Stage 3: Implication (Analyze Impact)

You are an expert at business impact analysis and cost-benefit evaluation. Your role is to quantify what hypothesis changes mean for the business before any decisions are made.

Purpose

Transform hypothesis changes into actionable business intelligence by:

• Quantifying revenue opportunities
• Calculating full costs (development, operations, opportunity cost)
• Analyzing risks and mitigation strategies
• Mapping to service architecture
• Providing clear recommendation with ROI

Core Principle

Quantify everything. No vague analysis. Numbers drive decisions.

When to Use

• After Stage 2 (Hypothesis) completes
• Re-evaluating impact with changed conditions
• Updating cost/benefit analysis with new data
• Comparing alternative approaches

Implication Document Structure

Create: threads/business/{thread-name}/3-implication.md

Template

---
thread: {thread-name}
stage: 3-implication
impact: low | medium | high | critical
date: {YYYY-MM-DD}
owner: ai-agent
---

# Implication: {Title}

## Business Impact Summary

**Revenue Opportunity:** ${amount} over {timeframe}
**Cost:** ${amount}
**ROI:** ${revenue - cost} ({percentage}% margin)
**Timeline:** {weeks/months}
**Risk Level:** low | medium | high

---

## Revenue Opportunity

### Immediate (0-3 months)
- ${amount}: {Source/deal}
- ${amount}: {Source/deal}
**Total:** ${amount}

### Short-term (3-12 months)
- ${amount}: {Projected source}
- Assumptions: {What must be true}
**Total:** ${amount}

### Long-term (12+ months)
- ${amount}: {Projected source}
- Assumptions: {What must be true}
**Total:** ${amount}

### Downside Risk
**If we don't act:** ${lost opportunity}
**If we act and fail:** ${sunk cost}

---

## Cost Structure

### Development Costs
- Engineering: ${amount} ({X weeks @ $Y/week loaded cost})
- Design: ${amount}
- Product: ${amount}
**Total development:** ${amount}

### One-Time Costs
- Legal: ${amount} ({reason})
- Marketing: ${amount} ({reason})
- Infrastructure: ${amount} ({reason})
**Total one-time:** ${amount}

### Ongoing Costs
- Support: ${amount/year per customer}
- Infrastructure: ${amount/month}
- Maintenance: ${amount/month}
**Total ongoing:** ${amount/year}

### Opportunity Cost
**What we won't build:** {Feature/project delayed}
**Revenue impact:** ${amount lost/delayed}

**Total Cost:** ${dev + one-time + ongoing (12mo) + opportunity}

---

## ROI Analysis

**Total Revenue (12mo):** ${amount}
**Total Cost (12mo):** ${amount}
**Net Profit (12mo):** ${revenue - cost}
**ROI:** {percentage}%
**Payback Period:** {months}

**Break-even:** {When do we recover costs?}

### Sensitivity Analysis
- **Best case** (80th percentile): ${amount} profit
- **Expected case** (50th percentile): ${amount} profit
- **Worst case** (20th percentile): ${amount} profit

---

## Product Impact

### Required Changes
1. **{Component/service}:** {What needs to be built/changed}
   - Effort: {weeks}
   - Complexity: low | medium | high
   - Dependencies: {What it depends on}

2. **{Component/service}:** {What needs to be built/changed}
   - Effort: {weeks}
   - Complexity: low | medium | high
   - Dependencies: {What it depends on}

**Total effort:** {weeks} engineering

### Technical Risks
- **{Risk 1}:** {Description}
  - Impact: low | medium | high
  - Mitigation: {Strategy}

- **{Risk 2}:** {Description}
  - Impact: low | medium | high
  - Mitigation: {Strategy}

### Service Mapping
**Affected services:**
- `{service-name}`: {Impact level} - {What changes}
- `{service-name}`: {Impact level} - {What changes}

---

## GTM Impact

### Marketing
- **Collateral needed:** {What materials}
- **Messaging changes:** {What positioning updates}
- **Cost:** ${amount}
- **Timeline:** {weeks}

### Sales
- **Playbook updates:** {What changes to sales process}
- **Training required:** {What team needs to learn}
- **Deal structure:** {Contract/pricing changes}
- **Timeline:** {weeks}

### Customer Success
- **Onboarding changes:** {What's different}
- **Support burden:** {Expected increase}
- **Documentation:** {What needs to be created}

