Soma x Node by Nábila Diaz Arias

SDES 791 â&#x20AC;&#x201C; 490 | Fall Quarter 2016

TABLE OF CONTENTS INTRO 6 7 8-9 10-11

Objective The Team Case Study: Soma B Corporation & B Corporation Score

RESEARCH 15 16-17 18-21 22-23 24-25 26-27 28-29 30-31 32-33 35 38 39

Research Process Trends Matrix Value Proposition Canvas Stakeholders Map Business Model Canvas Social Business Model Canvas Customer Needs Matrix Red Ocean 10 Types Of Innovation Takeaways Mind Map Market Growth

MARKET RESEARCH

43 Air Pollution 44-45 Pollutants 46-47 Industry Leaders 48- 49 Type Of Units & Filters 50-51 Customer Segments 52-53 Region Segementation 54-57 18 Air Purification Plants 58-59 Market Value Comparison

CONCEPT DEVELOPMENT 63 64 65 66-67 68-69 70-71 73 75 76-77

Ideation Crazy 8’s Decision Matrix Pros & Cons Map 10 Types Of Innovation Social Business Model Canvas Node Types Of Dried Herbs Application Interface

80-81 82-83 84-85 87-89 90-91

Rebate Matrix Product Pricing Cash Flow KPI’s & Dashboard B Corporation Score Improvement

IMPACT ANALYSIS

REFERENCES 94-95 96 97-99 100

References: Trends Matrix References: Customer Needs References: Market Research References: Impact Analysis

INTRO

OVERVIEW For this Collaborative Experience class, the task will be to expand upon the business model of an existing B Corporation, to develop a new line of business, aligning the mission, vision and values of the company, being innovative, and develop a line that generates revenue. The process will revolve around ‘describing what is,’ including developing analyses of the business environment, the current business model, and the industry and competitive landscapes, within which, the new line of business must fit. The project will then focus on ‘designing what might be,’ through identification of true market opportunities and detailed elaboration of the innovative concept that is most promising for the B Corporation.

THE TEAM

Chelsea Lyle

Nik Parekh

NĂĄbila DĂaz

Oscar Liaw

Service Design

Design Management

Service Design

CASE STUDY: SOMA “Soma is on a mission to improve life for everyone who drinks water, with sustainable, plant-based filters that make water healthy and delicious, beautiful carafes and pitchers, and the convenient filters by mail service.” (Soma)

Founded

Located

Raised [Kickstarter]

Total Products

2012

San Francisco

$5.9 Million

Soma is a participating B Corporation company with a score of 82, which is 27 points higher than median scores. However, there are many subcategories that Soma can improve upon, including Workers, Job Creation, and Transparency. Our team recognized the opportunity to expand on Soma’s current business model, and develop a new revenue-generating service. Due to Soma’s well-established brand identity, this service has the potential to seamlessly enter a new competitive landscape.

https://www.drinksoma.com/company

SOMA: B CORPORATION “Soma exists to build a healthier, happier, well hydrated world by redefining how beverages are consumed globally. Soma is the smart, beautiful, sustainable water filter that simplifies your life. It gives you clean water anytime you want it, in a gorgeous glass carafe worthy of that unsung hero of all liquids. Soma’s filters are made entirely from biodegradable materials, including coconut shells and a plant-based casing. Through its partnership with charity: water, Soma donates clean drinking water to people in need with every filter sold. Soma takes the simple things you do every day of your life and makes them just a little more meaningful. So here’s to that thirst-quenching, life-giving combination of hydrogen and oxygen, and a smarter, more beautiful new way to appreciate it with every sip. Raise your glass. We became a B Corp because the rigorous model continually reminds us of our core value that we can drive business as a means for social and environmental change - one filter at a time” (B Corp.) 10

http://www.bcorporation.net/community/soma

B CORPORATION SCORE

ENVIRONMENT

WORKERS

CUSTOMERS

COMMUNITY

GOVERNANCE

OVERALL B-SCORE

23/7

18/18

7/N/A

10/6

82/55

http://www.bcorporation.net/community/soma/impact-report/2014-08-11-000000

RESEARCH

RESEARCH PROCESS Our process began by researching about Soma, their competitors, and trends in the water filtration industry. The goal was to uncover insights that would inspire our team to explore new market opportunities. Cultural, social, technological, and economic trends revealed top leaders and future predictions of filtration industries. Comparisons with these top leaders revealed current positions of filtration services and allowed us to develop an opportunity for concept development.

