Knowing when to pull the plug!

Part 1

With any corporate venturing program, one of the most important factors that will determine financial returns is the ability to stop investing in projects that simply won’t work out at all, or will be inconsequential to their parent company, even if they do succeed.

Here’s a set of questions to revisit when evaluating your portfolio of new ventures:

A portfolio view of growth options requires the ability to stop!

A big mistake we see organizations make when they try to push into new territory is that they try to apply the same logic to a well-understood, repeatable business that they do to an uncertain new one. One of the most significant ways this happens is that once an idea has made it through the corporate approval process, its proponents and champions assume they are going to bring it to commercial launch.

It’s smarter to realize that many projects that might have sounded good at the drawing-on-a-napkin stage aren’t going to go on to be successful businesses. It doesn’t mean they weren’t useful, it just means that particular direction isn’t going to work out.

So here is Part 1 of my list of 12 topics I suggest you consider as you review the progress of your corporate innovation programs. See also this great article by our friends at Innosight on another approach to dealing with potential Zombie projects.

1. We have learned that it is going to be much more difficult or expensive to achieve our original project goals.

The old joke about venture capital investments is that it always takes twice the time and double the investment that you thought to achieve success. It’s well worth asking whether, given the new information you are obtaining by working on the project, the original objectives are still attainable.

While its parent companies aren’t saying, this may well be one of the issues that led to the unceremonious discontinuationof the Drinkworks platform.

2. We have learned that it is going to take much more time to achieve…