TESTING AN INNOVATION’S FEASIBILITY PROJECT

Learning Outcome: In this project, you will demonstrate your understanding of the feasibility considerations necessary to launch and carry out a basic innovative initiative. You’ll demonstrate this competence by building your own personal innovation feasibility tool and applying it to a selected innovation.

Guidance: Your analysis will assess the technical, customer/user, economic, and competitive feasibility of a specific innovation in a selected business. You may select an innovative business of your own choosing. For your selected business or organization (and an identifiable innovation in that business), explain the key feasibility considerations that would be important for a venture team (or a top management team) to consider before launching the innovation. Some of the categories for your evaluation criteria would include technology (stability, simplicity, etc.); economics (profitability, scaleability, fit with venture mission, value chain dependence, etc.); or marketplace acceptance (novelty, usability, differentiation, accessibility, etc.), among others you may choose to include for the innovation you’ll analyze.

Advice: You may select an existing innovation or you may select a potential (or hypothetical) innovation and test its feasibility with the feasibility tool you create. Factors to consider in your evaluation tool can be drawn from the resource materials in this course and other applicable sources you find 

Deliverable: The scope of this feasibility test is a 5-page single-spaced analysis, including references. The body of your analysis should address the following sections: The Innovation and its business/organization (1/2 page); The Innovation’s Marketplace context (1/2 page); Criteria for evaluating the innovation (2-3 pages that describe relevant criteria, and the rationale for why you included them; be sure to use sub-sections to organize each criterion description); Finally, prepare a summary 3-column table (see attached file with a sample format here: Summary Innovation Feasibility Table x ) with the identities of the feasibility criteria you choose in one column, a brief description of how that criteria applies to the innovation you select in the second column, and a percentage weighting for each of the criteria in a third column. The total weighting should equal 100%.
Examples of parts of prior Innovation Feasibility Testing assignments are here: Selected examples of parts of the Innovation Feasibility assignment x
Rubric: Here’s how we will review and evaluate this project: Rubric_663_Testing Innovation Feasibility-1 x

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Innovation Feasibility Criteria	Applicability to this Innovation (briefly described for each one)	Weighting of Criteria’s Importance
Criteria #1 (named)
Criteria #2 (named)
Criteria #3 (named)
Criteria #4 (named)
			Etc.
Total Weighting of all Criteria:	100%

Selected examples of parts of the Innovation Feasibility assignment:

The Innovation and its Business

Casper, the online bed-in-a box maker launched in April 2014. The New York City business had a simple concept “produce the best mattress possible at an affordable price, sell a single model, and deliver it quickly, for free, with a 100-day trial period” (Welch). Their concept worked so well that in their first month they made $1 million dollars in sales (Welch). In their first year, they made $100 million in revenue (Upson, 2017). Presently, they have expanded internationally, entering in Canada, Germany, Austria, Switzerland, and the U.K (Ringen, 2017).

Since their launch, Casper has released several different products from bed sheets to pillows and most recently dog mattresses. Their mission is to “make sleep a lifestyle and build sleep environments that become part of [one’s] life” (Bertoni, 2016). They do this by spending “a lot of money on a great product development team” (Bertoni, 2016).

The Casper, their most popular mattress, took 9 months of pure research and idea building. After their research, it took 3,240 hours of testing and 108 prototypes developed to finally have a product (Designing the Casper). They expanded quickly through viral videos of customers happily unwrapping their mattresses from a box. Casper cut overhead cost by conducting all its business online. Furthermore, they cut cost by compressing the mattresses which allowed them to deliver via UPS at a 10th of what would have costed them to deliver an uncompressed mattress (Welch). Finally, they cater to their customers by sending anniversary gifts, dog beds, and inviting their customers to come to events and test prototypes (Welch).

The Innovation’s Marketplace Context

The mattress industry is a $14 billion industry; Casper and other similar rivals account for about 2% or $300 million dollars of industry sales (Gottfried, 2016). Every 10-15 years, consumers buy a new mattress (Dholakia, 2015). According to IBIS World, the largest competitor is Mattress Firm which accounts for 27.1% of the market share followed by Select Comfort Corporation at 8.5% (Palmer, 2016). There are a total of 12,175 businesses and annual growth is expected to rise at 3.2% between 2016-2021 (Palmer, 2016). Consumer Reports mentions that markups in this industry can range between 40-50% and are even higher after a mattress crosses the $1,000 mark (Dholakia, 2015).

