4 Key Questions To Ask To Help Identify When To Stop Investing In An Innovation

When to close the door on innovation? When to stop investing in an innovation? Every organization and person has their own risk tolerance levels. The decision to stop pursuing an innovation depends on both the organization and the champions of the project. The innovation project leader has a large impact on how long an innovation will be invested in – based on their own belief in the project, their experience, risk tolerance, passion, energy levels, flexibility and ability to accept they may be on the wrong track.

There are 4 key questions to ask to help identify when to stop investing in an innovation:

1)      What is going on in the market?

What is going on in parallel industries and how does your product fit with these?

For example in the mobile application space there aren’t too many developers creating games or applications for Blackberrys (created by RIM – Research In Motion) which has an impact on the attractiveness of the phones to potential customers. RIM has been working hard to entice developers to program for their platform for quite some time to overcome this challenge. At the same time, NFC is growing quite rapidly for mobile wallets and RIM has brought their strength in security to create a method for handling secure mobile payments for Visa credit card systems.  This will give them an advantage in creating innovative and trusted applications for retailers, banks and credit payment systems.

For the music industry it wasn’t even a parallel industry that changes their business model. It was an online file sharing system that brought about innovations in how this industry sold its products. It is vital to monitor the market and analyze potential impact of the changes in the market to your organization.

2)      What are competitors doing?  

Are competitors going in a completely different direction for valid reasons?  How different is it than what is being offered in the market? If it is perceived as similar to existing already in the market you should have branding behind you. However, if your innovation is similar to an existing product already in the market than it isn’t an innovation either.  While you don’t want to copy what competitors are doing, especially if you want to stand out, there is a need to follow the competition to ensure you’re not completely off the mark.

Recently the iPhone 5 was released without NFC functionality (for mobile wallet). While Apple is known for being extremely innovative and having a great grasp of their customers and they had reason for wanting to expand their own ecosystem by excluding NFC functionality I think they may have missed out on a huge market opportunity. All of their major competitors are bringing in NFC functionality and creating a stickier relationship with their customers through this functionality. The iPhone5 wasn’t as successful as anticipated and part of that was the lack of perceived increase in value. With the addition of NFC this may not have been the case, especially in countries where NFC is cropping up everywhere.

3)      How much time and money do you have left?

This is a bigger factor for smaller companies but in large organization you may have less leeway in keeping the project going based on the company’s required rates of return and acceptable development timelines.

Going back to the Blackberry example, their latest operating system is due to be released at the end of January 2013. It was originally slated for mid-2012 for release. Although RIM isn’t doing as well in the market place, they had the finances available to push the release date further out to ensure the product was done well.  Time will tell if it was the right decision and so far from early reviews it may have been the right choice.  Other companies with fewer finances would not have been able to afford either continuing with the innovation or delaying the release.


4)      How disruptive is the innovation?

If you are pursuing disruptive technologies than the decision to continue investing in innovation is more difficult. With longer term projects that have investors backing it than there is more scrutiny on the projects.  Investors are more flexible with those that have good track records and are willing to give more time, money and autonomy – the same goes in larger organizations. With a track record of delivering innovations there is more leeway allocated.

Currently the advertising industry is undergoing major changes directly with social media and indirectly with how information gathered from social media to target advertising to customers.  This is the combination of social media and data analytics and it is going to be quite disruptive.  The impact of this disruption may take another few years to be fully realized and companies that are able to show the power of this information today are going to have a high chance of success once the full impact of this disruption is realized.

At the end of the day it comes down to the organization’s risk tolerance, the innovation leader and the amount of time and money available. 


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