TRENDS MATRIX This Trends Matrix explores cultural, social, technological, and economic trends, while acknowledging filtration industry leaders, including air and water purification companies. These data points were organized on a timeline of past, present, near future, and far future. While exploring this tool, our team was able to discover patterns of changing environments, landscapes, and consumer behaviors and expectations. Understanding that the industries are constantly evolving with digital technology and shifting with consumer demands, our team was able to identify implications that will be the drivers of future products and services. Some of these include connected or smart devices, sustainable product and service innovation, and increasing focus on individual health and wellness. We learned more specifically that there is increasing demand for creating alternate ways of filtering drinking water, such as desalination. Medical hydration, such as therapy and pills, and experimental consumption, such as â&#x20AC;&#x153;water bars,â&#x20AC;? are also beginning to pop up in cities such as Minneapolis, Minnesota.

PAST

PRESENT

NEAR FUTURE

FAR FUTURE

� Baby Boomers dominate the health industry and transform healthcare expectations (2014). [1]

� Health and wellness conscious food and beverage intake, such as eating organic, vegan, paleo, and balancing the body's natural bacteria (2016). [2] � Millennials pay extra for sustainable products and services (2015). [3] � Baby Boomers have highest disposable income, taking up 70% of the market. [4] Millennials spend double the amount that Baby Boomers do on one product: Coffee. [5] � Weight management and cardiovascular health to be the top issues for consideration over the next two years while developing foods, beverages and dietary supplements. [6]

� Generation Z is willing to pay more for environmental and social impact services or products (2015). [7] � Functional foods Millennials expected to outspend Baby Boomers by 2017. [8] � "Water Bar" to open in Minneapolis, MN, where consumers spend money to enjoy education through tasting flights of regional water. [9] � Natural ingredient substitution pills for total daily function: Morning cognitive health, Energy boosting, sleep enhancing. [10]

� Gen A, or "Screenagers," will be "the most formerly educated, technology supplied, and globally, the wealthiest generation ever." (2016). [11] � 1.8 billion people will live in regions that face "absolute water scarcity," reports the United Nations. (2025). [12] � "Hydration Therapy" bars offer relief from jetlag, hangovers, and general acute illnesses. Will these become social? [13] � Hydration pills (electrolyte pills or something known as MegaHydrate pills) to substitute water or supplement hydration. [14]

� Distillation. [15] � Basic water gun and chlorine and ampule filtered water supply in space on the Apollo mission.[16] � Reverse Osmosis � Artisian Well � Spring Water � Mineral Water

� Sparkling Water. [17] � Desalination: Debate over whether or not this is the answer to California's drought problem (2014). [18] � Nike's water-free, chemical-free carbon fabric dying process (used also by Adidas and Dycoo Textiles) (2013). [19] � LifeStraw water filters make purifying questionable water, especially in developing countries, easy and accessible. [20] � Companies are finding sustainable solutions for filtering water in developing countries (2013). [21]

� 7 meter high ion air filter introduced to Beijing, with plans to be implemented country-wide in outdoor public spaces (2016). [22] � Molekule: A personal air filter that uses UV light from LED's to break down unwanted air toxins. (2017). [23] � Sensor and robotic manufaturing processes (2016). [24] � Smart water filters: Amazon and Brita team up for the first ever Wi-fi water pitcher, including automated filter re-ordering services. (2016) [25]

� 4D In-home printing. [26] � Solar powered desalination "pipe" plant proposal entered into Land Art Generator Initiative contest (2016). [27] � Solutions for maintaining shelf life of nutrients, enhancing flavor perception, and managing stress through space food need to be developed (2025). [28]

� Environmental Protection Agency (EPA) Regulations. [29] � Federal Food, Drug, and Cosmetic Act (1938) under the Food and Drug Administration (FDA) Regulations. [30] � Safe Drinking Water Act (1974) [31] � Centers for Disease Control Agency (1946)

� California Environmental Protection Agency (1991). [32] � Bottled Water Regulations [33] � Food and Drug Administration Bottled Water Regulation (2002). [34] � Polyfluoroalkyl and Perfluoroalkyl [toxic] substances (PFASs) found in drinking water of 33 states. [35] Nearly 90% of fresh water is used for producing food and energy (2011). [36]

� US Organic market 14% growth rate between 2014 and 2018. [37] � Water market increasing 6% a year (Global Growth Rate, GPR). [38] � GDP is decreasing in the USA. [39] � Trans-Pacific Partnerships (TPP) could have an effect on international trade and taxes. [40] � North American Free Trade Agreement (NAFTA) is undergoing a shift and may effect many industries. [41]

� In 2035 water demand will exceed supply by 40% (2011). [42]

� Malvern Waters is the first spring water to be bottled (through United Kingdom's Holy Well Company) (1600’s). [43] � Schweppes invents fizzy mineral water (1783). [44] � Deer Park water (a Nestlé brand company) is founded and becomes popular in the bottled water trend (1976). [45] � Coca-Cola introduces Glaceau, a smart water brand with added electrolytes (1996). [46] � Brita filter advertisements: "Tap and toilet water come from the same source. Don't you deserve better?" (Early 2000's). [47]

