As leaders, all of us have had the experience of starting new initiatives that, in the end, never went anywhere. Maybe it involved launching a new product, service offering, or a new target customer base. But as soon as it evolved from a mere idea into something tangible, where you actually committed people and financial resources to it, it got stuck. You just never got moving out of first gear. But rather than call an end to that project, most organizations continue to invest in keeping them going, month after month, year after year, with nothing to show for it. Let's call these insidious things Zombie Projects, since they are truly neither alive nor dead and seemed doomed to walk the Earth for eternity. Most of us are just really bad at killing these kinds of dead-end projects even though they become a particularly vicious drain on resources that could be more profitably deployed elsewhere. Worse still, most organizations have more than a few zombies in their businesses.
But great CEOs take a very different approach. Rather than waiting and hoping that these projects work out over the long run, the best CEOs ask a critical question early on that allow them to know whether they need to kill a zombie project on the spot.
The question is, "What must be true for this project to be successful?"
Let's consider an example where our company is launching a new product - a high-end digital music subscription aimed at college students. The challenge, though, is that our product and marketing people agree that we need to charge $30 a month to make money on the service - which is priced above the going market rate.
While some of us might just take the plunge and launch the product and then hope for the best, great CEOs hit the pause button and ask what must be true before they will give additional money past the exploratory phase. In our example, our CEO might ask questions such as:
- Can we access social media and magazines that will allow us to effectively and economically reach our target customers?
- *Will college students pay above-market rates for our service?
If either of these two things isn't true - there isn't a business. In our sample case there are probably few other things that must be true as well, but generally no more than 4-5 items control the success of a project.
When a great CEO doesn't get satisfying answers to questions like these, then he or she knows the business don't have any legs to stand on - so he or she will kill the project on the spot by not allocating any more money or talent. The beauty of this approach is that you can get answers to these questions by conducting small and inexpensive tests to give you a sense of whether your new product will be successful or not.
This is also the exact approach that top venture capitalists take with their investments. Top VCs are always asking questions that help them determine whether a company is worth investing more resources and capital in - or not. If they don't get satisfying answers to questions like we posed above, then top VCs simply walk away rather than keeping a failing company on life support.
One of the advantages VCs have over, say, CEOs, is that they can be more clinical about their analysis - they are more removed from the day-to-day operations of the company. The trick is that, as a CEO, you need to be willing to look at your new projects with an objective eye and not over-think what you believe you and your teams are capable of. Obviously, no one likes to fail. But that's why it's so critical to head off zombie projects as early as you can.
While that kind of filter might limit the number of cool ideas in your company's innovation funnel, it will also vastly increase your odds of successfully launching your next game-changing product or service. So look around your business and see if you have some money-sucking projects that have to be put out of their misery to make room for some vibrant new ones with higher success rates. Isn't that worth killing off a few zombies along the way?
Jim is the author of the best-selling book, "Great CEOs Are Lazy" - grab your copy to today on Amazon!