Startups often struggle to win their customers. To do that, they must correctly identify their pain, address it in the most effective way, and communicate the opportunity startup is offering to the customer, in other words: they must find product-market fit.
Two common ways for an entrepreneur to reach the product-market fit are Proof Of Concept (POC) and Minimum Viable Product (MVP). They are usually used for software development startups but are also applicable to define any obvious direction for product growth. These approaches are also alternatives to software prototyping.
The difference between MVP and POC lies in the stages of software product readiness and in their strategic importance for the business. Both product-validation approaches answer questions about product viability but their differences are about product readiness. This article explores the process of product validation through the example of a mobile app. We'll explain how a startup can decide between POC vs. MVP — and how to differentiate these concepts from the product simulation.
The product validation process
As the financial resources of businesses are limited, ideas need to be validated before their implementation. Before going to production, mobile apps go through the following stages of the product validation lifecycle: analysis, system simulation, drafting system customer, and full system release. The team is testing the initial business idea’s viability ever more thoroughly on each of these stages. That requires additional finances.
The concept of product viability is crucial for any business because highly viable products have a high potential for organic distribution through customers’ recommendations and word of mouth. Marketing efforts, dedicated to the promotion of such applications, will cost less and will be more efficient; the app will be very popular. In the non-IT fields like retail or automotive industries, market-leading companies use focus groups to test product viability. However, this method is too time- and resource-consuming for a startup — besides, cognitive biases often compromise its results.
The analysis stage of the product validation lifecycle corresponds to creating the POC, which demonstrates the practical potential of a concept. The outcome of the analysis is a detailed, proven concept for a defined target audience. At this stage, idea validation takes place through research, market analysis, checking competitors’ products, and strategies. The goal of POC development is to explore the presence of the real need in the conceptual product or service as most startups create something cool but what people are not ready to pay for. Running a proof-of-concept allows a startup to get into the top 10% through product validation which also increases brand awareness and sustainability and increases chances to attract venture investments.
The next stage is system simulation, on startup develops a prototype. Prototyping involves working on user experience, interactivity, and design. Product teams can create UI/UX even if there is no real technical architecture behind it. Then, users will test its functionality through mockups.
Then, startup founders can show a prototyped application to a potential VC to visualize how the actual app would function and let him personally try it as a user would. Attractive design, high interface usability, simplistic approach to user behavior (when minimum taps needed to go through the main flow), and fast work of the application are important factors to consider when building a prototype.
Mobile app prototyping is especially crucial in the seed-funding stage of startup development. It helps to decide on how to create a clear and concise user flow that users will easily understand and offer the most comfortable option among all alternatives. Usually, the first few taps show if the product is engaging and useful enough to attract a new customer.
After product prototyping, startups usually create an MVP, which corresponds to the draft-system-for-the-customer stage of the app validation lifecycle. MVP is not a simulated application anymore but a true product with a minimum number of features. It is a working app, which can be not only shown to a potential investor but also tested by the end-user and work to retain customers. Monitoring user behavior while testing the MVP provides businesses with answers that have been lacking at the concept development stage.
After MVP’s successful testing and approval, the production release stage comes when the product is fully launched to the market. Or, in other cases, MVP is a product startup launches to a limited audience. So, MVP’s testing and metrics evaluation lead to creating the next, improved versions of the app with features that have proven to fit the market needs the most.
What is a POC
The Proof Of Concept (POC) is the first step of validating a product or service idea. Before starting to create anything tangible, the business needs to check whether it should invest its resources at all. POC stage answers the question of whether the product is feasible and needed on the market. Its goals are to find solid and undefiable proof that the idea will work, with all possible risks being acknowledged, and to assure that the newly invented product will be valid from both technical and practical perspectives. Before developing a full-fledged distinctive app, or even a prototype, the company has to ensure its feasibility, validate all product-and-market-related hypotheses, and create the full list of all associated threats.
To create a POC, the startup team may brainstorm first. Then, they do research and development (R&D), market analysis, and plan risk mitigation. The difference between a simple product idea and a POC lies in minimal product validation efforts made, which means confirming a product’s value to the market (but that's not an MVP yet.)
If that's not the startup's first product, the POC stage runs a little bit differently. The product development team also checks whether the new product fits the company’s brand identity, verifies the impact on other products already launched on the market (it's generally a good idea to avoid self-competition), determines the potential for vertical and horizontal expansion of the product, and defines the product limitations in a live application. It is also a suitable time to forecast the project’s return on investment (ROI).