� Many mass-production companies comply with personal sustainable policies, like Intel's water conservation policy (2016). [48] � Alliance for Water Stewardship (2014). [49] � Coca-Cola's 5x20 Social Responsibility Program (2016). [50] � Aquasana. [51] � Camelbak. [52]

� Drinkcove. [53] � Nanotechnology for affordable water purification (2013). [54] � Paper Water Bottle Company. [55] � GE Corporation, Tata Chemicals Ltd., Eureka Forbes, Pentair Residential Filtration, 3M Purification, LG Electronics, Whirlpool Corporation, Aquatech International LLC, Clorox Company. [56]

� "Hydration Therapy" companies. [57]

CULTURE / HEALTH

TECH

ECONOMIC / LEGAL

LEADERS

THE VALUE PROPOSITION CANVAS The Value Proposition Canvas reflects customer’s pains, gains, and jobs, and if the value map of Soma is considered a “perfect fit”. Our team learned that Soma’s user’s main objective is to consume clean drinking water, which includes a pleasant taste. Soma’s most important and impactful offering is their coconut and vegan silk filters with plant-based casings, which attracts those who are seeking a natural, organic consumption experience. Our team also understood that the most innovative service that Soma offers is their filter subscription option, which alleviates consumer’s pain of replacing their expired water filters. From this exercise, we were able to identify what Soma was offering, what the consumer expected, and how the new market opportunity might be able to improve consumption experiences within the filtration industry.

PRODUCTS & SERVICES

VALUE MAP

� Subscriptions for filter replacements � Safe manmade materials � Partnerships with charity: water � Plant-based casing for coconut and vegan silk filter

� BPA-free sustainable water containers � E-commerce plaform � In-store partnerships � Biodegradable filter (including patents) � Filter subscription

GAIN CREATORS PAIN RELIEVER

� Competitive pricing � Simplicity of container design � Durablity (break) testing for glass containers � Filter replacement kit with print (and video instructions on YouTube)

FIT

� Reminders and notifications � Simplicity and usability � Durability of containers � Versatility of containers � Accessibility � Available and convenient � Low cost � Investing in sustainability through purchases � Indicators that confirm water is clean � Enjoyment of drinking water

GAINS PAINS

TOMER JOBS CUS

CUSTOMER PROFILE

� Improving health by consuming clean drinking water � Looking healthy to others � Avoiding tap water, plastics, and BPA products � Prioritizing personal health � Choosing aesthetically pleasing product options � Considering clean water a basic need � Seeking affordable options and solutions

� Availability � Trust of water source(s) � Trust of filter efficiency � Price for bottled water � Replacing filters on time � Bottled water dominates the market in terms of disposable options � Accessible � Leaky containers � Sustainability of water containers and manufacturing processes � Controlled temperatures of water in container

STAKEHOLDER MAP To identify powerful or key stakeholders of Soma’s current service and who is providing value to the user, we visually mapped out the stakeholders. They are organized in rings by direct and indirect interaction with the user. Direct stakeholders were those who participated with the customers in “front stage” interactions. Indirect stakeholders were behind the line of visibility, and are considered “back stage” participants. We were able to use this information to better understand who the partners were and what channels Soma utilized.

THE BUSINESS MODEL CANVAS The Business Model Canvas is a strategic management tool often used by designers to describe and challenge existing business models, and design and innovate new business models. By describing Soma’s existing business model, our team was able to understand what value Soma currently provides, who they target, and how they operate. We understood that Soma’s main customer segment were health-conscious individuals who want a more natural and organic way to drink water. The value Soma brings to these consumers are improvements to quality of life through sustainable, affordable filters, well-designed products that are functional and beautiful, and giving back to those in need. We learned that Soma focuses on health and lifestyle, bringing sustainable filters to a industry saturated with plastic and synthetic water filters. The filters that Soma provides are not only better for consumer’s health, but they are affordable and accessible through their unique subscription service that ships them on a scheduled delivery service.

KEY PARTNERS � Investors � charity: water � Organic suppliers: coconut & bamboo � Man-made material suppliers: Glass, silicone, and plastic PLA

KEY ACTIVITIES � E-commerce development and maintenance � Manufacturing � Managing inventory � Customer service � Marketing � Glass breakage test

VALUE PROPOSITION

CUSTOMER RELATIONSHIPS

Improving lives by:

� Filter subscription (automated) � Social media engagement � Customer service � Support local economy and community � Offer promotions

1 2

KEY RESOURCES � Soma patents: Filter and assembly � Soma pitcher, carafe, and water bottle product design

Sustainable filters and containers that are affordable. Well-designed products that are functional, simple and beautiful.

Giving back: We work with Charity:Water to help those in need.

Encourage happy lifestyles and healthy choices.

