A proof of concept in product development or business development refers to a preliminary (often scrappy) validation of the idea that you are about to put larger resources behind. If you are a founder, you will need to show proof of concept for your ideas in order to secure investment, and if you are an existing business, you will want to run a proof of concept before launching a new product, moving into a new market segment, or beginning a large new project.
A good proof of concept will:
Encapsulate those parts of your product or service that provide the core of the value to customers. (Keep it simple and focused.)
Show stakeholders, investors, or founders that there is market demand for what you offer.
Help refine what exactly it is that customers want to see from you, and whether it is feasible for you to deliver on.
Minimize risk by letting you get your feet wet when beginning a new venture.
Save you money, since you may discover leaner ways to execute on your business idea.
A proof of concept requires you to create a basic real-life simulation of your idea, and get it in front of as many potential customers as possible, to see how they react. But because you aren’t about to put major resources behind a proof of concept, doing one requires you to really look beyond your comfort zone and execute creatively. The key is to create as true-to-life a simulation of your idea as possible, by focusing just on its most critical aspects.
PoC vs. prototype: what’s the difference?
It’s important to recognize that a proof of concept is not a prototype. Here’s a breakdown of the difference between a proof of concept and a prototype.
A prototype helps work out how something should be built.
A prototype:
Seeks to develop a working model for what will eventually be produced.
Has most of the functionality of the final product, but isn’t as efficient or well-designed as the real deal will be.
A proof of concept helps decide if something should be built.
A proof of concept:
Gauges consumer reaction or feasibility and helps define what next steps the business should take.
Can include a prototype or beta version, but does not have to be built using the same technology or methods that the final product will be built with.
Examples of Proof of Concept in action
Since the way that you execute a proof of concept will radically differ depending on what your business idea is, examples are very helpful in illustrating what makes one successful. Here are a few of my favorites:
Pixar
Known for pushing boundaries in computer-generated animated films, Pixar sometimes creates short films to test out complex new animation techniques. The short film Geri’s Game was created to test out realistic animation of human facial expressions and clothing so that 3D human characters could be realistically achieved on screen. The success of that short film later helped create the full-length movie Toy Story 2 and others later used the same techniques.
Hometalk
When I was managing the design team at Hometalk, an online DIY community where users share home improvement tutorials, we wanted to see if members would be interested in purchasing painting kits. To test this out, we planned out the kits and created a simple landing page for the offering. Then, we had a community influencer (a painting expert) choose and buy materials, pack the kits, store them in her home, and deliver them herself. The concept failed because consumers weren’t interested. But the proof of concept was successful in the sense that we didn’t lose a whole lot of time or money in the process of learning what we needed to know.
Airbnb
After some initial market research, Airbnb found that many people wanted to host their homes on the platform, but didn’t have the necessary time or energy to maintain the property. They decided to launch a new “co-hosting” service where vetted hosts could rent out your property for you. But before any new software was developed, the team first ran a proof of concept test using a “service prototype” in just one city - Tokyo. Here, the research team worked with the ops team on the ground to match apartment owners and co-hosts manually, in an approximation of how algorithms would eventually do it. The team also set up ad-hoc communication through emails, forms, and spreadsheets that together simulated what the platform would later do automatically. The PoC test - and later the actual program - were a runaway success with hosts and co-hosts around the world.
Doing things that don’t scale
As you’ve likely noticed, all three of these examples illustrate the wisdom of the famous advice given to Y Combinator startups by founder Paul Graham: “Do things that don’t scale.” When he first gave this advice in 2013, it seemed counterintuitive to most listeners: isn’t good business always about scalability? Making examples of Stripe, Microsoft, and others, Graham encourages entrepreneurs in the early stages of fragile business growth to take seemingly outlandish, impractical, or extreme steps to make early users happy. He also advises companies to make early stage products work via building personal connections - rather than fancy tech, big marketing, or PR buzz.
The same principles apply to creating a powerful proof of concept that will fuel the growth and maturation of a business idea. For your PoC, the idea is to use any and all methods available, to craft a real-world simulation of your idea as quickly as possible. This can include either extremely low-tech or high tech ways of bringing people together to experience your business use case. For example:
To simulate automated notifications, you might choose to manually send out emails.
To simulate the experience of a game in virtual reality, you might invite people to an actual room decorated with paper models showing what the user will encounter on their journey through various levels. Or, you might choose to render just one level of the game to get individual user feedback.
To simulate a new IoT music-making device, you might strap an ipad onto a regular keyboard or turntable.
A simple Proof of Concept template you can use
I created this printable template for running a PoC in the most organized and focused way possible. Fill out the first section while you plan your proof of concept, and then the second section after your test has run.
My template is similar to the Strategyzer research card (also a wonderful resource!), but it is modified for the specific needs of a PoC test. Here’s a bit more explanation about how to fill in each of the fields:
What we want to offer people is:
Here you will write a line or two summarizing what you want to offer and why it is valuable.
Here is how we will simulate that idea:
Using any and all tools at your disposal, craft whatever it takes to bring said scenario to life and test the hypothesis. You can create basic prototypes in tools like invision, figma, or even canva, google slides, excel, or cardboard and markers (gasp!). It doesn’t need to be a full working prototype. It does have to simulate an idea and its context for potential users in a real-life way.
We will test out the reaction by:
A beta version where you can gather data from users is ideal, but quick and dirty user testing also does the job: get it in front of about 20 people who match the real target for the thing. Plan to ask each person a set of questions for feedback after they have used your product/service.
We’ll know it was a success if:
Here you will want to agree on your most basic metric of success, a baseline indicator or that you will let you know that you have something that appeals to people. Did more than 50% of your testers say they wanted to start using your product? Did more than 80% react positively? Did 40% download your app after seeing your landing page? Any of those might count as success for your test.
After the test has been run, fill out the second part of the template with your team:
We learned that:
Debrief with your team after the test, to summarize what you observed and what you learned. Some lessons will invariably be difficult ones to swallow - the goal here isn’t to get only positive feedback. Your goal is to gauge how much appeal there was around your concept: did people’s eyes light up at the basic idea? Did they get really enthusiastic about it? Did they react to it as a “nice to have”, or “need to have”? Did your hypothesis turn out to be true? For those users who gave negative feedback: Did they pan the idea outright? Did they dislike it’s execution but enjoy the concept? Did they offer suggestions for improvement? All of these are important questions to ask.
So therefore we will:
Summarize a plan of action based on what you have learned. Do you decide to continue and improve on your concept or decide to throw it in the bin? Do you resolve to step back and revise your value proposition? Or, was your value proposition a huge hit with users, and now all you need to do is add some new functionality? All of these are valid options.
Once you’ve run your proof of concept test, you’ll probably be surprised at the things you’ve learned in such a short period. Don’t worry if the PoC has failed - you will either have learned some expensive lessons very cheaply, or have figured out your next move on the path to success.