Proof of Value vs Proof of Concept: How Do They Differ?

Proof of value vs proof of concept are two startup terms frequently confused and misunderstood by founders and those creating digital products. In reality, they both belong to the earliest product stages following ideation. Whether you're planning to initiate a brand-new project or add a feature or service to an existing product, these stages are vital for testing the concept long before full-scale development, which includes design, prototyping, and development processes.

POC and POV are mainly used to test the waters before making long-term product development commitments. By not missing out on them, you can assess demand for the product and whether it's what your potential target audience really needs. When you get that down, you'll be able to determine if it's worth your time and investment and what to do next.

Otherwise, you might start investing your resources into a project with huge enthusiasm, only to realize halfway through that it's a dead end. On the contrary, you can prove to yourself that the result is worth the effort, or find out through research that your idea needs fine-tuning or a shift in focus. In other words, if you want to avoid blindly risking your capital, effort, and time, don't skip these vital steps at the earliest stages of the product development life cycle.

On this page, we dot the i's on proof of concept vs proof of value sharing essential information to help you minimize the risks and be better prepared for product development.

Proof of Concept (POC) Defined

Proof of сoncept (POC) is a method leveraged to confirm whether your business idea is viable. POC in software development enables you to prove the product's feasibility and capability to meet industry requirements and live up to user expectations. It is essential for data-backed decision-making. Basically, you try to prove a theory and find out if the new product or service that you have in mind will work in a specific market.

Key Advantages of Proof of Concept (POC)

Now let's take a sneak peek at why this approach is substantial for businesses and what value it can bring. The main pros of proof of concept encompass:

• business viability evaluation (ensuring there's a market for a product is the key step when it comes to deciding if product development is reasonable);
• financial risk reduction (POC allows businesses to avoid wasting their resources on something that may not be viable in the long run);
• tech-related risk mitigation (proof of concept assists in validating the feasibility of an idea from the technical standpoint before development, giving you a chance to identify the potential stumbling blocks and reduce the risks of failure);
• business strategy enhancement (with all the above in mind, you can better shape your business strategies and refine your product scope).

Typical Stages of POC

As you see, sticking to the POC approach is advantageous if you want to prepare for the journey ahead instead of embarking on it with nothing up your sleeve. But where do you start with proof of concept and what are the typical stages? 

1. Setting Clear Goals and Scope

The first step involves defining the business idea and setting clear objectives for the POC. You should ask yourself: "What do I want to create, and how will it benefit the end-users?" This will help you form a clear vision of what you aim to bring to life, identify your target audience, and determine the required tech stack. To prove your product hypothesis, you'll need to evaluate whether the solution can be developed and integrated as needed in terms of technology, as well as ensure that the proposed solution efficiently tackles the user problem. 

After setting the goals, determine the scope of your proof of concept. While there are no rigid rules for what must be included, you need to assess the POC and establish clear boundaries for its scope. For example, you might include checking whether it is possible to bring the core prioritized features to life with the technology stack in mind in the scope. Also, you'll need to analyze the market size and demand, while finding and browsing competitors' products can help you refine your project idea to the market standards and needs.

2. POC Implementation 

The implementation phase implies conducting thorough research and gathering the necessary data to make sure the product is in demand. The market research might include a competitor analysis to better understand existing products and spot market gaps, along with industry trends. On the technical side, contacting tech experts can help assess the viability of the proposed solution and define the appropriate tech stack. 

Engaging with potential customers is another crucial step to define whether your product aligns with market demands. To get feedback on clients' needs, pain points, and expectations, you can conduct interviews, surveys, hold focus groups, or try other ways to reach out. 

3. Analysis and POC Success Assessment

Analyzing data about your target audience, competitors, and industry helps identify customer needs and market opportunities. By examining all the collected data and user feedback, you'll be able to figure out what you need to fine-tune and assess the results to conclude whether the POC was a success or not and whether you should move forward with your initiative. 

If you need more insights on going through POC, here's a step-by-step proof of concept template that can facilitate the whole process.

When to Use Proof of Concept (POC) 

Proof of concept is highly efficient in the early development stages of the product right after ideation and before the discovery phase begins. It allows you to test the waters and prove whether your business idea is feasible and worth your time and effort. By going through POC, you can tackle potential technical hurdles beforehand, ensure there's a market for your product, and gauge if it can be a success. 

Let's picture your company is considering building an AI chatbot for your existing fitness app that could craft exercise plans, give recommendations based on customers' past workouts, keep track of their progress, and provide more cool features for sports buffs. To do that, you should first test the concept of your bot and answer the following questions:

• What is the purpose of your chatbot?
• Who is the target audience?
• What specific needs will the chatbot address?
• What are the key functionalities and features required?
• What technology stack will be used for the chatbot?