CHANNELS � Soma’s e-commerce website � Social media (Facebook, Instagram, Twitter) � Parter stores (Target and Amazon) � Product Reviews � Emails � Phone � Delivery

COST STRUCTURE

REVENUE STREAMS

� Payroll � Manufacturing � Shipping � Headquarters and warehouse overhead � Customer service � Marketing and paid social/ad channels � User testing and prototyping � Promotional offers

� Filters (Subscription and Individual Purchase) � Water bottle, Carafes and Pitchers � Delivery and shipping � Fixed pricing model � Patent: Water Filtration System (February 2015) � Patent: Water Filtration Assembly (April 2015)

CUSTOMER SEGMENTS � Health-conscious consumers who want a more natural and organic way to drink water � Millennials (born 1980-2000) who want aesthetically pleasing products that are made of sustainable materials � College students who want a convenient and durable clean water drinking solution � Companies who care about the environment and want to give their employees aesthetically pleasing company accessories

THE SOCIAL BUSINESS MODEL CANVAS Based off of the original Business Model Canvas, the Social Business Model Canvas is a strategic management tool often used by designers to describe and challenge existing business models, and design new business models that focus on social innovation. By describing Somaâ&#x20AC;&#x2122;s existing social business model, our team was able to understand what social value Soma currently provides, who the beneficiaries are, and what products and services they provide to satisfy social value. When comparing this tool with the original business model, our team was able to understand the operations and core values that Soma offers.

KEY RESOURCES

KEY ACTIVITIES

� Soma patents: Filter and assembly � Soma pitcher, carafe, and water bottle product design

� E-commerce development and maintenance � Manufacturing � Managing inventory � Customer service � Marketing � Glass breakage test

PARTNERS � Investors � charity: water � Organic suppliers: coconut & bamboo � Man-made material suppliers: Glass, silicone, and plastic PLA

COST STRUCTURE � Payroll � Manufacturing � Shipping � Customer service � Marketing and advertising � User testing and prototyping � Product development

TYPES OF INTERVENTION � BPA-free water drinking containers � Coconut, vegan silk, and plant-based filter

SEGMENTS BENEFICIARY: � Farmers of organic materials � Local manufacturing employees CUSTOMER: � Health-conscious consumers who want a more natural and organic way to drink water

CHANNELS � Soma’s e-commerce website � Social media (Facebook, Instagram, Twitter) � Parter stores (Target and Amazon) � Product Reviews � Emails � Phone � Delivery

SURPLUS � Social Responsibility: charity: water

� Millennials (born 1980-2000) who want aesthetically pleasing products that are made of sustainable materials � College students who want a convenient and durable clean water drinking solution � Companies who care about the environment and want to give their employees aesthetically pleasing company accessories

VALUE PROPOSITION SOCIAL VALUE: � Provides clean drinking water � Reduces waste with biodegradable water filter IMPACT MEASURES: � Limited time product releases give $1 per bottle back to cities or communities in need of safe drinking water (e.g. Flint, MI) � Soma partners with charity: water to bring safe drinking water to over 663 million people CUSTOMER VALUE: � Well-designed drinking experience � Sustainable lifestyle � Healthy product � Clean water

REVENUE � Filters (Renewal and re-purchase) � Water bottle � Carafe � Pitcher � Delivery and shipping � Fixed pricing model � Patent for filter system and assembly (February - April 2015)

CUSTOMER NEEDS MATRIX One goal of our research was to understand the existing customer needs in filtration and purification industries. We created a matrix to understand how competitors are succeeding or failing in transparency, sustainability, quality, health, social responsibility, functionality, affordability, and friendliness. We compared each company and tallied their scores to discover which need was being met by most companies, and which was not. This was achieved through an objective ranking system in which each cell was ranked from 0-5, with 5 being the highest rating. For example, if Sustainability was ranked a 3, that company was able to achieve 3 out of 5 objectives that are essential for meeting that customer need. These objectives were created based on existing market research articles. We were able to understand which company was most successful overall compared with each competitor. Transparency is being achieved by most companies, while sustainability is not. Our team proceeded to visualize the customer needs matrix in order to get a better grasp on what the drivers of competition were.

RED OCEAN In order to understand existing competition and consumer demands, and to better visualize customer needs, we mapped the customer needs matrix on the red ocean strategy. We confirmed from the customer needs matrix that the drivers of competition in the existing market are mainly transparency and quality, and that there is room for improvement with sustainability, social responsibility, and functionality. This insight inspired our team to consider how Somaâ&#x20AC;&#x2122;s current sustainable, social, and functional offerings could be extrapolated into another industry, other than water filtration.

10 TYPES OF INNOVATION After understanding the customer needs and what the drivers of competition were, our team explored what innovative configurations, offerings, and experiences industry leaders were providing using the 10 Types of Innovation tool. We found that all of the companies were pioneering in their own categories. We asked ourselves, “If Soma has secured their position and pioneered in the water filtration industry for sustainability (and their subscription service), what other industry would be a good fit for Soma?” Soma is already succeeding with transparency and sustainability in the water filtration industry because of their unique, patented filter. So, could the air filtration industry benefit from Soma’s sustainable, subscription-based water filtration business model?