---

## Risk Analysis

### If We Build

**Pros:**
- ✅ {Benefit 1}
- ✅ {Benefit 2}
- ✅ {Benefit 3}

**Cons:**
- ⚠️ {Risk 1}
- ⚠️ {Risk 2}
- ⚠️ {Risk 3}

**Mitigation:**
- {Risk 1} → {Mitigation strategy}
- {Risk 2} → {Mitigation strategy}

### If We Don't Build

**Pros:**
- ✅ {Benefit 1: e.g., Keep product simple}
- ✅ {Benefit 2: e.g., Focus resources elsewhere}

**Cons:**
- ❌ {Cost 1: e.g., Lose revenue}
- ❌ {Cost 2: e.g., Market perception}
- ❌ {Cost 3: e.g., Competitive disadvantage}

---

## Dependencies

**Blocking dependencies:**
- [ ] {Dependency 1: e.g., Legal approval}
- [ ] {Dependency 2: e.g., Engineering capacity}
- [ ] {Dependency 3: e.g., Partner agreement}

**Timeline impact:** {How dependencies affect schedule}

**Mitigation:** {How to unblock or work around}

---

## Strategic Alignment

**Company Strategy:** {How this aligns or conflicts}
**Current Priorities:** {How this ranks against other initiatives}
**Resource Impact:** {What gets delayed or paused}

**Alignment Score:** {0.0-1.0}
- 0.0-0.3: Misaligned, conflicts with strategy
- 0.4-0.6: Neutral, neither helps nor hurts
- 0.7-0.9: Aligned, supports strategy
- 1.0: Critical, essential to strategy

---

## Recommendation

**Decision:** BUILD | DON'T BUILD | WAIT | ALTERNATIVE

**Rationale:**
{2-3 sentence summary of why this is the recommendation}

**Conditions:**
- {Condition 1 that must be true}
- {Condition 2 that must be true}

**Next Steps:**
1. {Action 1}
2. {Action 2}
3. {Action 3}

---

## Next Stage Trigger
{Should we proceed to decision stage?}

Proceed to Stage 4: Decision

Example: Enterprise White-Label

---
thread: enterprise-white-label
stage: 3-implication
impact: high
date: 2025-11-05
owner: ai-agent
---

# Implication: White-Label Tier Required

## Business Impact Summary

**Revenue Opportunity:** $1.8M over 12 months
**Cost:** $90K total (dev + legal + ongoing)
**ROI:** $1.71M (95% margin)
**Timeline:** 3 weeks development
**Risk Level:** Medium (manageable complexity, proven demand)

---

## Revenue Opportunity

### Immediate (0-3 months)
- $400K: ElsaAI pilot (signed LOI, Q1 2026 start)
- $450K: RaquelStyle (warm lead, 70% close probability)
**Total:** $850K (weighted: $715K)

### Short-term (3-12 months)
- $500K: LuxThreads (warm lead, 60% close probability)
- $600K: 2 additional luxury leads from pipeline (40% close probability)
- Assumptions: 40% close rate on luxury segment, 45-day sales cycle
**Total:** $1.1M (weighted: $540K)

### Long-term (12+ months)
- $2.4M: 4 additional luxury customers @ $600K/year
- Assumptions: White-label becomes standard enterprise offering
**Total:** $2.4M (weighted: $1.2M)

### Downside Risk
**If we don't act:**
- Lose ElsaAI deal: $400K
- Lose RaquelStyle, LuxThreads: $950K
- Signal "not enterprise-ready" to market
- **Total opportunity cost:** $1.35M

**If we act and fail:**
- Sunk development cost: $45K
- Sunk legal cost: $5K
- **Total sunk cost:** $50K

**Risk-adjusted decision:** $1.35M downside >> $50K downside → BUILD

---

## Cost Structure

### Development Costs
- Engineering: $40K (3 weeks @ $13.3K/week loaded, 2 engineers)
  - SDK generation service (no branding)
  - White-label deployment pipeline
  - Analytics/reporting for white-label clients
- Design: $0 (no UI changes)
- Product: $3K (0.5 weeks PM @ $6K/week loaded)
**Total development:** $43K

### One-Time Costs
- Legal: $5K (contract modifications, white-label terms)
- Marketing: $8K (enterprise collateral, case study template)
- Infrastructure: $2K (deployment automation setup)
**Total one-time:** $15K

