Thursday, July 10, 2008

Don't Let the Circumstances Outpace Your Assumptions

Don't Let the Circumstances Outpace Your Assumptions

A front-page article in yesterday’s Wall Street Journal illustrated how important it is to periodically revisit the assumptions behind an idea.

The article described how several years ago, the head of Sacramento’s regional planning agency started to push developers to concentrate growth in defined areas rather than furthering suburban sprawl. The argument hinged on lowering pollution and fostering economic development.

Of course, with the price of oil shooting up, today the idea looks remarkably prescient.

I wonder, however, how many planners rejected similar ideas because they couldn’t imagine people making living decisions based on the cost of commuting, and how many now wish they started dusting off those rejected plans when signals emerged suggesting that circumstances had changed.

On the other hand, sometimes circumstances change in ways that undermine ideas that once seemed credible. Consider Motorola’s daring, and ultimately doomed, venture to provide satellite-driven mobile telephony.

When Motorola started investing in the multi-billion dollar “Iridium” project, competing standards made using mobile telephony in different counties a major headache. I remember when I joined McKinsey & Co. in the mid 1990s how world travelers would carry several mobile phones. Under these conditions, a truly global technology had appeal.

As many markets converged on a standard (Global System for Mobile communications, or GSM) and created roaming agreements, the basic premise behind Iridium crumbled. Motorola continued plowing money into the venture until it was crystal clear that it was a flop.

It’s rare that you come across a universally good or bad idea. Whenever you make a decision about an idea, ask about the three developments that would make you reject the project you just approved or approve the project you just rejected. Periodically revisiting that shortlist will help to properly manage your innovation portfolio.

Can readers think of examples of good "before their time" ideas that might have been killed too soon? I wonder sometimes what would have happened if Apple kept at the Apple Newton for example. Maybe the iPod would have come even sooner.

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