Background / Challenges

As previously mentioned I had a good background in the oil and gas industry having worked alongside some of the smartest people in the business and by leveraging this access to my own company I was able to incorporate this model of looking for innovative products and services to improve existing processes. There was an opportunity and a niche in the industry and one particular area of interest to improve on was Amine filtration.

To facilitate and develop an innovative solution required collaboration with suppliers and customers around a common goal and pain point. We found this pain point with one of our existing customers who were experiencing lost gas production and the incurred expenses that were associated with this reduced processing capability. We traced this to using the existing inefficient bag filters and the buildup of contaminants in the amine system.

Of course to get acceptance to trial our new filter innovation would be a challenge as there are many levels of hierarchy that have to be convinced that we have a “better mousetrap” and skepticism is always in the forefront when something new is being proposed. You have to get buy in from procurement, operations and maintenance, engineering, safety, upper management to name a few and this can be a daunting task at the best of times.

This was something our innovative group had to overcome but was not insurmountable as we had the benefit of core competence with “high quality of the collective learning and knowledge-base within the firm and ability to coordinate diverse skills and integrate multiple streams of technology.” (2) An irony was that the oil company would probably be seen as “Mechanistic” in structure and ourselves as “Organic” based on our organizational differences. (6) We were however able to leverage our competence and experience to build customer trust that we had their interests as the basis of our goal in the developing of this prototype innovation.

Criteria for Innovation Evaluation

1. Improve Process Operations (Less Labor Maintenance)

1. Reduce Filtration Costs

1. Reduce Mechanical Costs

1. Improve Plant Throughput (Increased Gas Sales Revenue-Finished Product)

1. Extraneous Variables (Reduced Chemical Costs-Less Replacement Solvent Costs)

1. Less Disposal Costs (Used Product Disposal)

1. Improved Safety

a. Criteria #3-
Simplicity

1. When evaluating this innovation, one of criteria’s that I believe to be highly important is the simplicity of this technology. In a “2012 poll, the Consumer Electronics Association discovered that 87% of people said ease of use is the most important thing when it comes to new technologies” (Tischler, 2017).

2. In another study conducted by Harvard, Patrick Spenner and Karen Freeman found that what made consumers “sticky —that is, likely to follow through on an intended purchase, buy the product repeatedly, and recommend it to others”, was “decision simplicity” (Spenner, 2014). The study found that “the easier a brand makes the purchase-decision journey, the higher its decision-simplicity score” (Spenner, 2014). Thus, the higher amount sales, repeat business, and recommendation to others.

3. This is extremely important because unlike a purchase made at a brick-and-mortar, e-commerce sites cannot persuade the consumer or justify why a certain purchase is best to made there. Instead, they have one opportunity and that is why it is important that the site is simple and easy to navigate through.

4. Lastly, I would say that the product itself should be simple to understand. This goes hand in hand with product differentiation.

Feasibility Evaluation of the Custom Baked Goods Mobile App

Custom Baked Goods Mobile App

Innovation Feasibility Criteria

Applicability to this Innovation

Weighting

Technical complexity

The mobile app will be a moderately complex item to implement. For experienced developers it would be simple, for novices it would be slightly more challenging but do-able using the abundance of tutorials available online. I would score this at a 7.

10

Production time

A simple app that caters for user login, picture uploads, request distribution, payment facilitation and notifications should take between a month and 6 months to implement depending on resource availability. This is a considerably low production time and would elicit a high score of around 4.

5

Legal concerns

Having searched through patent databases and trawled the web for existing companies providing similar offerings, I have not encountered any legal mandates that would prohibit the launch of the business. One regulatory consideration is that any business selling edible items to the public is required to undergo a health inspection and obtain a health certificate. (Entrepreneur, 2016) This will need to be enforced and verified when bakers sign up to the app. The app would get a score of 8.