CONFIGURATION PROFIT MODEL Spotify: Subscription / Freemium / Ad-Supported Amazon Prime: Membership / Subscription / Cost Leadership Pricing / Switchboard

NETWORK

STRUCTURE

PROCESS

Etsy: Collaboration

Southwest Airlines: Decentralized Management

Amazon Prime: Process Automation / Lean Production / Logistics Systems / Predictive Analytics

Ebay: Collaboration Amazon: Collaboration Uber: Collaboration

Greyston: Corporate University

Everlane: User-Defined

Airbnb: Collaboration

AT&T: Installed Base

Kickstarter: Collaboration

Google: Incentive Systems / Knowledge Management / IT Integration / Organizational Design

Dollar Shave: Subscription Fee

Research Gate: Open Innovation / Collaboration

Airbnb: Organizational Design Uber: Asset Standardization Zappos: Incentive Systems

EXPERIENCE

OFFERING

Facebook: User Generated

PRODUCT PERFORM.

PRODUCT SYSTEM

Apple & Google: Superior Product / Ease of Use / Engaging Functionality / Performance Simplification / Styling / Safety

Apple & Google: Extensions & Plug-ins / Product Bundling / Modular Systems / Platforms / Integrated Offering

Coca-Cola: Environmental Echo: Sensitivity / Focus Complements / Ikea: Process Efficiency Product Bundling Starbucks: / Modular Superior Product Systems / Tesla: / Customization / Platforms On-Demand Styling Production Lego: Nike: McDonaldâ&#x20AC;&#x2122;s: Complements / Superior Product Modular Systems Process Standardization / / Engaging / Platforms Functionality / Localization Safety / Feature Aggregation / Environmental Sensitivity / Customization

SERVICE

CHANNEL

BRAND

Insta Cart: Concierge

Amazon: Diversification

Patagonia: Transparency

Birchbox: Personalized Service

Uber Eats: On-Demand

Apple: Component Branding / Values Alignment / Certification

Warby Parker: Try Before You Buy Ikea: Total Experience Management Nest: Supplementary Service Netflix: Personalized Service CVS: Superior Service

Warby Parker: Go Direct / Flagship Store Dollar Shave: Go Direct Shyp: Indirect Distribution Clif Bar: Cross Selling

Whole Foods: Co-Branding / Brand Extension / Values Alignment / Transparency Disney: Brand Extention / Transparency / Values Alignment / Certification Audible: Co-Branding / Component Branding /

USER ENGAGEMENT Disney: Curation / Experience Enabling / Autonomy & Authority / Community & Belonging / Personalization / Whimsy & Personality / Status & Recognition Hololens: Process Automation / Experience Enabling / Mastery / Autonomy & Authority / Personalization / Whimsy & Personality Lego: Autonomy & Authority / Personalization

TAKEAWAYS There is an increasing demand for creating alternate ways of filtration. Soma’s most impactful offering is their coconut and vegan silk filter with a plant-based casing. Soma’s most innovative service is their filter subscription option. Soma user’s main objective is clean consumption. Consumers in the air and water filtration industries most value transparency and sustainability.

What other industry would

be a good fit for Soma?

MIND MAP airborne contamination pollution city farming

FARMBOT backyard farming

FOOD

allergies

LIGHT

indoor

bacteria iv

pollution

biological

MEDICAL

outdoor

SUSTAINABLE FILER / CLEAN

mechanical

AIR

noise

greenhouse

rain

WATER

ocean

MATERIALS tap / home renewable coconut

vegan

charcoal

MARKET GROWTH

Point-of-Use Water Filtration $24.5 BILLION [2020]

Indoor Air Purification $19 BILLION [2020]

9.86%

10%

MARKET RESEARCH

AIR POLLUTION n. â&#x20AC;&#x153;Contamination of air by smoke and harmful gases, mainly oxides of carbon, sulfur, and nitrogen.â&#x20AC;? (Dictionary.com)

Indoor Air is

People spend

People delay

90%

1 month

more polluted than Outdoor Air

of their time indoors

on changing filters

TYPES OF POLLUTANTS Where they are found

Trichloroethylene

Formaldehyde

Benzene

Paint and Varnish

Paper and Fabrics

Plastic and Tobacco

Xylene

Ammonia

Rubber and Leather

Cleaners and Fertilizers

TYPES OF POLLUTANTS What they cause

Trichloroethylene

Formaldehyde

Benzene

Drowsiness and Coma

Lung Swelling

Unconciousness

Xylene

Ammonia

Liver and Kidney Damage

Eye and Throat Irritation 45

INDUSTRY LEADERS Within the air purification industry our team identified the top leaders based on who had the greatest market share. These companies provide HVAC and indoor room filters that are made from plastic or synthetic materials, through HEPA, carbon, UV, and ionizing technology. We discovered that these filters are not biodegradable, not made of natural materials, and they do not achieve complete purification of the 5 main toxins that are found in our indoor air when used alone. These toxins are found in common household items and can cause major health problems if the air is not properly filtered.