What is an MVP
MVP abbreviation stands for Minimum Viable Product, which is a fully functional standalone testable app with a minimal set of working functions that represent the business idea to the market. The word ‘viable’ here means that the product is not only wanted on the market and can be purchased by the customers but also has the potential to grow, develop and be profitable for the business. The word ‘minimum’ refers to prime basic features that have to be included in the app. When developing MVP, startups balance between an available budget for app development and the desire to offer the most attractive and practical representation of the product concept at hand. MVP allows generating the most validated knowledge about customers with the least effort and at the lowest cost.
MVP is developed when a company needs more than just a prototype of the proven business concept. There is sufficient budget to go through all software development stages and the project is estimated and planned properly. MVP refers to creating an app that includes all prime functionality and features wanted on the market so that customers can test it and confirm that it solves their pain point(s). Here, user experience is real and not mocked up. MVP development is needed whenever a startup is ready to present a working product to the chosen customer segment, gets to know the market perception of the core product and its potential rentability, and is ready to address bugs found by the live testers with the least reputational loss. For businesses having other working marketed projects, an MVP can also help to cheaply retain existing customers.
POC vs MVP
Remember that POC is a well-developed idea only, while MVP refers to the first product iteration allowing to generate first product metrics. At the same time, these terms both relate to product validation strategies which help businesses connect to the market and the customers, stay profitable and scalable as well as competitive, and continue following the innovative approach to product creation and enhancement.
Whether to build POC or MVP, a startup should decide based on a number of factors. First of all, it is important to remember that the company chooses between two strategies rather than two tools. Moreover, these strategies are usually used both, one after another. Secondly, the need for POC should be identified. The Proof of Concept is usually needed for two cases:
(1) there is no product that does not exist on the app market and the brainchild is too fresh, and
(2) the market is full of competitor products.
For the former situation, viability should be checked in order to verify whether this particular idea is feasible for development at all.
For the latter situation, it is a matter of cost saving to develop an application that is too similar to the rivals’ products before the core differentiation features are found.
POC will serve for both cases as it answers the questions of whether the customers need the product, will use it at a certain price, and whether it can solve their pain points at all. As an internal research-and-validation project, POC is the key to determine the competitive advantage - a unique feature-set to contrast against any existing working products being offered.
MVP is being done when the above-listed questions are already answered, with or without a POC, and also often after the prototyping stage which refines the app design and UI/UX. These steps also ensure that the first-time users of the app will not abandon it after their first try. Otherwise, building an MVP will be a waste of investment funds and no real value for the business.
The Minimum Viable Product is an attempt to create a successful end product at minimal cost and start testing and monitoring it on the real market as soon as possible. Its marketable features allow re-validating market demand (as the market could have changed since the POC times), proving all underlying hypotheses and product assumptions, gathering usability metrics, and leveraging extra features decision-making. MVP is just the first step on the path of developing a mature mobile application but this step determines the correct and realistic direction of this development.
Choose POC over MVP if your business:
- Creates something really new and unseen before
- Is not sure about what product to develop for a highly competitive market
- Needs to check the product idea feasibility and viability and choose among a long list of available characteristics
- Needs to check for risks and mistakes early enough
- Needs analysis of the potential of the product’s market growth, development, and scalability
- Wants to get a clear answer of whether to invest in a project
- Requires to confirm the idea’s potential to an investor
- Needs to showcase the product capabilities and distinctive features
Choose MVP over POC if your startup:
- Has already validated the product viability
- Has own sufficient funds or has raised investment to start product development
- Has already agreed on the optimal usability and the most attractive design
- Is ready to observe the real-life market fit of its product
- Does need client involvement and real-market feedback
- Requires high retention through a small investment
- Expects no reputational risks to launch a new unfinished product or perceives high product development readiness
- Is ready to work with product metrics and other analysis tools
- Realizes that the concept is working but the direction of the product improvement is yet to be determined as per market needs.
Overall, the choice between POC and MVP for either business or startup directly affects its chances for long-lasting market success. Both concepts thoroughly test product viability and belong to the product validation process but are results of its different stages. Having used MVP or POC strategy for product-market fit checks, the R&D team can help the enterprise not only benefit from differentiation and a strong standing-out brand but also ensure that the product is really demanded by consumers, which will guarantee the project profitability.
The Proof-Of-Concept is a tool for showcasing your product’s capabilities, while the Minimum Viable Product concept allows you to check customer perception, start testing it with real users, receive their feedback about the first functional version of the product, or even retain the existing ones because they like the new basic set of features. POC is a well-analyzed product concept, MVP is a tried and tested idea.
Yet, software product strategies POC and MVP can both serve the primary financial goals of a business, either through a successful investment or just an upscaling.
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