10

Target market size and stability

The market for baked goods is large and steady. (Palmer, 2017) Reality baking shows and Pinterest has lead to increasing popularity in custom cakes. (The Chef (UpServe), 2012) On the other side of the spectrum, the health conscious have created a rising demand for low carb and low calorie baked goods. (Palmer, 2017) I would score this at an 8.

10

Usability

By designing a user-friendly app and employing UX design principles, we should be able to create an easy to use order management experience for both the customer and the baker. By making it available on smartphones, it should be easily accessible to all and simple to use. Score: 8.

10

Novelty

The app will provide a new and modern way of ordering baked goods. By utilizing familiar and popular concepts such as social media and Pinterest, we will be able to offer the user a unique method of ordering cakes with the reward being elimination of the quote finding hassle and the receipt of delicious baked items. Score: 3

5

Capital Outlay

To set up this app, for me personally will require minimal capital investment for hosting fees, maybe licensing fees, and my own time investment. This is because I have development experience. To outsource the development may require slightly more capital outlay, but of a moderate quantity. I would rate this a 6.

10

Profitability

To make money from this innovation, we would charge a small service fee or take a minimal 5-10% commission on sales. Since the expenses to run the app are low, we should be able to break even within the first 20-30 sales in a month, using an estimate of R400 per sale. This scores a 7 in profitability – it will be profitable but the scale of profit will be determined by the number of sales.

10

Scalability

The innovation offers a range of up-scaling opportunities, such as expanding globally, offering other food products, offering catering services, etc. It would score a 4 for scalability.

5

External Logistical dependencies

The innovation has one external logistical dependency and that will be the ability to partner with Uber/Taxify for deliveries. This is not critical to the core deliverable however, so I would score this at an 8.

10

Maintainability

Fortunately for software solutions today, maintainability has been made simple and fixes can be implemented with little to no downtime. Updates can be rolled out as often as necessary and code changes are not complex to implement. Score: 5

5

Competitive Landscape

The bakery landscape is characterized mostly by local bakeries. By using these bakeries in the business model, we actually reduce the competitive impact of consumers choosing to buy from businesses they are already loyal to. We simply provide an alternative and more convenient channel for doing so. From a baker perspective, companies such as Candywasted and NetFlorist do recruit bakers to bake on their behalf, but for a baker wishing to establish their own brand, the app would be the preferable option. Score: 8

10

Total Weighting of all Criteria:

100%

Student:	ENES 663 – Assignment 3 Rubric Innovation Feasibility Analysis
Criteria	Exceeds expectations [grade range A to A-]	Meets expectations [grade range B+ to B-]	Below expectations [grade range C+ and below]
Context of the Business: Is a business context provided for this analysis?	Informative business description provided as context; clear relation to feasibility concerns.	Basic description of business; limited connection made to feasibility concerns.	None or very limited description of business context or feasibility concerns.
Number and Relevance of Criteria Identified: How many feasibility criteria are identified?	6 or more specific feasibility criteria identified; well-informed explanation of relevance provided.	4-5 specific feasibility criteria identified; basic explanation of relevance provided.	Fewer than 4 specific feasibility criteria identified; limited explanation of relevance provided.
Criteria Description: Is each feasibility criterion fully described?	Well-informed description; clear examples and explanation of each criterion	Understandable description for each criterion; basic examples provided.	None or very limited description for each criterion; no examples provided.
Criteria Table: Are criteria clearly portrayed and measured?	Well-organized format with informative narratives and % allocations;	Clear format with basic narratives for each criterion;	Unclear format or missing table;
Writing Mechanics: Is the writing clear, logically constructed, and error-free?	Clear, well-organized pattern with section headings; error-free writing; clear, understandable language; rich vocabulary	Basic organizational pattern provided; mostly error-free writing; able to follow.	Unclear organizational pattern; no section headings; presence of writing and/or grammar glitches; hard to follow.
Research/Referencing: Are appropriate references used as supporting evidence?	Supportive and clearly organized referencing provided; format clear.	Basic number of sources provided to support arguments made; format OK.	None or limited references and supporting evidence provided; unclear format.
Assignment Score = [15% of final grade]

TM: 2018