What the heck is a feasibility study anyway?

Recently, I was talking to a former client who owns a rather large company, and he was asking for advice on a “report” with information to help his management team decide on a product expansion project. “You mean a feasibility study?” I asked. His response? “Well, no. We just (I despise the word ‘just’ in these instances) need information about the potential market size, the tech needed with a delta analysis with what we already have, potential operational roadblocks, target customer demographics, and stuff (not a fan of “stuff” either) like that.” So…. It turns out they need, you guessed it, a feasibility study. Though after another conversation I realized a “report” sounded less expensive than a “feasibility study” to this friend. I told him I was happy to help with the project, no matter what he called it.

When I mentioned this to someone else later in the day, she asked what a feasibility study was, specifically the contents. So, I thought I’d write a quick post to explain my view.

A basic, simple feasibility study examines the viability of a business idea. Basically, the study provides whatever data and information needed to help leaders determine if the idea (project) could even work, and if so, what would the probability of success be? Think of it as the homework done in advance of a test.

I’m a big fan of feasibility studies for a few reasons. However, I mostly like them because the formality of the study requires a significant amount of work, thought, data collection and analysis, and a final evaluation. So, a feasibility study first gets everyone on the same page, and then allows for debate and then informed decision making. Sure, there’s still risk, there always is. But, at least there is some degree of proper analysis made in advance of starting a project. Done properly (and I stress “properly”) a good feasibility study should save you time and money and it should help mitigate risk.

Now, don’t get me wrong. I’m NOT a fan of “analysis paralysis”. You know, when a leadership member or team looks at data, over and over, asks the same questions multiple times and just sits on an approval, likely because the fear of failure is overwhelming. This constant kicking of the can is a sure way to demotivate the team, not to mention ensure you miss business opportunities. I AM all for, as I’ve previously written, telling companies to “Fail Cheap. Fail Quickly. Fail Often.” (see post on the topic). But, that doesn’t mean doing it blindly with reckless abandon. For the record, I find that in Corporate America, many times feasibility studies are used as “Get out of Jail” cards meaning if the project does fail for any reason, the leadership team can blame the consultant. But ok, I’m confident with the work my team and I do, so this doesn’t concern me.

The feasibility studies I do evaluate both short and long-term views and include enough data so the client can evaluate all risks. My feasibility studies also include data and points of view on why NOT to do a project. This might be because of market sizing and the related opportunity, the operational aspects of the project and an analysis of resources needed, including staff and cash. I also like to include a confidential aspect of the study, meant only for the highest-ranking person who will approve the project. In this section, I evaluate he internal team(s) and give my POV on an estimation of their belief in the project and their related support. However, in general, since each project is different, so are feasibility studies. When considering components of a study, I normally start with the following list:

1. Executive summary: For me, this is always plain-speak explaining the details of the project and any related company information.
2. The current market as well as any new target market.
3. Operations and Technology: What exists, what is required and an analysis of the delta and how to overcome it.
4. Organizational chart – again, what do we have and what will we need.
5. A detailed marketing strategy.
6. Project timeline and very clear deadlines.  
7. Financials for the project, and all related assumptions.
8. Potential Strategic Partnerships & Advantages (especially around speed-to-market and risk mitigation).
9. Final recommendation.
10. Sources. Wherever there’s data, an infographic, a chart, etc. a source is listed.

I’ve created and cooperated on many feasibility studies over the years, and I’ve read hundreds. It is important everyone remembers (consultants and clients alike) that while the best feasibility studies are fairly accurate, the implementation of the project is critical. With poor implementation, you’re sure to fail. So, for me, feasibility studies are critically important because they get everyone on the same page and allows the company to get buy-in from all stakeholders. Then, when the boss says “GO” – everyone knows in which direction.

If you have any comments on feasibility studies, leave me a comment. If we’re not connected on LinkedIn or you’re not following my blog, let’s fix that right now.