“It is better to have enough ideas for some of them to be wrong, than to be always right by having no ideas at all.” – Edward de Bono
Most people will spend hundreds of hours and thousands of dollars trying to keep a favorite business baby breathing. Yet studies say (and my experience confirms) that it’s almost never a good idea. After the time and money has been invested, the patient dies anyway.
Take Microsoft co-founder Paul Allen. Between 1999 and 2004, he learned the hard way about the futility of pumping money into a failing business venture. According to Business Week, Allen lost at least a third of his $30 billion fortune after five years of funneling money into tech and media companies that he believed could fulfill his “Wired World” concept of merging the Internet, cable TV, and entertainment. Of course, because of the tech bust and resistance from some of the individual companies he had invested in, it was evident early on that the “Wired World” would not come about, but Allen could not let his pet project go until he’d lost billions.
How can you protect yourself from losing all your cash to a much-loved idea? The smart thing to do is simple: Give your great idea a good test – as quickly and as inexpensively as you can. If it fails, discontinue it immediately.
That advice is sometimes hard to follow, because your ego – as well as the hard work and care of everyone who helped you make it happen – is invested in the project. In fact, according to a study by Eyal Biyalogorsky, William Boulding, and Richard Staelin of Duke University’s Fuqua School of Business, when presented with a case history of a hypothetical business project and given the choice of proceeding or shutting down, 52 percent of managers decided to keep the project going despite all the negative information they were given. One reason for this tendency, the researchers conjecture, is that decision-makers distort negative information until it seems like a good idea to keep moving forward. A manager’s initial positive feelings about a project overpower any problems that crop up.
Even though it’s difficult to kill something you care about, something into which you’ve invested time and money, sometimes it just has to be done.
A partner of mine and I recently had the sad task of putting to rest a business idea on which a small group of people had worked very hard. It was especially difficult in this case, because the “father” of the project was a friend of ours. He had given his all to get this baby going and was hoping it would be his big break, the opportunity for which he’d been waiting years.
It would have been a very difficult process – killing the project and telling him that we were doing it – but we had prepared him (and ourselves) by following some of the rules suggested below. As a result, we were able to do the nasty deed quickly and painlessly.
- The most important thing is to establish a serious benchmark in the very beginning, before launching the project. Using the data you have from past new-product launches, determine what sort of targets you want to set. If all previous successful launches began with a sales-response rate of five percent, for example, you should make your benchmark five percent or more. Why? Because things never seem to turn out as well as we hope they will – especially when those things are ideas we want to believe in. Set a conservative benchmark and then get all team members to agree that if you don’t reach it, you won’t go forward.
- If you can set two or three criteria for judging the project – two or three benchmarks – that would be even better. But be sure you have a way to average all the benchmarks or some other way to make the go-forward decision automatic.
- Throughout the early stages of a project, do everything you can to ensure the best possible outcome – but, all the while, remind your teammates (and yourself) that the market is sometimes enigmatic. Work for success but recognize the possibility of failure.
- If the project does fail, thank everyone who worked on it. Thank them as a group and individually.
- Have a post-mortem meeting to figure out what went wrong and what might be done differently “next time.”
- Make it very clear: Stopping this project is not the end of the world. In fact, by cutting it short, you have more time, energy, and resources to test another project, one that might succeed. Let everyone who worked on the project know that although you are sad that it didn’t work out, you are optimistic. You will find something that will succeed.
- If you pushed to have the project launched against everyone’s warnings not to, admit responsibility but don’t apologize and don’t act guilty. Idea leaders (people who come up with new ideas or promote them) are important not because they are always right but because they are so often willing to do what others would rather not even try.
- Act upbeat, especially if you don’t feel upbeat. Remind yourself that most of the greatest business leaders, like the greatest athletes and entertainers, failed more often than not. Keeping an upbeat way about you will do more than anything else to improve morale.
- Consider holding an Irish Wake. Invite team members to a pub to dance and sing and to tell stories about the dearly departed.