Thursday, February 5, 2009

What to look at when budget cuts hit innovation

In a recent blog at Business Week, they look at how companies could look at their budget cuts and how they affect innovation. Scott D. Anthony points out two of the main ways companies are currently looking at to cut unnecessary innovation: first year revenue or net present value. Both of these ways can have their faults. First year revenue could start out slow, but turn into a huge revenue source, while net present value can be hard to judge because of the business strains can cloud the judgment of the company.

Anthony the poses five questions that can help you identify if it's the right time to leave a project behind:

1. What is the upside potential?
2. How much risk remains?
3. What resources are required to reach the next learning milestone?
4. How well does the idea fit important qualitative criteria?
5. How much does the idea contribute to the overall portfolio's balance?

Have you faced budget cuts to your innovation program? How have you approached letting projects go?

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