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Proof of Concept (PoC) Versus Proof of Value (PoV): Definition, Difference & Which one to use

Ajay Jay
January 31, 2024
5 min read

Welcome to our deep dive into the mainstays of innovation strategy: Proof of Concept (PoC) and Proof of Value (PoV). As we traverse this exciting subject, you'll come to understand not only their meaning but also the nuances that differentiate these two, and most importantly, where and when to use them in the presales process.

"Innovation requires both vision and validation, and that's essentially what PoC and PoV provide."

Keep reading to get a quick overview of what you're about to explore:

  • Definition of Proof of Concept (PoC)
  • Definition of Proof of Value (PoV)
  • Differences between PoC and PoV
  • Real-word examples of PoC and PoV
  • Guidelines on when to use PoC and PoV

Armed with this knowledge, you'll be able to make informed decisions and effectively navigate your innovation journey. Let's embark on this enlightening exploration of PoC and PoV together.

Imagine preparing to tackle a new and innovative idea. The stakes are high, and you wish to ensure success as much as possible. To help you and your team determine its feasibility and potential value, you may use two industry-recognized methods: Proof of Concept (PoC) and Proof of Value (PoV).

What is Proof of Concept (PoC)

Proof of Concept (PoC) is your go-to tool when you want to test an idea and ascertain whether it's technically feasible. It's like prototyping a tentative design in physical products. You'll build a working model to check whether the underlying theory behind the innovative idea can be put into practice. Does the new solution work as expected? Can you indeed develop it? These are the questions that PoC aims to answer.

Think of PoC as your safety check before embarking on full-scale innovation.

What is Proof of Value (PoV)

On the other hand, Proof of Value (PoV) steps in when you need to test the viability of the solution. PoV seeks to measure the value and potential ROI (Return On Investment) that the solution can generate. In this stage, you're not merely asking whether the solution works, but also whether it's worth the investment, both in terms of time and money.

Consider PoV like your crystal ball, providing you insight into future potential business value, before fully committing to it.

Now you might be wondering, "Which one do I use? Do I need both?"

The answer depends largely on your specific situation. However, a widely recognized practice is to start with a PoC. By verifying the technical feasibility first, you minimize risk and lay a foundation for a more secure investment. Once the theory behind the idea is proven, you can then advance to a PoV. Here, you explore its potential value and validate whether adopting this new idea or innovation could bring a significant enough return to be worth your efforts.

In summary, PoC and PoV, while distinct, ideally work together in testing new ideas or innovations. PoC checks for feasibility, PoV tests for value, and together they play a vital role in fostering successful innovation.

So, always remember,

"PoC and PoV are your safety net in the exciting but uncertain world of innovation."

As you navigate the uncharted waters of technological advancements, two key concepts stand out as guiding lights: "Proof of Concept" (PoC) and "Proof of Value" (PoV). The distinction between these two terms might seem subtle, but it's a world of difference when it comes to implementing a new system or solution.

The Differences Between PoC and PoV

In essence, both the Proof of Concept (PoC) and Proof of Value (PoV) processes contribute significantly towards the success of a project or product. However, despite being interrelated, they vastly differ in their approach, purpose, and outcome. Let's dive deeper into their distinctions.

Objective

The key divergence between the two primarily lies within their business objectives. PoC aims to determine whether a particular idea can be transformed into a viable product or a project. Conversely, the purpose of PoV is to ascertain that the proposed solution delivers the expected and requisite value, which justifies the investment.

Outcome

A successful PoC results in a feasible solution to the problem statement and thus marks the onset of product development. On the other hand, PoV business outcomes help stakeholders make an informed decision about whether to move forward with the project based on the delivered value and return on investment (ROI).

Scope

While a PoC focuses on a specific aspect or feature of the total project, a PoV concentrates on the overall value the project will deliver. In other words, PoC is usually more narrow and specific, while PoV is broader and more encompassing.