Replying to these questions through research and data can help you verify the idea's potential and lay the groundwork for further development. 

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Proof of Value (POV) Defined

Now you may be wondering, "What is proof of value? Is it somehow different from POC?" They are both integral parts of the same process. The only difference between POC and POV is that proof of value walks in when you need to measure the product's value and potential ROI (return on investment).

Falling back on the POV meaning in business, you essentially try to get a confirmation of the product's anticipated value. This implies both the expected business value from the company's perspective and the value it is supposed to bring customers.

At this point, you have a better understanding of the product's feasibility but may be unsure about its investment potential. So, you're asking yourself: "What does this project mean for the company? And will the invested money bring the anticipated return?"

Key Benefits of Proof of Value (POV)

POV proof of value is like a magic crystal ball that can shed some light on the product's potential value before actually hopping on the "development wagon" Importantly, it's quantifiable and measurable.

Once the idea is proven tangible, the technical feasibility is verified, and a market is identified, it's time to concentrate on the financial side. No one is willing to create something and get nothing in return, right? Here comes proof of value with the following benefits:

• justifiable investment moves (proof of value provides stakeholders with a clear vision of what the product can achieve in terms of ROI, backed by tangible results and data);
• alignment with customer expectations (ensuring your product's goals meet customers' needs and actually solve their problems is crucial for higher customer satisfaction and boosted chances of future product success);
• measurable value assessment (establishing success criteria helps evaluate the product's value and determine whether it'll handle customers' issues and its financial value as well).

Typical Stages of POV

Stakeholders, business owners, and possibly even investors must be adamant about the financial value that a product can have and be certain that the product will bring value to customers. And that's what POV is for. But how does this process work?

1. Pain Points Identification

The first step is to identify the main customer pain points by carrying out market research, surveys, or interviews with potential clients. After collecting the necessary information, you can conduct a pain point analysis to familiarize yourself with customers' unfulfilled needs and challenges.

2. Setting Success Criteria

Defining success criteria is the next step in assessing the product's financial value and ascertaining whether it solves customer pain points. The specific set of metrics and quantifiable data that may be collected to prove this depends on the product specifics. For instance, some teams utilize ROI calculators to assess how much a product may potentially bring a business over time.

What's for measuring the value a product could deliver to customers, teams can fall back on collected feedback at the earliest stages. By gathering feedback and suggestions for the potential product's modifications and upgrades and analyzing reviews, you can easily spot the issues and nip them in the bud. And once the product is released, various metrics can serve as signals of customer satisfaction (e.g., the number of completed orders, daily active users, and so on).

3. Rechecking POV Over Time

It's important to note that POV is not a one-time action but a continuous process that can be applied at various stages of product development, from a raw idea to a developed MVP and beyond. Collecting metrics data and having clear success criteria can help you confirm that your product idea or tangible product is not a waste of time and money, learn what to improve, and how to modify the offering so it brings more revenue and ROI.

When to Use Proof of Value (POV) 

Once the viability of the product is confirmed, it's important to validate its potential value before committing further time and resources. This is why proof of value normally follows proof of concept. This approach not only helps ensure the product's efficiency but also provides clear ROI calculations and demonstrates its commercial potential to stakeholders.

Let's return to the building an AI fitness chatbot example. You're aware of the feasibility of your bot, but will it be worth the investment? To evaluate the value of your AI chatbot, you should craft a POV. As such, you'd better take a look at the following questions:

• Will the chatbot reduce customer support costs?
• How will the chatbot enhance the user experience?
• What is the expected return on investment (ROI) for the chatbot?

As a result, you can be more certain that your chat will bring the expected value and make calls regarding its development.

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And What Is Proof of Technology (POT)?

As briefly mentioned earlier, POC can quite often comprise proof of technology (POT) as a part of the idea feasibility validation process. POT focuses on the technical aspects and is leveraged to confirm the technical parts of the product. When developing a new standalone product, POT verifies that the required technology exists, it's feasible, and can be optimally implemented. 

When it comes to adding a new feature to an existing product, proof of technology is typically utilized to determine whether the proposed technology can integrate seamlessly into the existing environment, thus verifying compatibility. 

In a nutshell, the key difference between proof of technology vs proof of concept vs proof of value lies within their business objectives:

• POC aims to validate the feasibility of a business idea;
• POT centers on proving that the fundamental technologies function properly;
• POV addresses the commercial viability and potential return on investment of a product.

Key Differences Between POC vs POV

Speaking of POV vs POC differences, it's crucial to understand that these two terms are deeply interconnected. On the other hand, their objectives, scopes, and timelines may vary. Let's break down the must-knows about proof of value vs proof of concept in the table below:

Proof of Value vs Proof of Concept: Can You Go for Both? 

