What is a proof of concept (POC)?
A proof of concept, sometimes called proof of principle, is a test of whether a new business idea is feasible and valuable. It is a demonstration, typically on a small scale, that is used to gather data to support any further development of the concept. For example, a company could create a product concept and then seek feedback from potential customers. Based on that feedback, they may move ahead with the concept, make changes to the product concept, or scrap it altogether.
In practice, a POC is typically a document or presentation that you can share with clients or employees to gather their feedback. It should contain details and visuals of your idea, the needs or problems it aims to solve and for whom, how it might work, the resources you’ll need to complete it, timelines and how you will measure success.
You could also get rewarded for testing a proof of concept with an American Express® Business Gold Card. For each full and eligible £1 spent, you'll gain 1 Membership Rewards® point which are redeemable with hundreds of online retailers across tech, supplies and business goods¹. Payment terms of up to 54 days also give you longer to repay your Card balance, putting more flexibility in your cash flow management².
Different types of POC
POC projects can be used anywhere in a business to validate anything from new products or software to new markets, processes or business models. Here’s a closer look at four common types of POC projects.
Technology POC
A technology POC tests whether a new technology or software will work and support the business.
“We start each major software release with a POC, so we can understand what we are looking to achieve and what outcomes we can expect,” says Will Crosthwait, founder of the Find Me Sales software platform, which utilises AI to automate sales analysis and research.
For Crosthwait, POCs enable him to better understand the costs and timescales involved in building new features or components. “It’s important for us to understand the cost-benefit analysis of new features, so we can plan our growth better,” he says.
Product POC
This is used to test the feasibility of a new concept or idea. For example, a new product or feature. A product POC will explore the challenges or opportunities the idea aims to solve and evaluate the feasibility of possible solutions in a real-world setting, sometimes taking the concept through to the development of a prototype.
Business POC
A business POC helps management understand whether a new business model or commercial strategy has legs. For example, a switch from business-to-business to business-to-consumer, a change in model, such as to a subscription model, or even a new fundraising approach, such as crowdfunding.
Marketing POC
This can help marketing teams understand whether a new approach or channel has value before launching it on a wider scale. Find Me Sales, for example, ran cost-per-click (CPC) advertising alongside marketing outreach to understand how the two approaches compared. The learnings allowed the company to shift resources away from CPC and fine-tune its communications to customers.
How to write a proof of concept
Articulate the challenge you’re trying to solve
Crosthwait designs his POCs as slides that first outline the problem and hypotheses the POC aims to address.
Pixelfield, a London-based digital innovation agency, are often approached by prospective clients to perform POC work on their behalf. For Pixelfield, for example, their client wanted to know whether virtual reality (VR) could tackle mental health issues in elderly people.
Detail how you aim to solve it
The next step is to articulate how you aim to solve the problem. Pixelfield did this on behalf of their client by interviewing potential users to determine whether or not they would be comfortable using VR.
Specify success metrics
Define your Key Performance Indicators and metrics. Pixelfield captured data on the percentage of users who enjoyed a VR experience and reported the results back to the client.
Track and analyse data
Set up a central location that everyone in the POC project can use to collect and analyse data. Storing data in one place makes it easier to analyse once the POC is complete.
The conclusion of a POC is usually a decision on whether or not to build a prototype or MVP. “In most cases, a POC should answer the question 'do we have a sustainable business model' and give us indications of future performance,” says Pixelfield director Filip Hasa.
The next step is to develop a working model of the product to help potential users and stakeholders visualise your idea.
Benefits of using proof of concept
 |
A POC enables you to more accurately plan and predict the next stage of development of your idea by helping you to understand costs, risks and timescales. It can provide evidence to help you secure funding. It can also provide marketing and product data ranging from customer demand to the features that will have the highest value. All of this information can be used by your teams to optimise your strategy and product specifications.
One of Pixelfield's clients, a health and social innovation start-up, wanted to understand if virtual reality could tackle mental health issues in nursing homes. The idea was to use VR to enable people to travel again, but there was uncertainty over whether the technology was suitable for elderly people, how nursing home staff would use it, and if it could be funded.
“We started with interviews in the nursing home, with patients, staff and doctors,” says Hasa at Pixelfield. “We researched funding options and introduced the VR headsets to staff. Then instead of building the whole app and backend, we decided to record just two travel experiences, followed by testing and interviews.”
Over 85% of users loved the experience, as did the staff who saw it as a huge benefit to keeping elderly people active and communicative, says Hasa. They also identified a reasonable price point.
“The decision was made [by the client] to start with the minimum viable product development,” he adds. The product is now in nursing homes in four European countries.
Proof of concept example
An accounting firm has created a unique software for easier client expense filing. They aim to build an app but are unsure about full investment. Here, the firm opted for a limited version of the app first. A proof of concept was conducted through a restricted trial to select clients. User feedback and market reaction were carefully scrutinised to understand demand and viability. This foresighted strategy ensured preparedness before the comprehensive launch, reducing risks and raising success probability.
In conclusion, embracing a proof of concept before full-scale investment provides valuable insights into market reception and user needs. This strategic approach not only minimises risks but also enhances the likelihood of success by addressing potential challenges early on.
Proof of concept vs. prototype
A prototype takes the learnings of a POC into a working model of a product that shows potential users exactly how the idea will work in practice. “A prototype is a visual representation of the future product and can be used for usability testing and user feedback,” says Hasa. However, unlike a POC it doesn’t provide data on the business model and market opportunity.
Proof of concept vs. minimum viable product (MVP)
An MVP is a slimmed-down version of the final product, containing only the core functionality without any additional features. It is used to collect real user data and understand whether there is a significant market for the final product before spending any more time or money on developing it.
1. Membership Rewards points are earned on every full and eligible £1 spent and charged, per transaction. Terms and conditions apply.
2. The maximum payment period on purchases is 54 calendar days and is obtained only if you spend on the first day of the new statement period and repay the balance in full on the due date. If you'd prefer a Card with no annual fee, rewards or other features, an alternative option is available – the Business Basic Card.