AIR UNITS Pros + Cons

Central Filtration Pros: Least expensive unit Cons: Replace filters often

Room Purifiers Pros: Portable Cons: Ionizer technology and noisy

AIR FILTERS What they filter

HEPA

CARBON

UV / ION

Mold and bacteria

Absorbs most chemicals, but low efficiency on airborne particles such as allergens.

UV â&#x20AC;&#x201C; Must be paired with other filters. Ion â&#x20AC;&#x201C; Only temporarily masks the problem.

CUSTOMER SEGMENTS After identifying the air purification industry leaders, our team sought to identify the main reasons consumers invest in their products. We found that the main reasons include: - Animal lovers with allergies - Individuals with sensitivity to smells - Roommates living with a smoker - Individuals who have a new or old home A main insight from this research was that all of these reasons are due to respiratory health concerns. We continued to research respiratory health and found that asthma was the #1 respiratory health issue in which associated deaths are 100% avoidable. We chose to focus on this segment moving forward with our new product and service development, as we have identified that this is the group of individuals that our new offering can bring the most value to.

Allergies

Asthma

COPD

Bronchitis

1 in 6

1 in 12

1 in 28

1 in 36

Emphysema

Pneumonia

Lung Cancer

Cystic Fibrosis

1 in 102

1 in 318

1 in 1,500

1 in 10,630

REGION SEGMENTATION In order to identify a specific market segment to scale an air purification product from, we researched which region of the United States was most affected by asthma. We discovered that asthmatic individuals who live in Northeastern, urban, underserved communities were at the highest risk for air pollution. For the purposes of initial partnerships and scaling, and since Soma already has a partnership established with Target, there is an opportunity to introduce our product with CVS and Target.

WEST

MIDWEST

[Population: 76 Million]

[Population: 67.9 Million]

Living Under Poverty Line

Affected by Asthma

Living in Urban Areas

Living Under Poverty Line

Affected by Asthma

Living in Urban Areas

13.2%

7.3%

84.9%

11.5%

7.9%

72.7%

SOUTH

NORTHEAST

[Population: 121.1 Million]

[Population: 56.2 Million]

Living Under Poverty Line

Affected by Asthma

Living in Urban Areas

Living Under Poverty Line

Affected by Asthma

Living in Urban Areas

15.1%

7.5%

62%

12.2%

8.4%

83.5%

18 AIR PURIFICATION PLANTS During our research we learned that NASA identified 18 plants that naturally filter the 5 airborne toxins that are found indoors. Each plant purifies at least one or more of the five toxins, but the Chrysanthemum and Peace Lily filter all 5 toxins. This inspired our team to consider how a natural, sustainable filter could be introduced to the air purification industry.

DWARF DATE PALM

BOSTON FERN

KIMBERLEY QUEEN FERN

SPIDER PLANT

CHINESE EVERGREEN

BAMBOO PALM

WEEPING FIG

DEVILâ&#x20AC;&#x2122;S IVY

FLAMINGO LILY

LILYTURF

BROADLEAF LADY PALM

BARBERTON DAISY

CORNSTALK DRACAENA

ENGLISH IVY

VARIGATED SNAKE PLANT

RED-EDGE DRACAENA

FLORISTâ&#x20AC;&#x2122;S CHRYSANTHEMUM

PEACE LILY

MARKET VALUE COMPARISON Although NASAâ&#x20AC;&#x2122;s findings about indoor plant air purification was published in 1989, very few companies take advantage of the purifying properties of these natural plants. We recognized that the majority of companies do not manufacture products with natural, organic filtration materials and therefore do not enhance consumer health. As Soma places high value on their natural, clean consumption experience due to their plantbased water filter, our team identified an opportunity for Soma to take advantage of this air purifying solution.

Soma Water Filtration:

Existing Indoor Air Purification:

Natural, organic filtration materials

Beautiful, functional, and simple designs

Each filter purchase gives back to those in need

Sustainable manufacturing processes

Enhances consumer health

CONCEPT DEVELOPMENT

IDEATION Based on our research and inspiration from the NASA plant purification study, our team conducted a rapid ideation session. For two minutes at a time, our group came up with as many ideas for natural plant purification system as possible. We repeated this 10 times, and produced around 32 ideas. These ideas were affinitized to come up with 4 main concepts that include natural plant air purification. After identifying these 4 concepts, our team rated them in a decision matrix based on differentiation, desirability, viability, and feasibility. The top two ranked concepts included: 1) A plant and filter are enclosed in a unit, and 2) The filter material is based off of the NASA plant list, but no live plants are involved.

