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: