Summary The successful development of new business models follows a clear sequence: user, problem, solution, and business model. Each step builds on the previous one (though not necessarily in a strict sequence) to create viable solutions and business models. The Proof of Concept (PoC) is more than just a technical testing procedure. It also serves to validate value, pricing models, marketing strategies, and other concepts. However, an effective PoC requires a well-defined concept that clearly outlines the assumptions to be tested, the target audience, the duration of the test, and the criteria for success. Clearly defined goals and criteria are critical to the success of a PoC. Without these guidelines, there's a risk of wasting valuable resources and failing to generate useful results. |
In the development of innovations and new products, there is a clear, broad sequence of steps that are essential to maximize the chances of success: 1. User, 2. Problem, 3. Solution, and 4. Business Model. Each step builds on the previous one (often in parallel) and ensures that solutions are developed that the market wants, orders, and pays for. Additionally, a business model is created that generates, captures, and distributes value for all. Based on opinions and assumptions, mental models and concepts are developed. These concepts are hypothesis-driven and must be tested for accuracy in the real world. A typical example of this is a Proof of Concept (PoC).
Proof of what? In most cases, the Proof of Concept (PoC) should more accurately be called Proof of Technical Concept (PoTC), Proof of Architectural Concept (PoAC), Proof of Technology Performance (PoTP), etc.
The versatility of Proof of Concept: More than just technology
Traditionally, a PoC is often associated with technical issues when creating a solution and testing its applicability. Generally, it’s about verifying the feasibility of a technical solution, architecture, or function before making larger investments. But the concept of PoC is far more universal. A PoC can also be used to identify the value proposition of a solution from the user’s perspective (Proof of Value Proposition), test a pricing model (e.g., Proof of Price Model/Price Point), trial a new marketing strategy (e.g., Proof of Marketing Campaign ROI), or validate a sales (e.g., Proof of Direct Sales Acceptance) or logistics concept (e.g., Proof of Supply Chain Delivery Time). The key is to clearly define what is being tested and what goal is being pursued.
The necessity of a clear concept: What, for whom, how long, and why?
A Proof of Concept without a well-defined concept is doomed to fail. To achieve meaningful results, the following questions must be answered in advance:
What is being tested? It must be precisely determined which assumptions are to be validated. Is it about technical feasibility, market acceptance, or the efficiency of a new process? Without this clarity, there’s a risk that the PoC won’t provide the desired insights.
For whom is it being tested? The selection of the target audience is crucial. Are the tests being conducted internally within the company, or is the concept being tested directly in the market? Is the target group representative of the final application? This decision significantly affects the validity of the test results.
Whoever blindly begins a Proof of X will eventually emerge blind from the test after a long time.
How long is the test? The timeframe for the PoC should be clearly defined to ensure enough data is gathered without dragging out the project indefinitely. A too-short testing phase might lead to insufficient results, while a too-long phase could cause unnecessary costs and endless discussions.
What does “successfully validated” mean? It must be explicitly determined which criteria must be met for the PoC to be considered successful. These could be technical performance indicators, customer satisfaction, or economic metrics. Without clear success criteria, it’s difficult to measure the value of a PoC and make informed decisions.
Examples of successful Proof of Concepts outside of technology
A PoC doesn’t always have to be technical. Here are some examples that show how PoCs can be successfully implemented in other areas:
Pricing Concept: A company tests different pricing strategies on a small group of customers to determine which price models, structures, and points are best received and promise the highest profitability. This provides insight into how the company can optimize its pricing model before rolling it out to the entire market.
Marketing Concept: A new advertising campaign is launched in a limited geographic area to measure response and adjust the concept if necessary before it’s rolled out nationwide or internationally. This minimizes the risk of a large-scale, costly campaign that may not deliver the desired success.
Sales Concept: A new sales approach, such as a B2B start-up switching from unsuccessful online sales to direct sales with representatives, is tested in a pilot project to evaluate if this approach achieves the desired traction goals. This helps validate the acceptance of sales reps and associated salary costs early on before hiring staff.
Logistics Concept: A just-in-time delivery concept incorporating supplier warehouses is tested to see if expected delivery times and quantities are met. This allows for adjustments to the concept before it’s rolled out with multiple partners of the company.
Whoever doesn’t set the framework of the PoC from the outset starts a zombie project that eventually lives half-dead, half-alive, and never ends.
The importance of clear definitions of success
The key to a successful PoC lies in clearly defining what constitutes "successfully validated." Without such a definition, there’s a risk of either abandoning the PoC too early or continuing it for too long without clear results. Success criteria must be established beforehand, and they must be objective and measurable. These could be the achievement of certain KPIs, the confirmation of a hypothesis, or the fulfillment of specific requirements.
Conclusion
A Proof of Concept is a powerful tool that goes far beyond technical validation. However, without a clear concept that defines what, for whom, how long, and why it is being tested, there’s a risk of wasting valuable resources and failing to generate useful results. The success of a PoC depends critically on defining from the outset what goals should be achieved and what will be considered a success. Innovation leaders should take this planning seriously to ensure that their Proof of Concept delivers the desired value.
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