CRAZY 8â&#x20AC;&#x2122;s

A filter and plant are enclosed in a unit.

A filter is enclosed in a pot with a plant exposed to the room.

There is no filter, just an indoor plant product ecosystem with a sensor-based smart pot.

The filter materials are based off of the NASA plant list, but no live plants are involved.

DECISION MATRIX

Differentiation

Desirability

Viability

Feasibility

Total

Enclosed filter and plant

Enclosed filter and exposed plant

No filter and sensor-based smart pot

No live plant and NASA plant based filter

PROS & CONS MAP The highest ranked concepts with and without a plant were compared on a pros and cons matrix to understand which may provide more value to the stakeholders and users in terms of maintenance, operation expenses, and risks, to name a few. We learned that the concept with a plant has high risk with user maintenance, for example watering the plant, making sure the plant has proper lighting, and determining actions to take when the plant outgrows the container. We also discovered that some of the plants that filter the highest amount of air toxins contribute to allergies, which counteracts the exact purpose of our filter. Although the concept without live plants would have higher research and development expenses, it would have lower cost long-term for manufacturing, warehouse storage, and shipping. We also recognize that there would be less risk for financial loss if we sourced the plants from local nurseries and greenhouses. This will also improve Somaâ&#x20AC;&#x2122;s (the parent company) worker and job creation B Corporation scores.

10 TYPES OF INNOVATION Our team ideated what the new business model might look like by using the 10 Types of Innovation tool again. Revolutionary, impactful, or appealing configurations, offerings, and user experiences that exist with other industry leaders inspired our new business model canvas. We were able to discover how the service system might look and the best ways to differentiate our services and experiences while making a viable, feasible strategy. An income-based pricing model accessed through diverse channels, subscription-based delivery method, and modular product configuration are a few of the valuable solutions that the new business model provides.

CONFIGURATION PROFIT MODEL Income-based Pricing: After a fixed initial investment, pay an adjusted subscription price, or initial investment is an adjusted price with a fixed subscription Bundled Pricing: Buy multiple and get a discount User Defined: Choose what you pay knowing what your extra cash is going towards

NETWORK

STRUCTURE

PROCESS

Supply Chain Integration: Materials for product can be acquired through Soma’s existing suppliers

Incentive Systems: Offering rewards [financial or non] to provide motivation for desired actions

Proccess Standardization, Efficiency, and Lean Production: Modular systems and similar business model to Soma’s

Complementary Partnering Partnerships with healthcare industry leaders, such as CVS (And their Health Foundation and the CVS Health Community Grants program) Alliances: Partnering directly with health insurances to share risk and revenue Collaboration: Partner with Soma

IT Integration: Technology to support the care taking of live plants Competency Center: Use Soma’s existing resources and expertise to design new product Decentralized Management: Distribute select decision making processes to better serve target audience Asset Standardization: Modular systems

EXPERIENCE

OFFERING

Localization: Different types of filters for different regions with pollutants On-Demand Production: To save cost and risk of caring for and shipping live plants

PRODUCT PERFORM.

PRODUCT SYSTEM

Superior Product: Only 100% sustainable air filter

Complements: Aromatic diffusion options

Product Bundling: Ease of Use and Offer initial Performance purchase to Simplification include unit, 2 and Styling: filters (to collect Intuitive design data on how fast they use it) and Safety: 1 aromatic Visual indicators diffuser of their show when a filter choice has 2 weeks left; Glass breakage Modular test Systems: All filtration and Feature add-on Aggregation: components are Same filter fits in interchangeable each unit size with unit sizes

Intellectual Property: Establish a patent Environmental for sustainable air Sensitivity: Offering does no filter to little harm to the environment Predictive Analysis: Algorithm detects Customization: Offer material when to send a new filter to user options

SERVICE

CHANNEL

BRAND

CUSTOMER ENGAGEMENT

Guarantee: Free shipping and free returns all the time (Zappos); Unconditional returns if not satisfied (used units can be donated to non-profits or those in need)

Diversification: Reaching target audience through healthcare industry

Co-Branding: Blend with Soma to “enhance the credibility of an offering.”

Flagship Store or Pop-Up Presence: Soma’s water and air purification are available as total wellness solutions

Brand Extension and Alignment: Offer this product as a sister system to the Soma Water Filtration product system

Process Automation: Algorithm allows new filter to be mailed on time or reminders for plant care

Multi-Level Marketing: Offering product through another channel that sells it for the company: CVS, Target, Amazon, Home Depot’s Garden Center (if there is a live plant) etc.