Metrics

The successful execution of PoC is gauged by whether it can demonstrate the feasibility of the proposed idea or not. On the other hand, the PoV's success is measured through specific business metrics such as revenue increase, cost savings, or distinct processes efficiency that the project aims to deliver.

Timeline

A PoC typically precedes PoV. Once a PoC is developed and shows that an idea can be executed, a PoV is carried out to prove the value of implementing the idea on a larger scale.

In conclusion, understanding the core differences between PoC and PoV can help the entire organization make sound decisions and utilize its resources more efficiently. It also helps to build a sturdy foundation for any project or product that is being planned, leading to increased prospects of success.

Why should businesses run a PoV?

Businesses should consider running a PoV for a variety of compelling reasons. Let's take an in-depth look at some of these reasons.

  • Validation of Business Value: PoV serves as a powerful tool to validate the business value of a proposed solution. It helps organizations to substantiate the benefits of a product or service in a real-world context, proving its value before implementation.
  • Minimizing Risks: It's a fact that every business decision comes with its own set of risks. By conducting a PoV, organizations can identify and assess potential risks before they become problematic, thereby reducing surprises and mitigating risks effectively.
  • Boosting Stakeholder Confidence: A validated PoV can help win over stakeholders by clearly demonstrating the value of a proposed project. This can foster trust and buy-in, making it easier to move projects forward.
  • Refining the Implementation Strategy: The insights gleaned from a PoV can provide valuable information that helps in refining the implementation strategy. This includes understanding user acceptance, identifying potential barriers, and determining the level of change management required.

To sum up, executing a Proof of Value not only strengthens the credibility of a proposed solution, but it can save resources in the long run by avoiding investments in initiatives that don’t deliver real value. A well-executed PoV can steer your business decisions in the right direction and pave the road for a smoother and more successful deployment.

Why should businesses run a PoC?

Think of the Proof of Concept (PoC) as a fundamental building block in the product development process. It provides a platform for demonstrating the feasibility of a concept or an idea. But why is it so crucial for businesses? Let's dive deep and explore.

Speedy Innovation run: In the fast-paced world of business, rapid innovation is the key. A Proof of Concept allows you to test ideas quickly, even the radical ones, and gain valuable feedback from users without investing considerable resources. This allows businesses to stay ahead of the curve and bring groundbreaking solutions to the table faster than competitors.

Risk Minimization: PoCs help minimize risk by extensive testing a concept's feasibility before a full-scale rollout. They validate whether an idea is technically and theoretically executable, thus protecting you from costly mistakes downstream.

  • Financial Risk Minimization: PoCs can prove whether a proposed solution works as expected before investing significant funds into its full-scale development. This avoids the financial risk of developing a product that doesn't deliver on its promises.
  • Reputation Risk Minimization: A failed product can negatively impact your company's reputation. PoCs help avoid such scenarios by detecting potential failures at early stages.

Stakeholder Buy-In: The PoC can be a persuasive tool. When you have a demonstrable model of your concept, you're better equipped to illustrate its potential to stakeholders, both internal and external. PoCs provide tangible proofs that reduce ambiguity and build confidence in the project's viability.

Clarifies Concept Ambiguities: While you may have a great idea, translating it into a functional product may have challenges that aren't apparent in the beginning. The PoC testing phase can help identify these hidden challenges, enabling you to refine the concept and pivot as necessary.

Indeed, running a PoC in your business offers many advantages, such as promoting rapid innovation, risk assessments, gaining stakeholder buy-in, and clarifying ambiguities. Although it requires investment in time and resources, the potential benefits are powerful enough to make it worthwhile.

Which one does your busienss need: PoC or PoV?

To choose between a PoC or PoV, it's crucial first to understand the difference between the two concepts clearly, which we have already discussed. After grasping the difference, your business needs will help you decide which to use. We've outlined a couple of key considerations to help you make a decision.

