Prototyping as a Solution. Risk Mitigation with PoС and MVP

In this article we will explain how we apply Lean startup methodology in our practice and why prototype development is crucial in product development.

The most common request we receive is to develop a new product or feature to meet market demands. Сlients often come to us either with an idea without clear requirements or after an unsuccessful launch attempt, when questions about the scalability of the business model and monetization begin to arise.

We always recommend starting product development with the validation of the business idea and the MVP creation. Skipping this step can lead to significant financial losses in the future. Creating a Minimum Viable Product (MVP) requires substantial investments at an early stage and is associated with risks.

To reduce these risks, one should start with a Proof of Concept (PoC). PoC allows assessing the viability of an idea at early stages and determining whether it is worth investing in further development and growth of the idea.

To begin with, let's understand the concepts.

PoC, Prototype, and MVP: What's the difference?

Understanding the concepts of PoC, Prototype, and MVP is crucial for founders before starting product development, as many startups fail due to a lack of knowledge or the wrong approach, and familiarity with these concepts helps reduce the likelihood of such outcomes. They form the foundation of the so-called “The lean startup methodology”, which aims to save resources and reduce the risk of failure.

Contrary to the common stereotype, the concepts of PoC, Prototype, and MVP are not only applicable to startups but can also be used in real businesses. Here is an example of call center automation with AI. In this case, a PoC allowed the client to validate the idea of reducing call center costs using artificial intelligence.

It's important to know the difference between PoC, prototype and MVP.

PoC is a method of verifying a concept. It is closer to research than to product development. The result is a decision: whether the product is viable or not.

A prototype, on the other hand, is a more developed version of a PoC, but it can still be unfinished because it does not need to show results under real market conditions. The purpose of a prototype is to practically test how convenient the created concept is, how to use it. It's a simulation of how a real product will work and feel. Prototypes can be of different sophistication levels - from sketch to working software.

In our practice we often create digital wireframes using Figma e.g.. These wireframes offer a more detailed representation of the application, allowing us to map out the UI/UX more precisely. They serve as a blueprint, illustrating the structure and layout of different screens.

During the wireframe stage, we added interactive elements such as clickable buttons and drop-down menus. This level of sophistication helped us conduct preliminary usability testing, gathering essential feedback to refine our designs before moving forward. Here is example of our wireframes:

When we talk about MVP, it's a product ready to be tested in the market. This product has basic functions, allows you to get real feedback from users, and even generates initial profit. This product enters the market and continues to operate even if left at the MVP stage. Of course, the product is gradually refined over time. Giants like Airbnb, Spotify, and Dropbox started with an MVP.

Almost all of our major projects also started with an MVP at some point, such as our transportation management system (TMS) development project.

Why are PoC and Prototype necessary during product development?

In product development, where speed and adaptability are paramount, risk reduction becomes a key factor for success. Product managers use various methods to understand user needs and pain points, including basic research like surveys and in-depth interviews. However, it is important to recognize the limitations of these methods, as research participants may not always be sincere or accurately describe their behavior, leading to skewed data and incorrect product decisions.

When developing a product with complex logic and numerous features, it may be impossible to test hypotheses until the product is released. Several reasons contribute to this challenge: there may be no metrics available, it might be difficult to gauge demand through user interviews, or it could be challenging to test the product under real-world conditions.

A Proof of Concept (PoC) can help in these situations by providing a preliminary demonstration of whether the idea can be successfully executed within the technical constraints. This early validation helps identify potential technical issues and ensures that the concept is feasible before significant resources are committed.

For example, Quixey was a search engine for mobile apps aiming to become the "Google for apps." The company spent a year and a half and significant resources developing complex search technologies without verifying if the product idea matched the market potential. Consequently, the company exhausted its financial resources and could not attract additional investments.

Therefore, we propose viewing PoCs and Prototypes not merely as development stages but as a comprehensive approach to reducing business risks when launching initiatives in the form of products or projects. To illustrate this, we will provide examples from our cases demonstrating the necessity of PoCs and Prototypes in product development.

Which product development strategy to choose?

PoC and MVP are crucial steps in product development strategies, providing a structured approach to validate ideas, gather feedback, and ensure market readiness. We usually interview the client to understand what steps need to be taken to make the launch a success. Here are some questions from our questionnaire:

Who is your target audience?
Do you have a product monetization strategy?
What are the goals of the project?
What is the timeline and budget for the project?

We always work together with the client to clarify all ambiguities and find answers to the questions raised above. The following illustration shows a simple decision-making algorithm that you can use to determine what is needed.

A few tips on what to choose, formulated from our practice and communication with clients.

Develop a PoC if:

You want to find out if the idea is possibly executed within technical limitations
You wish to reduce the risks of failure at the final hurdle
You need to convince investors that it’s an idea that’s worth funding

Develop a prototype if:

You’re raising funding
You want to have a clearer picture of how the app looks, feels, and functions
You need to present the ideas with a limited budget

Develop a MVP if:

You need to deliver a working app to the customers
You need to monetize the app
You need real usage feedback for further improvement

Conclusion

To stay afloat, businesses need to continuously evolve. However, sometimes an erroneous idea intended to spur growth can lead to unjustifiably high financial investments and potentially ruin your company.

Validating an idea using the PoC has several clear advantages. Right product development strategy and MVP help you reduce financial and reputational risks, refrain from implementing questionable methods and solutions, or, conversely, convince investors of the high potential of your product.

However, it is important to acknowledge that there's no guide for everyone. The stages and the right software development strategy depends on many factors and is unique to each business. You will need to determine these stages yourself or outsource it. Reach us at sales@twelvedevs.com to implement your project.