How to kill a pet project the right way

Inc. (USA) - - DEPARTMENTS | CONTENTS - —KATE ROCK­WOOD

NO ONE LAUNCHES AN INI­TIA­TIVE

as­sum­ing it’s go­ing to fail. “We start with truly high hopes for any project,” says Meir Stat­man, a pro­fes­sor of fi­nance at Santa Clara Univer­sity and au­thor of Fi­nance for Nor­mal Peo­ple. “But then things hap­pen.” The mar­ket shifts, a ri­val crowds you out, or some mi­nor-seem­ing tech hur­dle reveals its Gor­dian-knot na­ture. But that doesn’t mean it’s easy to just walk away. “It’s very hard psy­cho­log­i­cally for peo­ple to let go of sunk costs,” Stat­man says. “As long as a project’s still alive, there’s some hope. Once it’s ter­mi­nated, re­gret floods in.” Be­cause of what psych ex­perts call re­gret aver­sion, we tend to dig in and throw good money af­ter bad. Learn­ing how to fail is key to pro­tect­ing your busi­ness from un­suc­cess­ful projects that just won’t die.

DE­FINE THE FIN­ISH LINE –

Be­fore the team is off and run­ning, fig­ure out what they’re rac­ing toward. What does suc­cess look like? What are the bud­get and sched­ule ex­pec­ta­tions? What ad­van­tages do you have over the com­pe­ti­tion, and what re­mains a question mark or draw­back? “Rush­ing to em­brace a project of­ten means skipping that ob­jec­tive as­sess­ment,” Stat­man says. But with­out pa­ram­e­ters de­fined up front, it’s harder to gauge whether progress is be­ing made. When an ini­tia­tive’s goals are squishy or ill-de­fined, there’s a ten­dency toward re­vi­sion­ist his­tory. When we said get to mar­ket by sum­mer, didn’t we re­ally mean Septem­ber?

EN­COUR­AGE RED FLAGS –

Peo­ple in the trenches, slog­ging day to day on the project, will be the first to feel the tremors that some­thing is amiss. So “the lower down the right de­ci­sion is made to ter­mi­nate a founder­ing project, the bet­ter off ev­ery­one is go­ing to be,” says Stat­man. If em­ploy­ees fear that speak­ing up will irk the boss, they’ll stay mum. Stat­man points to Ther­a­nos, the blood-test­ing startup that fa­mously im­ploded: Al­legedly, em­ploy­ees who ex­pressed doubts about the project were rep­ri­manded or fired. It’s crit­i­cal to en­cour­age in­tel­lec­tual hon­esty to counter the in­stinct to keep bad news un­der wraps. “Explain that they should be the first to tell you if this is not go­ing as hoped, and that you’ll even re­ward them for be­ing forth­com­ing,” Stat­man says.

IN­VITE THE UNINVESTED –

You need to eval­u­ate every project coldly. That’s hard to do if you green-lighted one and the out­come is dis­ap­point­ing. Stat­man cites a 1976 study in Or­ga­ni­za­tional Be­hav­ior and Hu­man Per­for­mance in which half of the sub­jects were told to in­vest $ 10 mil­lion in one of two di­vi­sions of an un­der­per­form­ing com­pany. Then, all sub­jects were given data show­ing that, af­ter those in­vest­ments, one division’s busi­ness de­clined while the other’s im­proved, and were told to in­vest up to $20 mil­lion in one of them. The re­sult? Those who had al­lo­cated the orig­i­nal $10 mil­lion to the ail­ing division spent more of the sub­se­quent $20 mil­lion on that same division than any other group did on ei­ther division. To counter bias, Stat­man says, “you need peo­ple in the re­view process who aren’t emo­tion­ally at­tached to the project.”

WALK ON THE SUNNY SIDE –

There’s noth­ing wrong with a pos­i­tive ap­proach. “At the mile­stone meet­ing, start by elic­it­ing all the good ar­gu­ments for con­tin­u­ing the project—and not only from the team, but also from the C-suite and fi­nance,” Stat­man says. By fo­cus­ing on the wins (a bit of IP, a fu­ture idea), you take the team out of a de­fen­sive pos­ture and re­as­sure them that no one’s ques­tion­ing their skill or mo­ti­va­tion. “Then,” he adds, “when the head of the re­view com­mit­tee says, ‘Now let’s hear pos­si­ble rea­sons we might want to ter­mi­nate,’ the team could be re­lieved to share some mar­ket shift or in­sur­mount­able tech prob­lem.”

EMBED THE BEAN COUN­TERS

Make the fi­nance staff part of the team. It’s easy for project cham­pi­ons to dis­miss them as naysay­ers. But if you can get both sides to know each other as peo­ple—in project meet­ings, say—“they’re more likely to co­op­er­ate and less likely to clash,” says Stat­man. You need a score­keeper to keep ev­ery­one cur­rent, not a ref to call off the game in the fourth quar­ter.

SEP­A­RATE PROJECTS FROM PEO­PLE –

Is it pos­si­ble to pull the plug on a pet project—and get pro­moted? It should be. When the project leader sees her ca­reer tra­jec­tory tied to a project’s suc­cess, she might work week­ends to nail that tight dead­line. But she might also keep fran­ti­cally pump­ing fresh blood into a corpse that should have been laid to rest months be­fore. “Be clear from the start that you be­lieve in the project and—sep­a­rately—you be­lieve in the team,” says Stat­man. If you do kill the ini­tia­tive, openly ac­knowl­edge the work the team put in.

PRE­VENT FU­TURE ZOM­BIES –

As painful as a post­mortem might be af­ter you’ve pulled the plug on a months- or years-long project, you have to do one or you risk re­peat­ing the fail­ure, says Stat­man. Did you un­der­es­ti­mate a com­peti­tor? Was there a mar­ket shift that should re­shape your port­fo­lio? Did you hit an IT wall that you never want to scale again? Do you need bet­ter or dif­fer­ent tal­ent? “The re­gret and dis­ap­point­ment makes peo­ple want to avoid think­ing about it, but you have to bat­tle that in­stinct,” he says. Then, on to the next thing.

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