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Business Case Development Workshop

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Presentation on theme: "Business Case Development Workshop"— Presentation transcript:

1 Business Case Development Workshop

2 Innovation happens when ideas meet market need
Nothing great was ever achieved by a sole individual

3 Purpose of the Business Case
Capture all relevant data in a standard one-page format (format use corporate-wide) Key inputs and questions all revolve around Consumer – Technical – Economic framework Outline the scope of the business opportunity Share why this opportunity is worth Clorox investing resources (people, time, money) Make it easy for the business to quickly understand and assess the opportunity and make a decision to pursue

4 The power of the business case is the holistic viewpoint
Technical Consumer Economic Clorox had to change the approach to innovation. Previously we relied on the Technical community to drive innovation – the assumption being driving the engineers harder would lead to more innovation. (click again to show bottom half of the slide) Progress comes when you realize there are other areas you can make changes to drive innovation. We can innovate with the consumer – who do we talk to, how do we talk to them? How do they interact with and use our product – and how can we make the process better? We can innovate around the business model – how do we go to market, who leads in the marketplace, how do we deliver our product or service? You must also realize that a change in one area impacts the other two – change does not happen in a vacuum! And the most powerful change is when you can integrate and synchronize all three.

5 Business Case Format Example 1: Clorox Funk-Out Odor Eliminator: Business case overview
Concept Name: Funk-Out Odor Eliminator Team Name: SSI Date: 10/4/10 Opportunity description What is it? New benefit and new segment in existing laundry category: sanitizing laundry liquid additive. What drill site? SSI Why is it attractive? 1) Good fit with Clorox equity. 2) Consumers love the Funk-Out name 3) Provides odor elimination benefit for non-bleach loads. Opportunity sizing: ~$35MM INCS at 55% gross margin. Assumes annual volume of 8-9MM units at ~$6.00 SRP. Opportunity validation Consumer lens 1) Strong concept scores and consumers passionate about the name and benefits 2) Funk-Out name communicates benefits without alienating consumers, 3) Consumers have big need for non bleach laundry products that eliminate odor in just one washing especially for sports clothing a tough Technical lens Formula from Silver Anti-Bac delivers performance better than detergent alone with fragrance masking. Prolonged odor control nice to have. No EPA registration required for odor control products. Economic lens Opportunity to grow the laundry category by introducing a unique benefit to market. Value to consumer of laundry sanitization TBD. Initial assessment of “degree of difference” (High/Medium/Low, see back up for detail scoring) Business model Consumer need and behavior Product category Technology Customer channel Low – Similar to C2 Med – Requires consumers to add an extra step in their routine. Med – New category segment, but similar to C2 Low – Formula is ready to go and no EPA registration required Med – Current channels, but would require incremental shelving space next to CLB and C2. Killer questions to be answered in next phase Description Next steps to validate / test key assumptions Legal to determine feasibility and cost of acquiring TM Efficacy testing for laundry and spray products for short and long term odor elimination Perform BASES test and estimate full P&L Funk-Out name makes a difference and TM can be acquired at reasonable cost Superior performance and claims versus detergent alone. Financials are attractive and incremental

