Community Forum – Tell us about your termination metrics

Our organization wants to drill down on what metrics companies actually use when making project termination decisions.  We have good entrance and selection criteria, but we don’t have effective criteria or tools to optimally allocate resources.  We know a lot of metrics are captured, but what is the most important in your decision making?  Results below: 

2. Please explain why some of your organization’s projects are not terminated in a timely manner, but should be.

• Lock-in effect: Too high effort to apply for new projects, loss of funding for groups, no incentive for to cut off their funding source.
• Poor oversight, reluctance to kill as it takes a long time to get the budget for a project, lack of courage (concern about long term impact to career)
• Unexpected roadblocks or development results.
• Disconnect between market pull and projected impact. Lack of response on lighthouse customer validations.
• Most of our terminations are killed early. For the few that make it to late stage before being terminated, the most common causes are unanticipated changes at the customer and improperly validated value propositions.
• Pet project, lack of gate review rigor.
• The ultimate decision is in hands of 1 person, business owner, and their delay in realizing and deciding project is not a fit.
• Our process is aimed at removing uncertainty and learning along the way. Often discrete projects would be part of a larger theme, but the project itself represents a “small bet” and is often carried out to completion. While we may suspend moving forward in a given theme, we almost always complete projects unless some operational issue arises preventing progress.
• Eternal optimism of the project sponsor or champion; slow to recognize that some key assumptions are no longer true, etc.
• We pursue the technology, but cannot get it commercialized, and sometimes spend too long with the tech before cancelling.
• People being too married to their projects.
• Usually a commitment to one customer has been made that we do not want to break.
• Sunk cost fallacy; “we have to do something”
• Poor communication from customer (no feedback is better than bad feedback), failure to do “last experiment first”

4.  Please describe a specific example of how your organization used the key metrics listed above to make a termination decision.

• Strategy revision led to project termination.
• Product was being developed. In gate review, request for more customer insight was requested. Finding: customer need was not well understood and the product would not meet the customer expectations.
• Size of delivered profit and volume targets in 5 years do not match the current forecast.
• A regional project that cannot be leveraged/scaled into other regions is challenged to make room for broader opportunities. We have guardrails for project count; projects with lower strategic alignment or limited scalability, even if they might be “good” projects as far as ability to win is concerned, might be killed or at least put on hold to make room for bigger/better projects.
• Recently reviewed our total portfolio of projects related to improving product sustainability.  We assessed all projects for technical feasibility, market potential and environmental impact and terminated several, while adding resources to others.
• A fresh look during Gate meetings indicated any of above choices are “off”.
• Our dominant criterion is the level of commitment of our lead customer – if that changes, a project is at high risk of termination.
• Higher priority projects pull resources from incubation efforts, forcing cancellation.
• During a gate review, reviewing updated data on market size/potential sales – revealing a much smaller opportunity that originally thought.
• Numerous competitive products launched while our product was in development; size of market significantly diminished.
• We had a project with a customer in a large market which was new to us, but adjacent.  Our customer initially had interest in the project and we demonstrated technical success, but over time the customer added success criteria which made it difficult to continue, especially since this was a new market for use.

Relevant IRI resources:

• How Companies Can Benefit from Brilliant Failures