Proof of concept became a business classic. Every company is doing some sort of proof of concept, sometimes without even realizing it. We believe that this guide is applicable regardless of your activity and regardless of your position. In this guide, we approach Proof Of Concept as a state of mind, a process that allows one or many to grow their business in a sustainable fashion.
Three core elements
First, let’s picture a proof of concept as the combination of a Prototype, an Objective and Clients. We will deep dive into each of those elements individually later on. Each of those elements are made up of risks and opportunities, and finding the sweet spot for a successful Proof Of Concept is not something we can put in a mathematical formula.
Agility is important. There is not a specific order in regards to those three elements, everything can start with a prototype that was built by an individual, before realizing that there could be a broader objective and noticing that the number of clients is potentially significant. In general, however, it starts with the Objective, where someone realizes that there is an unsolved problem, no appropriate solution or that a current solution could be used for another purpose. Objective, in this instance, will trigger Clients, which is the research for the potential market. As we gather details regarding this second element, the Prototype element will naturally follow.
Now that we have introduced those core elements to the Proof Of Concept, let’s dive in!
At first glance, one can think that Prototype is the only aspect in a POC. As explained earlier, it is only one of the three core elements to a Proof Of Concept, but it is certainly the most complex to master. During the course of the development, we see three zones that can be characterized as the intersection of investment and product completion.
The green area represents a prototype that is not complete enough to be sold as the final product. It is either missing one key feature to the product or it might be that it is at a stage where the benefits are not clear enough to the audience.
The blue area is the sweet spot. It is when the least amount of investment has been put into the prototype and yet it is showcasing enough of the critical features of this product and hence highlight to the potential audience the benefits (or lack of) of such product once complete.
The red area is considered the overkill zone. This zone should be avoided at all costs for several reasons. The first reason is quite obvious, why should you spend money to improve a prototype that you did not test with your market yet. Or worse, you do not even know if there is a market for it. There is a second reason that is more strategic. The more time you spend on developing this prototype, the harder it will be to adapt it to your market. As you start demonstrating the benefits of your product, your audience (composed of your future users) will have feedback. In our experience, 90% of this feedback include great ideas. Some are not feasible or are ideas that you already have considered and rejected, but still, great inputs. If you are too far in the development of your prototype, pivoting to another approach or adding some features might not be possible without a significant change in the approach.
In order to know when you are in the blue area, experience will be a key criterion. It could be your own expertise in the field or the one from a consultant or even a partner. What matters is that you gather a level of experience that is giving you comfort that:
You are focusing on the right features
You know what the minimum features of your prototype need to be
What is the objective of your product? Is it supposed to improve processes, create value, change the world … Objectives are not mandatory. You can go ahead and create a prototype without an objective in mind. But having at least an approximate understanding of what your product’s objective is / could be / will be is providing you with an unbelievable tool to stay focused. The Objective element will eventually become mandatory whenever you want to market your product. In our experience, the more advanced you are in your development phase of the prototype, the more the objective gets refined. We also experience instances when the objective drives the rest of the POC approach. It is mostly the case when the idea came from someone that does not necessarily have the means (experience, time or money) to carry on such a path alone. It is also the case for about 75% of the Proof Of Concept that are launched in a corporate environment.
We are listing here the three main questions that need to be answered in order to perfect this
element, as well as why such questions matter:
For instance, if your product should solve a significant problem that is widely accepted and for
which no solutions are currently offered, it is likely that the product would be able to be sold at a higher price, reducing the risk of not reaching a Return On Investment. Although this seems to be the best case scenario, it also bears risks which includes the acceptability factor. We determine the acceptability to be highly correlated with the level of innovation it implies. For instance, we believe that one’s product will reach its peak of market acceptance when the level of innovation is somewhat “average”. Let me describe in more details what we consider “average” and why it is the sweet spot for future market acceptance.
The zone we show at the top of the bell curve is basically the situation where the technology used is known, widely accepted, and yet, not used in the market you are targeting.
If the technology used is underwhelming, for instance less advanced than what the market is using currently, then your product will be missing the “wow” factor that sometimes makes or breaks a deal. On the opposite side, if innovation is overwhelming, it might be too scary for your prospects. Being presented with something that implies significant changes to your companies’ operational processes often decreases your chances of acceptability. Also, hyper-innovation often means higher risks of failures.
The third element of our POC tryptic is Clients. The main question that one should ask in order to successfully master this element is the following:
“Do I know my market?”
Simple question, right? Well, it is rarely a Yes or No answer and we believe that it is because this question should actually be split into three areas:
Variety of the markets
Size of the markets
What is your accumulated expertise?
As you remember, we discussed the expertise as not only including your own expertise, but also the one from your close circle. This is what we meant by “accumulated” expertise. It is the sum of the people involved in your project’s expertise.
This factor is critical to one’s success to completing any proof of concept. Without a high level of accumulated expertise, one’s ability to determine the appropriateness of the POC is limited.
How versatile is the product?
A product’s versatility, or the variety of the clients it can serve is an important factor to consider when working on understanding your POC’s potential success. Naturally, the chances of selling the product increase with the size and variety of the potential market. It also helps you in determining the sweet spot for the Prototype creation. In general, the wider the market, the earlier you want to showcase your POC (between the green and the blue area) in order to avoid over-developing features that might not be needed. On the other hand, if your client’s profile is well defined and not readily expandable, the prototype will likely need to be closer to the red area.
What is the market size?
Is this product applicable to three companies in the world but with potentially significant benefits or could it be used by thousands of people but with a low income base? Market size (as a function of dollar and as a function of number of users) is the last, but not the least important of the three factors that make up your Clients element. The size of your market will help you understand how to sell your products. It is also a factor that will help guide you in reframing your Objective (if the size of the market is too small to foresee future profits for instance) or in determining the maturity needed for your Prototype.
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