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 I T wall that you never want to
scale again? Do you need better or
di;erent 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.
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 COUN TERS
Make the finance sta; 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 o; the game
in the fourth quarter.
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 o; 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.
DEFINE THE FINISH LINE –
Before the team is o; 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?
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.”
It’s a pet project. But you
have to know when to kill it
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. —KATE ROCKWOOD
SEPARATE PROJEC TS 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.
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LEAD 56 - INC. - JULY/AUGUS T 2017
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Ready to Let Go
