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 / Summer 2009 / Issue 55(originally published by Booz & Company)


How to Shut Down a Project Gracefully

Indeed, disengaging from a failed project is not as easy as merely hanging a “closed” sign on a door. It requires delicately balancing the emotional commitment many team members have to a project with the business logic behind the decision in a way that salvages their pride, shows respect for their hard work, helps the organization learn important lessons, and maintains the reputation of the company.

To discontinue a project, develop a disengagement plan. It’s just as important as the business plan you created to set up your growth initiative. But perhaps because people are so averse to failure, the disengagement plan is often neglected, resulting in lost value and much more misery than necessary. The disengagement plan should be short (five pages at most) but well crafted, a document developed by the venture team in conjunction with senior managers. It should formally address two critical issues.

  1. Damage control. List all the stakeholders who will be disappointed by the disengagement — from investors to suppliers to prospective customers who have indicated interest in the product or service. Then, specify what each disappointed party is hoping for but will not receive. Next, list steps that could be taken to mitigate the disappointment. (Your team may have an erroneous perception about stakeholder disappointment, so be sure to check these expectations before you expend any effort fixing what is not broken.) Mitigation could involve simply apologizing to stakeholders for failing to meet their expectations or, more dramatically, making formal restitution. Specify who is responsible for ensuring that particular stakeholders have come to terms with the project’s demise. And finally, leave room in this list for a “closure” notation, indicating that the stakeholder is satisfied. This is important because people tend to avoid or postpone the unpleasant task of damage control; diligent monitoring is necessary to ensure that the project is concluded.
  2. Exploit positives. Begin with an after-action review, in which your team catalogs lessons learned from the project experience. Take each major aspect of the project — for example, customers, sales channels, technology, and processes — and document your original assumptions, the information on which they were based, and what has been learned. This analysis provides the backdrop for an opportunity review, during which the team can unleash its creativity by brainstorming possible applications for what has been learned. These could involve knowledge transfers to other divisions, customers, and partners, as well as commercial possibilities, such as spin-offs, licensing programs, and joint ventures.

In performing this exercise, you can recoup much of the effort and expense that went into the project and recoup morale, too. If your team members can end the project recognizing that it was the project, and not them, that did not succeed, you will have considerably rebuilt any lost confidence. You could also gain serious economic benefits from this analysis: M.A. Maidique and B.J. Zirger’s 1985 study of major product innovation successes traced these triumphs to what the firms had learned from earlier failures. Among the triumphs was the genesis of the Thunderbird and the Mustang from Ford Motor Company’s Edsel fiasco and the development of the popular IBM System/360 mainframe from the Stretch computer, which failed to meet aggressive performance estimates.

Failure to produce a disengagement plan has generated huge opportunity losses in companies that could have gleaned major gains from scuttled projects. In one bank that we analyzed, management shut down a project when problems elsewhere in the company made it difficult to continue funding it. In essence, the project managers then “turned off the lights and shut the door.” Senior management never realized, nor did anyone tell them, that the project had left behind a revolutionary technology for transmitting vast amounts of data using signal compression, a technology at least seven years ahead of its time. The Internet came into commercial use six years later, and today, fast data processing is key to the business model of many rapidly growing firms. Huge profits could have been reaped if the bank had licensed the technology, if only someone there had paid enough attention to careful disengagement to think about it.

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