How to Kill an Underperforming Project
When a new venture is failing, how you pull the plug can make all the difference.
By Andrew Corbett
Most of us know that new product development and the creation of internal new ventures can have a huge impact on both growth and profitability. As a result, to proceed with or terminate new initiatives is one of the most important but difficult decisions leaders must make when growing their firms. Most often, it is a temporal issue. Initiatives might be ended too quickly, resulting in unrealized potential, or might be held on for far too long, resulting in prolonged commitment to a losing course of action. Whatever the case, failed new ventures can constrain a company’s resources for decades and cost hundreds of millions of dollars.
Is there a silver lining anywhere in these clouds? Perhaps. Previous research suggests that failure—specifically in the context of new product development and corporate entrepreneurship—provides valuable learning opportunities, such as a greater emphasis on innovation processes. However, this research tells us very little about how corporate entrepreneurs make decisions to stop new venture projects and how they capitalize upon the potential learning from these failed initiatives.
Gaining better insight into these issues is what motivated research I conducted with colleagues during the past decade. One recent research project with Fortune 100 companies, all of which were attempting to create internal new ventures with breakthrough products, focused on finding patterns in how corporate entrepreneurs think and act. We were examining their mental models or what psychologists call “scripts.” We held on-site visits with each firm and conducted follow-up phone calls every six months for more than three years. Our analysis of nearly 70 hours of interviews and supplementary documents suggests that corporate entrepreneurs often make use of different termination scripts: specific ways of thinking and acting to kill a new initiative. Moreover, we found evidence of learning resulting from the deployment of each kind of termination script. We describe our findings below, as we believe they can help corporate practitioners—especially those who want to become more entrepreneurial in thought and action—make better decisions.
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About the Author
Andrew Corbett is an Associate Professor of Entrepreneurship at Babson College. Previously, he was the MBA Director and Associate Professor at the Lally School of Management & Technology at Rensselaer Polytechnic Institute in Troy, NY. He has also taught at the University of Colorado and Bentley College. Professor Corbett is also currently a General Editor for the Journal of Management Studies. Prior to working in academia he spent over a decade in marketing and strategic management positions within the media and publishing industry.