One of the rallying cries of innovation is to fail fast. And many large organizations have gotten quite good at it, as long as we’re talking about low-fidelity MVP fast. But what happens when a concept passes the MVP test, and the enterprise decides to do a commercial launch? That’s when a reluctance to declare failure creeps in. When we’re too patient, too tolerant, and stop thinking critically. Despite all the newly-learned virtues of failing fast, we somehow end up failing slow. And that’s how zombie projects are created.
Why Failing Slow Happens
How do so many innovation projects stay alive for so long without meaningful progress toward commercial viability? Here are some reasons large enterprises let zombies walk in their midst.
- We anticipate early failure but not middle failure
- We set success metrics, but not failure metrics
- We overvalue sunk costs (and undervalue people and teams)
- We have weak pivot muscles, and weaker shelve muscles
Zombie ventures are human failures, not technical ones. To overcome this failure mode, we have to meet humans where they are, with guardrails and rubrics that support clear-eyed investment decisions, and a keen focus on avoiding zombies. Here’s what I mean:
1. Plan to succeed – but also plan to fail
2. Set your success and failure metrics up front
3. Build your pivot and shelve muscles
Let’s unpack each of these mechanisms that large enterprises can use to stave off the zombie innovations that are lurking in the shadows.
1. Plan to succeed – but also plan to fail
We typically say the right things about tolerating failure, but it also helps to spell out the math. Here is an example arc of a corporate innovation studio over five years. The table below reflects a healthy portfolio mix, with resources distributed between the top and bottom of the funnel. Notice that nearly half of the new ventures they start can expect to be shelved (i.e., to fail).
If we invest for success, we also have to fund the inevitable failures that help us get there.
2. Set your success and failure metrics up front
Every innovation needs a compelling commercial thesis to get funded. The best commercial thesis will include four mechanisms that help us know whether we’re succeeding or failing. We think of these as the mutual agreements between the team and the investors:
Why are these mechanisms key? Because they help us know when to pivot. You should pivot when you’ve had a major step backward in your confidence because you’ve:
- Had an external event that eroded your faith in the North Star,
- Invalidated a make-or-break assumption,
- Failed to reach a milestone, and/or
- Tripped one of the tripwires.
Tripwires are the most often omitted of these four elements. If the milestone defines a desired success condition, the tripwire serves as its photo negative, describing a minimum threshold and timing that indicate imminent failure. Tripwires save us from throwing good money after bad.
3. Build your pivot and shelve muscles
Pivoting and shelving are two core skills you need for successful innovation. Why? Because if you can’t pivot, you only have a narrow path to success, as whatever you start with has to be exactly right. If you can’t shelve, you’ll end up with low-traction projects that drain resources that should go toward more promising opportunities – zombies!
Pivot (v): To break away from the core focus of a venture in some fundamental way and pursue a new way forward.
Pivots are a test of will and skill for the whole team. It’s human nature to get a fixed idea about what we hope to create, but most successful solutions don’t turn out exactly as planned. We recommend normalizing the pivot by naming it and planning for it as an eventuality.
“A pivot is a change in strategy without a change in vision.”
Eric Ries
Pivoting doesn’t have to be as scary as it sounds, as it can be limited to one key aspect of the project. But innovation success does require us to master its art. Here are the steps to a successful pivot:
- Assess the failure condition and determine the severity of the shortfall.
- Reorient yourselves to the North Star and determine the amount of pivot room it allows.
- Remind your team that your role is to test the hypotheses and be good stewards of scarce investment resources.
- Generate pivot options while keeping these three possible responses in mind:
- Persevere
- Pivot
- Shelve
- Test the best few options. Let the test results drive the final investment decision.
Shelving is the third and final option when we’ve hit an obstacle – the last line of defense against the zombie project.
Shelve (v): To stop work on a venture that is failing to show adequate progress toward milestones.
Zombies exist because enterprises are very slow to shelve a concept once “the technology has been proven.” The team almost never wants to give up – which is admirable. But those people are very valuable and deserve to be put on a viable opportunity.
It is up to the venture-building governance structure to allow ventures to be shelved by:
- Setting expectations about the likely need to shelve ventures,
- Setting objective milestones and tripwires that define the minimum progress that is investable,
- Making a skillful attempt to pivot,
- Making a clear, explicit decision to shelve, and
- Demonstrating that while the venture failed to get traction, the team successfully tested the assumptions.
When you shelve a concept, it’s because the team succeeded in testing the hypotheses, but the venture failed.
When you shelve a concept, the advice to “celebrate failure” is unrealistic. It’s natural for a team to be disheartened when testing fails, or when a project must end. Take time to mourn the end of the venture, but harvest the lessons learned and keep the concept documentation available. You never know when conditions will improve or another project will offer you a chance to apply your work to a new challenge.
Putting it All Together
There are good reasons why large companies tend to produce projects with low commercial viability. As stewards of scarce resources, innovation leaders must be proactive in preventing these zombie projects from derailing our success. Just as VCs use a strict investment discipline for their portfolios, we recommend these three mechanisms to guide the way:
1, Plan to succeed – but also plan to fail
2, Set your success and failure metrics up front
3, Build your pivot and shelve muscles
You’ll see your luck improve almost immediately with these practices, because luck favors the prepared.
Clay Maxwell is Managing Partner at Peer Insight.
