Perils of holding on to corporate pet projects

August 26, 2013 1:48 pm

Perils of holding on to corporate pet projects

By Jonathan Moules, Enterprise Correspondent

Children seldom expect the downside of pet ownership when dreaming about receiving a puppy for Christmas. But at least there is usually a parent on hand with enough wisdom to put them straight. Unfortunately, ambitious business owners often do not hear the sobering warnings when it comes to their corporate pet projects. And when these puppies get out of control, the damage can be considerable.A few years ago, the directors of digital marketingagency Codegent came up with what they thought was a brilliant moneyspinner, a tool to enable any business to set up online.

The original plan was to have the product, called Dash, out to the market in three to four months – but £200,000 and almost two years later, managing director Mike Hart and his team had only just got to the stage where they had something workable enough to sell to customers.

They launched Dash at the Echelon trade show in Singapore, only to be told by customers, who were by their nature not very technologically literate, that the software was too complicated for their needs.

“We very soon realised that we’d basically wasted a load of money on something that a) didn’t do what people wanted and b) couldn’t really be justifiably supported,” Mr Hart admits.

“It was a very painful and frustrating experience and caused friction within the agency as some staff questioned why we had wasted so much time and effort.”

It is not just entrepreneurial founders that can get caught holding a puppy that they really should have humanely destroyed.

Sir Terry Leahy, who for more than a decade could apparently do no wrong at the helm of the supermarket chain Tesco, launched the company’s ill-fated push into the US under the Fresh & Easy brand.

His successor Philip Clarke only recently admitted that the US venture would never work, entering talks to sell the stores and taking a £1bn writedown.

It was a very painful and frustrating experience and caused friction within the agency as some staff questioned why we had wasted so much time and effort

– Mike Hart, digital marketing agency Codegent

Cranfield School of Management believes that holding on to pet projects can be such a damaging activity that it has made “drowning the puppies” a key part of its Business Growth and Development Programme.

Bruce Johnstone, director of the programme, says that, while successful business owners always aspire to greatness, they also do enough self analysis to be aware of their limitations. “It is vital to know what to say No to,” he explains.

Although the painful experience of Dash has clearly left a mark on Mr Hart, he insists on seeing the positive side of this failed plan, claiming that he learnt “a hell of a lot” from the process.

Codegent’s approach to new products now involves several new checks, such as making sure the target audience shares its views about the problem that needs fixing, Mr Hart notes.

“In many ways, I think without doing that we wouldn’t have had the subsequent successes in side projects that we have,” he says.

For Olga Nuryaeva, co-founder of Lenstore, a London-based online contact lens retailer, the “puppy” project was a push into the Polish market.

“It seemed like a great idea,” Ms Nuryaeva says, noting that it fitted well with the company’s plan at the time to become the largest online contact lens retailer in Europe in five years.

The biggest downside to allowing pet projects to run on is not the monetary loss but the cost of time – time that could be spent on pursuing other opportunities

– Olga Nuryaeva, co-founder of Lenstore

One of the big deciding factors was the fact that the company had a Polish analyst who, Ms Nuryaeva notes, was both talented and dedicated.

However, within six months of launching, the problems were obvious and Ms Nuryaeva took the tough decision to pull out.

“We had a very talented country manager in Poland who we lost, and a lot of time and effort was invested,” she admits. But Ms Nuryaeva does not regret the decision.

“The biggest downside to allowing pet projects like this to run on is not the monetary loss but the cost of time – time that could be spent on pursuing other opportunities,” she says. “The core business has since enjoyed record trading and our ability to focus more on it has certainly played a part.”

The problem with rushing to drown these “puppies” is that the idea may not turn out to be a dog after all.

Gerard Burke is founder of Your Business, Your Future, a similar programme to Cranfield’s BGP, helping ambitious owners of established companies to accelerate their organisation’s growth.

He notes that there is a fine line between admitting defeat and achieving a great breakthrough.

“Entrepreneurs have to fight against all the odds, overcoming resistance, other people’s doubts and repeated failures before they eventually succeed, so seeing something that others don’t and then having the determination and resilience to keep believing in it are seen as core characteristics of classical entrepreneurs,” Mr Burke says.

James Dyson would never have created his bagless vacuum cleaner business if he had doubted the concept and Henry Ford was only successful in his third car manufacturing business, Mr Burke notes.

“The other two had both failed and people were telling him it would never work,” he says. “Did people really believe Bill Gates when he foresaw a personal computer on every desk and in every home?”