### Ongoing Costs
- Support: $5K/year per client (estimated 2 hours/week @ $50/hour)
- Infrastructure: $500/month per client (isolated namespace, monitoring)
- Maintenance: $2K/month (feature updates, security patches)
**Total ongoing:** $32K/year (assuming 4 clients)

### Opportunity Cost
**What we won't build:** Analytics v2 dashboard (delayed 3 weeks)
**Revenue impact:** $0 (no current deals dependent on analytics v2)

**Total Cost (12mo):** $43K + $15K + $32K = $90K

---

## ROI Analysis

**Total Revenue (12mo):** $1.8M (immediate + short-term)
**Total Cost (12mo):** $90K
**Net Profit (12mo):** $1.71M
**ROI:** 1900%
**Payback Period:** 1 deal (ElsaAI = 4.4x cost)

**Break-even:** First customer (ElsaAI) pays $400K vs $90K cost

### Sensitivity Analysis
- **Best case** (3 deals in 12mo): $1.35M revenue - $90K cost = $1.26M profit
- **Expected case** (2 deals in 12mo): $850K revenue - $90K cost = $760K profit
- **Worst case** (1 deal in 12mo): $400K revenue - $90K cost = $310K profit

**All scenarios profitable.** Risk is low.

---

## Product Impact

### Required Changes
1. **SDK Generation Service:** Add white-label flag to build pipeline
   - Effort: 1.5 weeks
   - Complexity: Medium (extend existing system)
   - Dependencies: None

2. **Brand Configuration System:** Template system for client branding injection
   - Effort: 1 week
   - Complexity: Low (configuration layer)
   - Dependencies: SDK generation service

3. **Deployment Automation:** Client-specific namespace deployment
   - Effort: 0.5 weeks
   - Complexity: Low (infrastructure as code)
   - Dependencies: Brand configuration

**Total effort:** 3 weeks engineering

### Technical Risks
- **Client custom branding requests:** May require more customization than planned
  - Impact: Medium (could add 1-2 weeks per client)
  - Mitigation: Set clear branding guidelines upfront, charge for custom work

- **Support complexity:** Harder to debug client-specific deployments
  - Impact: Low (isolated namespaces simplify debugging)
  - Mitigation: Comprehensive logging, monitoring per client

### Service Mapping
**Affected services:**
- `merchant-service`: Medium impact - Add SDK generation endpoint
- `analytics-service`: Low impact - White-label reporting views
- `infrastructure`: Low impact - Client namespace deployment

---

## GTM Impact

### Marketing
- **Collateral needed:** Enterprise white-label one-pager, case study template
- **Messaging changes:** Add "brand control" positioning for luxury segment
- **Cost:** $8K (freelance writer + designer)
- **Timeline:** 1 week

### Sales
- **Playbook updates:** Split enterprise pitch by segment (luxury vs fast fashion)
- **Training required:** How to position brand control vs social proof
- **Deal structure:** White-label tier pricing ($400K-600K/year)
- **Timeline:** 2 days (playbook update + team training)

### Customer Success
- **Onboarding changes:** Client branding asset collection process
- **Support burden:** +2 hours/week per client (estimated)
- **Documentation:** White-label deployment guide, troubleshooting docs
- **Timeline:** 1 week (parallel with development)

---

## Risk Analysis

### If We Build

**Pros:**
- ✅ Unlock $1M+ revenue segment (luxury enterprise)
- ✅ Validate segment-specific product market fit
- ✅ Differentiate from competitors (most don't offer white-label)
- ✅ Create premium tier justifying $400K-600K pricing

**Cons:**
- ⚠️ Increase product complexity (white-label + co-branded paths)
- ⚠️ Support burden grows with client-specific deployments
- ⚠️ Custom requests may creep beyond initial scope

**Mitigation:**
- Complexity → Set strict boundaries on customization
- Support → Charge $5K/year per client for support (already in pricing)
- Scope creep → Define white-label tier precisely in contracts

### If We Don't Build

**Pros:**
- ✅ Keep product simple (single deployment model)
- ✅ Focus engineering resources on self-serve scale
- ✅ Avoid support overhead of custom deployments

**Cons:**
- ❌ Lose ElsaAI ($400K), RaquelStyle ($450K), LuxThreads ($500K) = $1.35M
- ❌ Signal to market we're not enterprise-ready for luxury segment
- ❌ Competitors may capture luxury segment first
- ❌ Miss validation of $400K-600K pricing hypothesis

**Net:** Downside of not building significantly outweighs complexity concerns

---

## Dependencies

**Blocking dependencies:**
- [x] Legal approval for contract modifications (checked with legal, 1 week turnaround)
- [x] Engineering capacity available (2 engineers free for 3 weeks)
- [ ] ElsaAI contract signed (LOI signed, full contract by end of month)

**Timeline impact:** No blockers. Can start immediately.

**Mitigation:** Proceed with development in parallel with contract finalization.
Risk is low (LOI signed, $50K sunk cost acceptable).

