Insights
How to Know When Enough is Enough: Deciding Whether to Innovate or Abandon a Promising Idea
Posted October 31st, 2024 in Articles
Innovation is essential for success in today’s marketplace. Companies that innovate will maintain—and ultimately grow—their market share, while those that don’t will find themselves falling behind.
But, innovating is about more than just pursuing a new idea. It’s about pursuing the right new idea with the right approach. Some ideas, even if they are very good, won’t be worth pursuing from a commercial perspective. The key is knowing when it’s time to keep innovating and when it’s time to move on.
A Case Study: Modular Building
The modular building “boom” serves as a valuable case study. When modular building first gained mainstream traction several years ago, many industry experts forecast that it would change the construction industry for good. But, as discussed in an article published by the Harvard Business Review last December, this never happened. The problem wasn’t lack of a good idea—modular building techniques offer several potential benefits—rather, the issue was that misconceptions and misgivings meant that it just wasn’t commercially viable for most companies.
Investing in Innovation: How Companies Can Make Informed and Strategic Decisions
With this in mind, what can—and should—companies do to make informed and strategic decisions about investing in innovation? Here are some key considerations:
1. Conducting a Feasibility Analysis is Critical
First, conducting a feasibility analysis is critical. Too often, companies of all sizes pursue new innovations based on an assumption (or perhaps hope) that they will prove to be profitable in the long term. Conducting a feasibility analysis allows for informed decision-making, and it is a critical early step in the process of pursuing a new idea. There are several steps involved in conducting an effective feasibility analysis, and a quantitative, data-based approach is essential for gathering the insights a company needs.
2. Innovation, Investment and Risk Go Hand-in-Hand
Second, adequate investment is essential for new ideas to reach their full potential. Before pursuing new innovations, companies need to have a clear understanding of the total cost of bringing these innovations to market. Likewise, companies need to consider the entire universe of risks presented—including not only opportunity costs, but potential liability-related costs and other risks as well.
3. Company Leaders Must Be Able to Identify When Enough is Enough
Finally, company leaders must be able to identify when enough is enough. This is the old adage of not throwing good money after bad. While continuing to invest with a long-term perspective will be the right approach in some cases, in others, the prudent business decision will be to cut the company’s losses, examine the lessons learned and decide which other new idea to try next.
Schedule an Appointment with a Strategic Consultant at Mithras Investments
Is your company preparing to make a substantial investment in pursuing a new innovation? If so, our team can help you make informed decisions. To schedule an appointment with a strategic consultant at Mithras Investments, please call 305-517-7911 or inquire online today.