6 Business Case Format Example 2: NeverScrub
F2M opportunity: NeverScrub Team Name: F2M Date: 9/22/2010 Opportunity description What is it? A Clorox branded product that hooks up in-line in the toilet tank and delivers disinfecting (and potentially other) actives directly to the toilet bowl, avoiding dilution of actives in the tank as well as eliminating premature degradation of toilet parts What drill site? Fast 2 Market – rapidly acquire new products for Clorox Why is it attractive? Build on Clorox presence in Toilet Care, potential trade up for the category plus ability to gain share from competitive toilet products. Consumer screening shows idea more attractive than current ATBC offerings. Opportunity sizing: (incl. rev, margin) Puricle reached $7MM in Sales in Early Clorox Advisors Panel screening results show $10M+ sales in Retail, only 21% cannib of current Clorox ATBC/MTBC. $5M new to category volume. Net INCS of $8M and incremental GM of $2M at $10M in NCS. Opportunity validation Consumer lens NeverScrub has 78 T2B PI vs. 61 for current Bleach & Blue ATBC (Clorox Advisory Panel). Finding solutions that increase time between cleanings while maintaining cleaning and disinfecting is a repeated consumer benefit. Potential for increase in consumer cues (fragrance, color) Technical lens Disinfecting active is the same as current registered Clorox ATBC (hydantoin compounds). Unique container design and application allows for new technology options, such as use of solid acrylic acids for rust stain and hard water stain removal, increased fragrance burst since active goes directly to bowl, not diluted in tank. High likelihood of increasing Delight. Economic lens Trade up opportunity, from $1/quarter avg spend for ATBC pucks, $3/quarter for MTBC to $7/quarter for NeverScrub device. Early testing estimates cannibalization of Clorox ATBC around 4%, Clorox MTBC around 17%, Other existing Toilet competitors at 31%, and category growth accounting for remaining 48% of sales. Net gross profit increase of $2M at current gross margin; manufacturer estimates could also expand gross margin from 51% to 56%, making this more attractive. Initial assessment of “degree of difference” (High/Medium/Low, see back up for detail scoring) Business model Consumer need and behavior Product category Technology Customer channel Low – anticipate regular Clorox mfg/retail model Low/Med – fits similar behavior for current ATBC users; slight modification in task to install device (<1min install time) Low – well established toilet cleaning and disinfecting category Low – technology is known and proven effective; currently used by Clorox in Toilet Low – current retail channels/distribution model 3 “killer” questions to be answered in next phase Description Next steps to validate / test key assumptions Are economic assumptions accurate and attractive enough to enter? Are consumers willing to join the category or convert to NeverScrub from current Toilet solutions? How real are the cannibalization rates and how could CLX instead grow share in this category? Verify financial model with CD F&A Engage Toilet Business GI (User/Shopper Insights) for more thourough consumer testing

7 Four Sections of the Business Case
Opportunity Description The what and why – what is the opportunity and why is it attractive? Opportunity Validation The proof – how do we know this is attractive? The three-legged stool – Consumer, Technical, Economic Degree of Difference How different will this be to execute? Where do we have or not have capability? Killer Questions What will we need to learn to move forward or kill?

8 Business Case Format Example: NeverScrub
F2M opportunity: NeverScrub Team Name: F2M Date: 9/22/2010 Opportunity description What is it? A Clorox branded product that hooks up in-line in the toilet tank and delivers disinfecting (and potentially other) actives directly to the toilet bowl, avoiding dilution of actives in the tank as well as eliminating premature degradation of toilet parts What drill site? Fast 2 Market – rapidly acquire new products for Clorox Why is it attractive? Build on Clorox presence in Toilet Care, potential trade up for the category plus ability to gain share from competitive toilet products. Consumer screening shows idea more attractive than current ATBC offerings. Opportunity sizing: (incl. rev, margin) Puricle reached $7MM in Sales in Early Clorox Advisors Panel screening results show $10M+ sales in Retail, only 21% cannib of current Clorox ATBC/MTBC. $5M new to category volume. Net INCS of $8M and incremental GM of $2M at $10M in NCS. Opportunity validation Consumer lens NeverScrub has 78 T2B PI vs. 61 for current Bleach & Blue ATBC (Clorox Advisory Panel). Finding solutions that increase time between cleanings while maintaining cleaning and disinfecting is a repeated consumer benefit. Potential for increase in consumer cues (fragrance, color) Technical lens Disinfecting active is the same as current registered Clorox ATBC (hydantoin compounds). Unique container design and application allows for new technology options, such as use of solid acrylic acids for rust stain and hard water stain removal, increased fragrance burst since active goes directly to bowl, not diluted in tank. High likelihood of increasing Delight. Economic lens Trade up opportunity, from $1/quarter avg spend for ATBC pucks, $3/quarter for MTBC to $7/quarter for NeverScrub device. Early testing estimates cannibalization of Clorox ATBC around 4%, Clorox MTBC around 17%, Other existing Toilet competitors at 31%, and category growth accounting for remaining 48% of sales. Net gross profit increase of $2M at current gross margin; manufacturer estimates could also expand gross margin from 51% to 56%, making this more attractive. Initial assessment of “degree of difference” (High/Medium/Low, see back up for detail scoring) Business model Consumer need and behavior Product category Technology Customer channel Low – anticipate regular Clorox mfg/retail model Low/Med – fits similar behavior for current ATBC users; slight modification in task to install device (<1min install time) Low – well established toilet cleaning and disinfecting category Low – technology is known and proven effective; currently used by Clorox in Toilet Low – current retail channels/distribution model 3 “killer” questions to be answered in next phase Description Next steps to validate / test key assumptions Are economic assumptions accurate and attractive enough to enter? Are consumers willing to join the category or convert to NeverScrub from current Toilet solutions? How real are the cannibalization rates and how could CLX instead grow share in this category? Verify financial model with CD F&A Engage Toilet Business GI (User/Shopper Insights) for more thourough consumer testing

