Over the years, we’ve seen a lot of potentially valuable innovations flop because the companies sponsoring them were using the fundamentally wrong logic in managing them. For instance, as Clayton Christensen recently described in the Harvard Business Review, they insist on valuing projects in terms of Net Present Value. A different approach, we’ve argued, is to think of ventures or innovations as real options. A real option is a toehold investment that buys you the right, but not the obligation, to make a subsequent investment when you know more. Consider how this way of thinking can help you avoid these common causes of innovation failure:
A New Approach to Innovation Investment
Over the years, we’ve seen a lot of potentially valuable innovations flop because the companies sponsoring them were using the fundamentally wrong logic in managing them. For instance, as Clayton Christensen recently described in the Harvard Business Review, they insist on valuing projects in terms of Net Present Value. A different approach, we’ve argued, is […]
March 25, 2008
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New!
HBR Learning
Innovation and Creativity Course
Accelerate your career with Harvard ManageMentor®. HBR Learning’s online leadership training helps you hone your skills with courses like Innovation and Creativity. Earn badges to share on LinkedIn and your resume. Access more than 40 courses trusted by Fortune 500 companies.
Unlock your team's curiosity and willingness to take smart risks.