Component Branding: 100% organic, biodegradable filters

Total Experience Management: Personalized follow up Superior Service: Friendly customer service ensures a hassle-free experience Personalized: Algorithms for filters, live plants, and diffuser options

Transparency: Provide a scientific explanation of air pollutant purification on website Certification: Patented filter

Curation: Differentiate our identity as providing a “clean” living experience Community and Belonging: Facilitate connections to make target group feel like they are part of a movement Personalization: Allow users to customize their modular systems and subscriptions Personality: Personify plants for children

SOCIAL BUSINESS MODEL CANVAS Our team utilized the innovative service system solutions from the 10 Types of Innovation to inspire the final Social Business Model Canvas. This strategic management tool allowed us to develop and describe the new business model, which focuses on social innovation. We identified three new customer segments: 1. Asthmatic individuals in Northeastern, underserved, urban communities; 2. Individuals with other respiratory health issues; 3. Individuals who are concerned about their respiratory health. The core value that our new business will offer is a sustainable purification system that eliminates indoor pollutants to enhance overall well being, without compromising a functional, simple, and beautiful design. In addition, the new business will partner with CVS Pharmacy to increase accessibility to our customer segments. The new business model improves the B Corporation Score with sourcing natural materials from local nurseries, greenhouses and farmers, as well as contributing to A.I.R. NYC, a not-for-profit that assists children with asthma in New York.

KEY RESOURCES

KEY ACTIVITIES

� Patents: Filter and assembly � Purification unit design � Subscription and unit sensor algorithm

� E-commerce and app development and maintenance � Manufacturing � Managing inventory � Customer service � Marketing � Durability test

PARTNERS � Grant Providers � Harvard � CVS (Including Health Foundation and Community Grant Program) � Target � Amazon � Soma Water � Natural material suppliers � Man-made material suppliers � A.I.R. NYC

COST STRUCTURE � Accounts payable to CVS for insurance-based rebate program � Payroll � Manufacturing � Shipping � Headquarters and warehouse overhead � Marketing � User testing and prototyping

TYPES OF INTERVENTION � Natural air filter � Coconut, vegan silk, and plant-based materials

CHANNELS � E-commerce website � Social media (Facebook, Instagram, Twitter) � Partner stores or providers (CVS, Target, and Amazon) � Email � Phone � Delivery

SURPLUS � Social Responsibility: A.I.R. NYC

SEGMENTS Beneficiaries: � Farmers, greenhouses, or nurseries of natural materials � Local manufacturing employees

Customers: 1. Asthmatic individuals in Northeastern, underserved, urban communities 2. Individuals with other respiratory health issues 3. Individuals who are concerned about their respiratory health

VALUE PROPOSITION Social Value: � Provides clean air purification � Reduces waste with biodegradable air filter Impact Measures: � Lower PPM in indoor urban community households � Reducing healthcare costs for all US residents Customer Value: 1, 2, & 3: A sustainable purification system that eliminates indoor pollutants to enhance overall wellbeing 1, 2 & 3: A well-designed product system that is functional, simple and beautiful 1, 2, & 3: Lowered health risks 1 & 2: Affordable through an insurance-based rebate program`

REVENUE � Filters and dried herb packs (Subscription) � Purification units � Delivery and shipping � In-store purchases or those made through partners � Patent

Our revolutionary air purification system features an all natural, plant-based filter that eliminates indoor pollutants to enhance overall well being.

As nature intended.

A simple, elegant aesthetic is achieved through the use of sustainable materials, such as bamboo and aluminum.

TYPES OF DRIED HERBS

DRIED EUCALYPTUS

DRIED LAVENDER

DRIED MINT

In addition to air filtration, the unit diffuses a subtle essence of natural scents through a dried herb component. Eucalyptus, lavender and mint are a few of the aromatic options available to users. They are able to order the dried herbs through the website or have the option to put their own in that was home grown.

APPLICATION Interface

IMPACT ANALYSIS

REBATE MATRIX Customer Segment 1

Yes

Calls CVS

Employee checks CVS pharmacy profile to confirm if customer has proof of respiratory health problems

Customer wants NODE

Go to CVS

Unit is immediately available for $99 plus tax

CVS bills NODE $199 for each rebate given

Doctor replies with record/proof

Employee has to fax customerâ&#x20AC;&#x2122;s doctor for record/proof of respiratory health problems

Doctor replies with denial of record/proof

Unit is available for $299 plus tax

PRODUCT PRICING Based on existing competitor prices of indoor room air purification systems, and on the cost-plus-profit of our proposed product, we were able to identify a price per unit and a subscription price for one and two filters per three months, or as needed.

UNIT

MSRP

FILTER

After Rebate

MSRP

Subscription [monthly]

$7.99 $299

$99

$24 $13.99

CASHFLOW Year 1

Rent F [-$30 Util [-$1

Soma Invests [$500,000]

GRANTS [$500,000]

Investors [$3,000,000]

R&D [-$500,000]

Patents 000]

Cost of Manufacturing [-$3,987,500] Rent Facility [-$30,833] Utilities [-$1,666]

Rent Facility [-$30,833] Utilities [-$1,666]