Opting for both proof of concept and proof of value can be beneficial for businesses looking to validate a new product. These two approaches complement each other perfectly by addressing different aspects of product evaluation. Together, much like the yin and yang, they provide valuable insights into a product's viability and potential return on investment. 

If you're struggling to choose between POV vs POC, consider leveraging both as they come in handy prior to product development, help you find answers to fundamental questions, and can greatly contribute to the product's success once it's released.

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Timing POC and POV in the Product Development Cycle

Now that you've got a good grasp of the main differences between POC vs POV, it's about time to examine the entire process from having a raw idea to launching an MVP.

Every business starts with an idea. Brainstorming a pool of startup ideas is what founders do to drive innovation and lay the foundation for their future businesses. 

Once the idea is found, it's vital to validate its practicality through the proof of concept stage. This involves exploring the market, conducting research, and interviewing potential clients to verify demand for your idea. 

While establishing the product's viability, two more tools can be beneficial: proof of technology and proof of value. Consultations with tech developers can provide insights on the technical aspects ensuring the product is workable in a real-world context and there's the necessary tech stack to build it. Meanwhile, analyzing metrics and quantifiable data during POV helps determine whether the product will cater to customers' needs and has what it takes to offer a solid return on investment.

Next, you enter the planning and discovery phase, which focuses on detailed project planning and preparation work before actual development begins. This involves falling back on the data gathered during proof of concept and the previous stages, shortlisting the appropriate tech stack, determining which features to build first, handling UX discovery, wireframing, and other vitals.

Crafting a product prototype then gives teams an opportunity to hone the product concept before its full release. At this point, you work on the MVP design and depict the initial versions of the product to review its functionality and usability. This way, you can make sure your idea has a real shot at success, gather valuable feedback, and detect design flaws or usability problems. 

The project then moves on to the development phase. Here, you convert your prototype and designs into a tangible minimum viable product. This phase involves developing a functional early version of your product that can be tested and refined. By gathering feedback, you can promptly make improvements to the required functionality. 

Once you're ready to show the MVP to the world, it's significant to incorporate testing to check whether your product is functioning as intended. The QA testing stage is essential for spotting and solving any upcoming problems prior to launching an MVP to a wider audience. 

To summarize, let's draw a line between POC vs POV vs MVP:

• Proof of concept focuses on validating whether a product idea is feasible and can be practically implemented using the chosen technology.
• Proof of value assesses whether the product delivers benefits to customers and meets market needs, ensuring it provides a solid return on investment.‍
• Minimum viable product creation means building an early yet functional version of the product that includes just enough features to satisfy the needs of early adopters and gather valuable user feedback for further development after MVP release.

Final Thoughts on Proof of Concept (POC) vs Proof of Value (POV)

Going through proof of concept and proof of value is integral as these are pivotal steps toward establishing a thriving product or service. With startup failure rates revealing that 90% of new startups don't survive their first year after launch, validating the feasibility of your initial idea and demonstrating its potential value is crucial. These two approaches ensure your product idea is both technically viable and commercially promising, minimize risks of wasting your time and resources, and increase your chances of building a product that will sell. 

If you have a project idea and need a hand with bringing it to life, Upsilon is here to help. With over a decade of experience in building and then scaling truly great products, we can help your startup with the tech side as it moves from the idea stage to a competitive venture. We can start off with discovery phase services to plan out the work ahead in the most resource-saving manner and then move on to building an MVP in under three months. So if you have an idea in mind, feel free to contact us.

FAQ

1. What does POC stand for in business?

POC in business stands for proof of concept and involves validating whether a product idea is feasible. It's utilized in the earliest stages of product development to verify there's a market for the product before committing substantial resources.

2. What does POV mean in business?

If you're wondering, "What is a proof of value?", the POV business meaning refers to measuring the product's value and potential return on investment. According to the proof of value definition, this stage may follow the proof of concept step or be a part of it. POV helps identify whether the product caters to customers' needs and will bring financial value to the company in the long run.

3. What is the difference between POV and POC?

Proof of value and proof of concept are two interconnected yet different concepts handled at the initial stages of product development. The key difference between POV vs POC is that the former aims to validate the feasibility of an idea, while the latter focuses on evaluating commercial viability and potential return on investment (ROI). Based on the POV and POC meaning, it's integral to handle these steps right after ideation, as they facilitate decision-making and help find data-backed answers to fundamental business questions.

4. What is POC and POV used for?

Proof of concept vs proof of value are complementary initial steps in the product development timeline that have various objectives. POC is used to prove the feasibility of an idea, ascertaining it can work and there's a market for it before committing significant resources. POV assesses whether the product can bring benefits and meet market needs, validating its commercial potential, value for users, and return on investment.