Knowing when to hold ’em and when to fold ’em

Somewhere in my random memory is a quote from an IBM chairman (I think it was Lou Gerstner) talking about how success depends on being absolutely ruthless about deciding to kill products that weren’t working. (And if anybody wants to correct that quote for me, please help. I couldn’t find the exact reference, though I found a collection of Gerstner quotes which didn’t include it.)

I also remember a chilling moment in my personal past when I listened to a guy who’d been running a sailboat company for 15 years tell me how he’d hated it the last 10 years. It was always borderline failing, but he couldn’t get out because he’d started it with friends and family money and he couldn’t tell his parents, sibling, and cousins that they’d lost their investment.

In my specific business past it’s been a problem for us to give up on products that didn’t make it, but for the record we’ve killed a bunch of them, from Business Plan Toolkit to Financial Forecasting Toolkit to Business Budgeting Toolkit, Cash Plan Pro, Cash Compass, DecisionMaker, Incorporation Toolkit, Systems Continuity Plan Pro, and I’ve probably put others into repressed memory where I don’t have to think about them.

I was at the pre-competition meeting of the judges of the University of Oregon intercollegiate venture contest a few years ago when we (the judges) were asked to introduce ourselves. One of them, Ty Pettit, said “I probably have the best qualifications for judging this contest because I recently oversaw a company going bankrupt.” That struck me as a very wise comment. Ty has had several successes since.

Thanks to Management R&D for pointing to some McKinsey material related to the hard decision to kill a project, or product, or, in some extreme cases, a company. I ended up signing up to receive regular updates, McKinsey seems to be generating very interesting analysis.