9 Opportunity Description
What is it? Describe the product opportunity – what is the product, how is it different than current business? Be specific! What drill site? Does this link to an existing corporate strategy (SSI, Natural) or drill site (Hands, Electronics, Pets)? Why is it attractive? What excites you about this? How does this opportunity create growth for Clorox? Opportunity sizing (including revenue and margin) Where art and science meet – multiple inputs available; triangulate to get to an appropriate size  more on this later Internal – build on existing market data and knowledge External – market sizing tools (Datamonitor, Mintel, et al) Experts – who has experience in this area and how big do they think it is?

10 Business Case Format Example: NeverScrub
F2M opportunity: NeverScrub Team Name: F2M Date: 9/22/2010 Opportunity description What is it? A Clorox branded product that hooks up in-line in the toilet tank and delivers disinfecting (and potentially other) actives directly to the toilet bowl, avoiding dilution of actives in the tank as well as eliminating premature degradation of toilet parts What drill site? Fast 2 Market – rapidly acquire new products for Clorox Why is it attractive? Build on Clorox presence in Toilet Care, potential trade up for the category plus ability to gain share from competitive toilet products. Consumer screening shows idea more attractive than current ATBC offerings. Opportunity sizing: (incl. rev, margin) Puricle reached $7MM in Sales in Early Clorox Advisors Panel screening results show $10M+ sales in Retail, only 21% cannib of current Clorox ATBC/MTBC. $5M new to category volume. Net INCS of $8M and incremental GM of $2M at $10M in NCS. Opportunity validation Consumer lens NeverScrub has 78 T2B PI vs. 61 for current Bleach & Blue ATBC (Clorox Advisory Panel). Finding solutions that increase time between cleanings while maintaining cleaning and disinfecting is a repeated consumer benefit. Potential for increase in consumer cues (fragrance, color) Technical lens Disinfecting active is the same as current registered Clorox ATBC (hydantoin compounds). Unique container design and application allows for new technology options, such as use of solid acrylic acids for rust stain and hard water stain removal, increased fragrance burst since active goes directly to bowl, not diluted in tank. High likelihood of increasing Delight. Economic lens Trade up opportunity, from $1/quarter avg spend for ATBC pucks, $3/quarter for MTBC to $7/quarter for NeverScrub device. Early testing estimates cannibalization of Clorox ATBC around 4%, Clorox MTBC around 17%, Other existing Toilet competitors at 31%, and category growth accounting for remaining 48% of sales. Net gross profit increase of $2M at current gross margin; manufacturer estimates could also expand gross margin from 51% to 56%, making this more attractive. Initial assessment of “degree of difference” (High/Medium/Low, see back up for detail scoring) Business model Consumer need and behavior Product category Technology Customer channel Low – anticipate regular Clorox mfg/retail model Low/Med – fits similar behavior for current ATBC users; slight modification in task to install device (<1min install time) Low – well established toilet cleaning and disinfecting category Low – technology is known and proven effective; currently used by Clorox in Toilet Low – current retail channels/distribution model 3 “killer” questions to be answered in next phase Description Next steps to validate / test key assumptions Are economic assumptions accurate and attractive enough to enter? Are consumers willing to join the category or convert to NeverScrub from current Toilet solutions? How real are the cannibalization rates and how could CLX instead grow share in this category? Verify financial model with CD F&A Engage Toilet Business GI (User/Shopper Insights) for more thourough consumer testing

