Sometimes It’s What You Don’t Work On That Counts

In the last post we talked about breakthrough innovation.  Over the many years I have managed large R&D portfolios, sometimes the most impact is obtained by carefully deciding what not to work on.  The majority of the planning and early project evaluations only look at what projects to add to the plan.  But how do you weed out projects that just won’t deliver?  This takes a strong will and a team focused on the long-term organizational goals.

In one instance, my teams were working on a second generation product (the first product was a game-changer and had significant market share) when a competitor came in with a “me-too” product with both a significantly lower price and better performance.  We got blindsided.  Why would a competitor come in with better performance and a lower price?  To grab share.  And you know what our customers asked for…a lower price on our product.

So what would you do with the current second generation R&D project?  One  position would be to shut the project down and re-allocate the limited R&D resources to another project with better ROI.  In all organizations there are a finite number of R&D resources, so maximizing the financial impact of the R&D spend is a key objective of the R&D management team.  But the revenue from the new product launch was already booked into the operating plan, so from the CEO’s perspective, no way would we shut the project down.  The problem was the projections for the operating plan were using much higher prices (i.e. before the competitor changed the landscape) so even if we successfully launched we wouldn’t “make the numbers”.

So what would you do?

So how did this all play out?  I took the long-term vision and advocated we shut the project down and move the resources to a higher margin product development project.  I didn’t prevail in that discussion.  Turns out the short-term usually wins (and you guessed it, we missed our numbers for that product line).

I remember reading about Steve Jobs at Apple saying its not about what you work on, but more importantly what you don’t work on.  There is a lot of wisdom in that philosophy.  Sometimes we get so caught up with our projects that we just can’t cut the cord when an unexpected event occurs.  It could be a new competitor or product, a patent that issues, or a new regulatory legislation.  There will always be events we cannot anticipate but can change the game instantly, so we have to have the guts to respond and make some tough calls.