What is a proof of value in digital product development?
If you’re building a digital product, how do you know if it has any value? This is what the process of finding proof of value is about. Read on to find out why checking your product’s likely value may be exactly the right thing to do for your project, and how to get started.
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Proof of value - definition
A proof of value (PoV) process does exactly as you would expect from the name: it proves (or disproves) the value of a product. It’s essentially an answer to the question: is it worth it? And that answer is in the form of measurable value to your business. However, what is value to the business based on? Sales? Number of users? Data gathered? Whatever the purpose of a digital product, its value to your business depends on the value it has for the user/customer.
This is where the idea of proof of value can link closely to Agile product development, which places the user at the heart of the development process. Without users, your product has no value. It may be technically feasible but that should not be the deciding factor on whether you go ahead with its development. Meeting user needs is what Agile is all about, and proof of value is a way of being sure about your product before you begin. Proof of value is a process used to validate the product idea and demonstrate a likely return on investment for stakeholders.
Proof of value vs. proof of concept
Proof of value and proof of concept (PoC) are not only similar sounding but they both relate to ensuring that your digital product development is fit to proceed. So, how do they differ?
A proof of value exercise answers the Should you? question by telling you whether or not a digital product will deliver value. PoV is a deeper dive into your product idea, justifying (or not) the development work needed to produce a finished product.
Checking for proof of value is heavily based on users’ feedback: it involves research with customers or user representatives, development of business and use cases. It will link back to the business objectives that you are expecting the product to support.
A proof of concept is, “a way of checking whether your software or digital product idea is possible, and verifying if the idea will work as it’s intended to” (Source). A proof of concept is about your product idea. Checking for proof of concept will tell you whether your proposed product will work. It will only tell you whether you can build it or not; not whether you should. Arguably, a proof of concept is a more accurate predictor of business feasibility and success.
The difference between PoV and PoC – how to choose
The choice between carrying out a PoC or PoV exercise is primarily a basic one determined by what you want or need to achieve at your stage of product development. If you’re unsure whether a product or feature is technically possible, proof of concept will answer that question. If you know the product is possible but you need to decide whether it will be worth the investment of time, money and effort to develop it, you need a proof of value. Test a product’s proof of value if:
- You already know the product is technically possible.
- You need to reassure decision-makers and investors.
- You need to prove the product’s probable value to users.
- You need to assess the risks of going ahead.
- You need a solid research basis for your decision.
Can you do both a PoC and PoV?
Absolutely! In fact, you could apply both exercises to any product given that they address different questions, and arise at different points in the development process. Ultimately, it depends on the scale and complexity of the product (and its likely development process) and the importance of the business objectives supported by it – is it worth the trouble?
The product and business benefits of proof of value
The most obvious benefit of proof of value is that when you then go ahead with your product development, you know that you are likely to see value in return – value for product users, and value for you in terms of business objectives achieved. Let’s break the benefits down in more detail:
- Stakeholder queries and concerns are answered, including whether the investment is worthwhile, what the likely tangible product benefits will be, and the probable return of investment.
- If you are working with an outsourced development company, a proof of value exercise is an early opportunity to collaborate on something tangible that will also show whether the longer collaboration to develop the product is viable or not.
- Product issues are identified early in the development process.
- A PoV usually results in cost savings – either from identifying and addressing any issues or obstacles early on or, if the proven value turns out to be insufficient, by stopping you going any further down a path that won’t bring sufficient return.
- It’s an early opportunity for members of the development team, the business, and users to get to grips with the product idea. This results in engagement, feedback, and commitment.
Carrying out a proof of value exercise shows the potential in the product, helps you define achievable product goals, produces useful data and analysis, and fits with an Agile product development approach.
How to run a proof of value exercise
The key to a successful proof of value is understanding what it is you’re hoping to achieve – you need to know what value you expect to see and for that means being clear on the business objectives related to the product. Once you know that, it’s about consultation and data-gathering. The specific means and methods may vary, according to your organization and the specific product; however, a basic framework for a PoV is as follows:
- Define success factors or goals – It’s important to establish what will be considered sufficient value to proceed with the product’s development. Review the original business case for the product and set measurable expectations that are clear, concise, and understood by all involved.
- Consult with relevant stakeholders – Talk to the decision-makers in your business. What value are they looking for from the product? Talk to investors. What value are they hoping for? Talk to representatives of your product’s target users. What are their pain points? What kind of solutions would be acceptable to them? To get as wide a picture of the potential value as possible, consult everyone whose role or function could be impacted by the development of the product.
- Analyze the feedback and data – Review the success factors for your PoV and compare them with the results of your consultations. If all factors are ticked off, development can proceed. If not, it’s time to circle back and revisit the original product concept or idea. What room is there for changes or adjustments that might bring greater value?
A thorough (and successful) proof of value exercise depends on a compelling business case, reliable data and input from multiple sources, and neutral analysis of that data.
The value of proof of value
Businesses don’t develop digital products for fun. The ‘build it and they will come’ approach makes a fine Hollywood movie, but a poor-performing app or website. A digital product should support business objectives in measurable and provable ways. Conducting proof of value exercises is a way of ensuring your development time, resources and talent will not be wasted. PoV helps ensure that your product’s business goals (the anticipated value) are clarified early in the development process.
For more on our approach to the full cycle development of digital products that bring value, check out our services pages.
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