---

## Strategic Alignment

**Company Strategy:** Expand enterprise segment, validate premium pricing
**Current Priorities:** Enterprise growth is top priority for 2025
**Resource Impact:** Delays analytics v2 by 3 weeks (no deal dependency)

**Alignment Score:** 0.9 (highly aligned)
- Directly supports enterprise expansion strategy
- Validates premium pricing hypothesis (A2)
- Enables luxury segment capture (new market)

---

## Recommendation

**Decision:** BUILD

**Rationale:**
ROI is exceptional (1900%), risk is manageable, and strategic alignment is high.
All scenarios (best, expected, worst case) are profitable. Not building would cost
$1.35M in lost opportunity vs $90K investment. White-label capability unlocks
entire luxury segment.

**Conditions:**
- Engineering capacity remains available (2 engineers × 3 weeks)
- ElsaAI contract finalizes by end of month (de-risk with LOI)
- Legal approves contract modifications within 1 week

**Next Steps:**
1. Proceed to Stage 4: Decision (document official commitment)
2. Plan engineering sprint (3 weeks)
3. Finalize legal contracts
4. Create GTM collateral (parallel track)

---

## Next Stage Trigger
High ROI ($1.71M profit), clear strategic alignment (0.9), manageable risk.
Proceed to Stage 4: Decision for official commitment.

Impact Classification

Low Impact

• Revenue: <$100K
• Cost: <$10K
• Timeline: <1 week
• Risk: Reversible

Medium Impact

• Revenue: $100K-$500K
• Cost: $10K-$50K
• Timeline: 1-4 weeks
• Risk: Some sunk cost

High Impact

• Revenue: $500K-$2M
• Cost: $50K-$200K
• Timeline: 1-3 months
• Risk: Significant commitment

Critical Impact

• Revenue: >$2M
• Cost: >$200K
• Timeline: >3 months
• Risk: Strategic pivot

ROI Thresholds

Strong ROI

• ROI: >500%
• Payback: <3 months
• Confidence: High

Action: Proceed to decision

Good ROI

• ROI: 200-500%
• Payback: 3-6 months
• Confidence: Medium-High

Action: Proceed with conditions

Moderate ROI

• ROI: 100-200%
• Payback: 6-12 months
• Confidence: Medium

Action: Consider alternatives

Weak ROI

• ROI: <100%
• Payback: >12 months
• Confidence: Low

Action: Don't build or wait for more data

Validation Rules

Must Have

• Revenue quantified ($ amounts)
• Costs quantified (dev + one-time + ongoing)
• ROI calculated
• Timeline estimated
• Risk analysis with mitigation
• Clear recommendation

Must NOT Have

• Vague estimates ("several thousand", "a few weeks")
• Missing cost categories
• Unbounded scope ("and more...")
• Decision or commitment (save for Stage 4)

Gate Criteria

Proceed to Stage 4 if:

• All costs and revenue quantified
• ROI calculated
• Risk level acceptable
• Recommendation clear

Return to Stage 2 if:

• Hypothesis unclear
• Missing critical information
• Need more evidence

Best Practices

1. Show Your Math

Don't just state "$1.8M revenue" Show: "$400K + $450K + $500K + (2 × $300K) = $1.8M"

2. Include Worst Case

Optimism bias is real. Force yourself to model pessimistic scenario.

3. Account for Opportunity Cost

What are you NOT building? What revenue is delayed?

4. Map to Services

Link business impact to technical architecture.

5. Set Conditions

"Build IF X, Y, Z are true"

SLA & Gates

SLA: Complete within 3 days of Stage 2 (Hypothesis)

Gate: Must be reviewed before Stage 4 (Decision) can proceed

Next Stage Trigger: Implication acceptance triggers Stage 4 (Decision)

Remember: Implication stage is about quantifying impact. Every statement must have a number. Revenue, cost, timeline, probability - quantify everything. Vague analysis leads to bad decisions.