11 Opportunity Validation
This section is the key to believing in the proposal Leverage both internal and external sources to triangulate and refine Consumer Lens What consumer input do we have that says this is big and important to consumers? Existing consumers – what do we know about habits and practices, needs states, etc. New consumers - what observable behavior shows consumers are trying to solve a problem? Technical Lens What technical proof do we have this works? Existing technology or new technology – where is the verifiable data? Is it valid? Economic Lens What proof do we have the economics are attractive? Existing business – work with internal resources to refine size of prize New business – approach from two directions: Top-down – start with market size and work to NCS of opportunity Bottom-up – start with materials costs and build to NCS

12 Business Case Format Example: NeverScrub
F2M opportunity: NeverScrub Team Name: F2M Date: 9/22/2010 Opportunity description What is it? A Clorox branded product that hooks up in-line in the toilet tank and delivers disinfecting (and potentially other) actives directly to the toilet bowl, avoiding dilution of actives in the tank as well as eliminating premature degradation of toilet parts What drill site? Fast 2 Market – rapidly acquire new products for Clorox Why is it attractive? Build on Clorox presence in Toilet Care, potential trade up for the category plus ability to gain share from competitive toilet products. Consumer screening shows idea more attractive than current ATBC offerings. Opportunity sizing: (incl. rev, margin) Puricle reached $7MM in Sales in Early Clorox Advisors Panel screening results show $10M+ sales in Retail, only 21% cannib of current Clorox ATBC/MTBC. $5M new to category volume. Net INCS of $8M and incremental GM of $2M at $10M in NCS. Opportunity validation Consumer lens NeverScrub has 78 T2B PI vs. 61 for current Bleach & Blue ATBC (Clorox Advisory Panel). Finding solutions that increase time between cleanings while maintaining cleaning and disinfecting is a repeated consumer benefit. Potential for increase in consumer cues (fragrance, color) Technical lens Disinfecting active is the same as current registered Clorox ATBC (hydantoin compounds). Unique container design and application allows for new technology options, such as use of solid acrylic acids for rust stain and hard water stain removal, increased fragrance burst since active goes directly to bowl, not diluted in tank. High likelihood of increasing Delight. Economic lens Trade up opportunity, from $1/quarter avg spend for ATBC pucks, $3/quarter for MTBC to $7/quarter for NeverScrub device. Early testing estimates cannibalization of Clorox ATBC around 4%, Clorox MTBC around 17%, Other existing Toilet competitors at 31%, and category growth accounting for remaining 48% of sales. Net gross profit increase of $2M at current gross margin; manufacturer estimates could also expand gross margin from 51% to 56%, making this more attractive. Initial assessment of “degree of difference” (High/Medium/Low, see back up for detail scoring) Business model Consumer need and behavior Product category Technology Customer channel Low – anticipate regular Clorox mfg/retail model Low/Med – fits similar behavior for current ATBC users; slight modification in task to install device (<1min install time) Low – well established toilet cleaning and disinfecting category Low – technology is known and proven effective; currently used by Clorox in Toilet Low – current retail channels/distribution model 3 “killer” questions to be answered in next phase Description Next steps to validate / test key assumptions Are economic assumptions accurate and attractive enough to enter? Are consumers willing to join the category or convert to NeverScrub from current Toilet solutions? How real are the cannibalization rates and how could CLX instead grow share in this category? Verify financial model with CD F&A Engage Toilet Business GI (User/Shopper Insights) for more thourough consumer testing

13 Initial Assessment of “degree of difference”
Using a High-Medium-Low ranking, how different is this from what CLX does today? A proposal that is all Medium or High is unlikely to be adopted Attribute Low Medium High Business model Fits consumer consumables model Consumables but with a twist New to CLX – service, subscription, etc. Consumer need & behavior Fits needs and behaviors CLX currently address Some behavior change or a twist on a known need Large behavior change or consumer education needed Product category Current CLX category or close-in adjacency Further out adjacency New category for Clorox Technology Known, proven technology Known technology but some difference (new application, registration, etc.) Unproven or new technology Customer channel Current Mass channels Alternate channels but still fit mass characteristics (ex: specialty retailers) New to Clorox channel, no existing relationship with customer