Stage of Innovation

The selection between PoC and PoV largely depends on the current stage of your innovation. If your product or service is at an early phase, PoC is typically more appropriate. It can help you determine the feasibility of your product, making it especially useful for initial development stages.

On the other hand, if your product or service is already developed and you now need to demonstrate its potential value, a PoV becomes more suitable. It allows you to confirm the benefits and worth of your product to others, especially valuable stakeholders.

Addressing Potential Challenges

In the journey of innovation, encountering obstacles is the norm rather than the exception. Are you worried about technical feasibility issues? Or are you concerned about the value that your product or service delivers? Answering these questions can guide you in choosing between PoC or PoV.

If you are tackling technical challenges or need to explore potential solutions to a problem, PoC will be your go-to strategy. It lets you prove your solution is technically doable before investing more time and resources into full product development.

However, if your challenge revolves around demonstrating potential business value or return on investment, that's where PoV comes into play. It provides evidence that your solution can deliver the expected value and should be further pursued.

In summary, every business case is unique, and the choice between a PoC and a PoV will depend on your specific circumstances and needs. Remember that the process of innovation also includes tailoring your approach to match your specific situation and goals.

Can you do both a PoC and PoV?

Indeed, it is not only possible but often beneficial for companies to carry out both a Proof of Concept (PoC) and a Proof of Value (PoV) during the process of validating a new product, service, or business approach.

PoC and PoV are not mutually exclusive; they are complementary processes that serve different purposes. Effectively leveraging both can provide comprehensive insights regarding a potential initiative’s feasibility and potential return on investment.

The key to successful innovation does not solely lie in having a viable concept or proven value, but in the conjunction of these two components - proving the concept first and articulating its value second.

To expound, a PoC verifies that a concept, idea, or prototype can be developed and can function as intended. It’s about answering the question,

"Can we build it?" Once this is established, moving on to a PoV enables the determination of the concept's real-world value and impact. Here, the question shifts to, "Should we build it?"

    • PoC first: By starting with a PoC, businesses can identify potential technical roadblocks early in the process, saving time, effort, and resources. This initial proofing provides assurance that the given idea is technically achievable.
    • PoV next: After the PoC is successfully established, conducting a PoV helps highlight the business benefit and the potential return on the investment. This validation procedure evaluates the practical worth of the concept in the intended market or business setting.

    In conclusion, while you might be driven to choose between conducting a PoC or a PoV, consider embracing both. They deliver different insights at different stages of your innovation journey, and when effectively combined, can significantly enhance your ability to introduce successful, valuable innovations into the market.

    Takeaway

    Remember, both Proof of Concept (PoC) and Proof of Value (PoV) are invaluable tools that can help your company innovate, address potential challenges, and better understand the benefits or feasibility of a certain solution. However, they serve different purposes and you must know when to apply each.

      • PoC: Choose to carry out a PoC when you have a new idea or innovative solution you want to experiment with or learn from. Remember, PoC focuses more on feasibility and functionality, not so much on the financial aspect.
      • PoV: Choose PoV when you know the solution works, yet want to dive into its practicality in your unique business environment. PoV is your way to understand the real-world value, financial benefits, and costs of a solution in your context.

      In some cases, you might need to conduct both PoC and PoV, in a sequential manner, to ensure the feasibility of the product idea (PoC) and then understand the real-world value and actual costs (PoV). It's important to remember that the two are not competitors, but two sides of the same coin -- working together to help your business make informed decisions about new products, services or solutions.

      Choosing the correct approach for your business involves careful analysis of your specific needs, resources, business goals, and the stage of innovation your company is in. So, when contemplating a new undertaking, remember the lessons and insights from this article to make the best possible choice for your unique business scenario.

      Adapting and innovating are essential for achieving sustainable business growth in our modern, fast-paced world. With both PoC and PoV in your change management toolset, you're better equipped to navigate the ever-evolving business landscape confidently and successfully.

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