in Project Management

Project managers use POCs to guide the product development process, often taking data from a proof of concept and using it to input objectives in project management software. In industries like technology, manufacturing, and pharma, POCs are used to pursue ideas and identify any weaknesses before taking them forward for practical, hands-on trials and eventual production.

POCs often require significant time or other resources and may need to be managed as standalone projects.

Benefits of POC

The main benefits of a proof of concept lie in their ability to establish if a new idea is feasible, ensure that a product is being created with end-user needs in mind, mitigate business risks, and to guide project managers as they take a new product from concept to creation.

The Bottom Line

A proof of concept helps companies filter good ideas from bad, and by definition, prove the viability of a new business concept. They support innovation by showing the long-term potential of a product, enabling firms to allocate resources efficiently and prioritize projects with the highest likelihood of generating significant value.

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Mark De Wolf
Technology Journalist
Mark De Wolf
Technology Journalist

Mark is a freelance tech journalist covering software, cybersecurity, and SaaS. His work has appeared in Dow Jones, The Telegraph, SC Magazine, Strategy, InfoWorld, Redshift, and The Startup. He graduated from the Ryerson University School of Journalism with honors where he studied under senior reporters from The New York Times, BBC, and Toronto Star, and paid his way through uni as a jobbing advertising copywriter. In addition, Mark has been an external communications advisor for tech startups and scale-ups, supporting them from launch to successful exit. Success stories include SignRequest (acquired by Box), Zeigo (acquired by Schneider Electric), Prevero (acquired…