14 Business Case Format Example: NeverScrub
F2M opportunity: NeverScrub Team Name: F2M Date: 9/22/2010 Opportunity description What is it? A Clorox branded product that hooks up in-line in the toilet tank and delivers disinfecting (and potentially other) actives directly to the toilet bowl, avoiding dilution of actives in the tank as well as eliminating premature degradation of toilet parts What drill site? Fast 2 Market – rapidly acquire new products for Clorox Why is it attractive? Build on Clorox presence in Toilet Care, potential trade up for the category plus ability to gain share from competitive toilet products. Consumer screening shows idea more attractive than current ATBC offerings. Opportunity sizing: (incl. rev, margin) Puricle reached $7MM in Sales in Early Clorox Advisors Panel screening results show $10M+ sales in Retail, only 21% cannib of current Clorox ATBC/MTBC. $5M new to category volume. Net INCS of $8M and incremental GM of $2M at $10M in NCS. Opportunity validation Consumer lens NeverScrub has 78 T2B PI vs. 61 for current Bleach & Blue ATBC (Clorox Advisory Panel). Finding solutions that increase time between cleanings while maintaining cleaning and disinfecting is a repeated consumer benefit. Potential for increase in consumer cues (fragrance, color) Technical lens Disinfecting active is the same as current registered Clorox ATBC (hydantoin compounds). Unique container design and application allows for new technology options, such as use of solid acrylic acids for rust stain and hard water stain removal, increased fragrance burst since active goes directly to bowl, not diluted in tank. High likelihood of increasing Delight. Economic lens Trade up opportunity, from $1/quarter avg spend for ATBC pucks, $3/quarter for MTBC to $7/quarter for NeverScrub device. Early testing estimates cannibalization of Clorox ATBC around 4%, Clorox MTBC around 17%, Other existing Toilet competitors at 31%, and category growth accounting for remaining 48% of sales. Net gross profit increase of $2M at current gross margin; manufacturer estimates could also expand gross margin from 51% to 56%, making this more attractive. Initial assessment of “degree of difference” (High/Medium/Low, see back up for detail scoring) Business model Consumer need and behavior Product category Technology Customer channel Low – anticipate regular Clorox mfg/retail model Low/Med – fits similar behavior for current ATBC users; slight modification in task to install device (<1min install time) Low – well established toilet cleaning and disinfecting category Low – technology is known and proven effective; currently used by Clorox in Toilet Low – current retail channels/distribution model 3 “killer” questions to be answered in next phase Description Next steps to validate / test key assumptions Are economic assumptions accurate and attractive enough to enter? Are consumers willing to join the category or convert to NeverScrub from current Toilet solutions? How real are the cannibalization rates and how could CLX instead grow share in this category? Verify financial model with CD F&A Engage Toilet Business GI (User/Shopper Insights) for more thourough consumer testing

15 3 Killer Questions What are the showstopper questions we need to answer to move forward? Alternatively, what questions, if answered “no”, means we kill the project? Can be any 3 questions, but typically revolve around the Consumer-Technical-Economic framework What is the killer question? How do you plan to test/answer the question?

16 Some initial sources on where to find information
Area to validate Internal Sources External Sources Technical AT R&D Experts: Guideline OIN networks Company/Supplier Google Economic Marketing F&A Estimates by smart people Market Research: Datamonitor Mintel Marketresearch.com Packaged Facts Experts Consumer User Insights Innovation Discovery Accelovation

17 Now that I have a business case, what do I do with it?
Socialize! Engage key stakeholders (which vary depending on the proposal) on your draft in order to learn and refine: What is important What key issues have you not taken into account How can they help build a stronger proposal Initial share-out with CILT, IGC “Safer” environment with multi-functional environment to build a stronger proposal prior to taking to the BU Get 3 smart people to agree with your proposal CILT can help identify key stakeholders for BU buy-in Taking to the BU Best done through R&D sponsor on Leadership Team (Michael, Denise, Bob, et al)


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