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Radhika Chadha

Cultivate `exit champions' in your organisation.You may save yourself much heartbreak andmoney over projects, as well as foster a cultureof debate and rational decision-making.

The Devil's Advocate is the popular term given to the Promoter of the Faith, an official of the Congregation of Rites, whose business it is to scrupulously examine all evidence, both of miracles and virtue, in the processes of beatification and canonisation, so that no person may, through human enthusiasm or error, receive the highest honours of the Church unless in every way worthy of them. Every objection must be answered satisfactorily before the case is allowed to proceed.

NEARLY 20 years ago, a large beverage company invested the bank in a new product — a flavoured drink — a concept well before its time in India. Dismissing questions about its competence in the new business, the management went ahead with huge investments. The result — a logistical mess as a focused product company struggled with multiple flavours, daily distribution and a zillion SKUs. Finally, the product was withdrawn, but by then it had caused a cash haemorrhage of nearly Rs 40 crore.

A leading shoe company, known for its janta brand and value-for-money products, decided to go upmarket. Saddled with an inflexible brand persona and a monolithic retailing structure, it realised the error of its ways — but too late. Not only did the move result in a loss of over Rs 50 crore, but, more importantly, it lost its leadership position as a host of local players rushed in to fill the vacuum it had created in the low-price segments.

In a country with a teeny-weeny population of installed home dishwashers, a brave multinational brings in its international range of dishwash tabs. Priced at a prohibitive Rs 200 per kg, the product fails to get traction in its target market of upper-class households. Question: When a rich housewife can delegate a messy sink to a bai who would charge about the same for washing and putting away the dishes as a months' supply of dishwash tablets, why would she want the icky job of stacking and clearing the dishwasher herself?

A large player in the FMCG space prides itself on an elaborate stage-gate management process. Ideas channelled through the system emerge as new launches with metronomic regularity. Yet, more than eight launches out of every 10 are flops.

These are not isolated cases. One estimate is that a major FMCG flop can result in losses of nearly Rs 20 crore, when the costs of media spend and product recall are factored in.

Why does this happen? How can savvy, well-run, companies, leaders in their own segments, create monumental blunders when they venture into new territories?

In my previous column, `Doomed to Fail,' I discussed how the force of collective belief results in nurturing "bad projects": ideas that are fundamentally bad and should never have survived the filters of new product development, yet assume a life of their own, leaving in their wake a flotsam of poor hit rates, wasted resources, and, worst of all, deteriorated morale.

Professor Isabelle Royer (`Why Bad Projects Are So Hard to Kill', Harvard Business Review) defines collective belief as a "strong conviction based on feeling rather than evidence that the project will eventually succeed." As she puts it, the problem in such situations stems from "the power ... of a very human impulse: the desire to believe in something." When this belief is held not just by a handful of individuals but by most of the organisation, it results in the birth of projects that assume their own momentum. And naturally enough, the spread of collective belief is directly proportionate to the company's need for the success of the product. In other words, the more important the project appears to the company's future, the more likely that the organisation will be blind to its inherent infirmities.

As Royer goes on to illustrate, collective belief is persistent and self-perpetuating. It drowns out dissent. Setbacks are dismissed as aberrations by a relentlessly optimistic team. In the early stages, the major challenge is the `Rosy Glasses Syndrome.' And with the increasing investment in the project — the emotional even more than the financial — the "sunk cost" phenomenon takes over. "We've already spent so many crores on this project, if we just put in a little bit more, it will succeed." And before you know it, you've created a Frankenstein. A bad project with a life of its own that refuses to go away.

Royer's prescriptions include familiar caveats such as avoiding a cheerleading squad and putting in an early warning system. But it is her last suggestion that I found both provocative and hugely practical: that of using an exit champion.

To shake the gripping force of collective belief, she recommends that the buoyant picture painted by the project champion be tempered by the countervailing force of an exit champion. This role puts a manager in the position of a dispassionate questioner of the viability of the project.

The role of the exit champion is to understand the assumptions behind the new business and question these, garner critical comments from the rest of the organisation, then challenge or confirm the viability of the project. Indeed, if the exit champion wants to pull the plug, she has to offer an equally robust business case for this decision, as would the project champion for keeping it alive. Yet, an exit champion is more than a devil's advocate. She has to tread a balance between suppressing creativity and resisting the seduction of collective belief. Ideally, the exit champion should be seen as a role in the development process and not be imbued with political overtones. A good exit champion would have knowhow and credibility, an experienced manager known for intellectual integrity and dispassionate criticism.

In my own experience, an exit champion can be an effective counter against collective belief. However, to work, it has to be integrated into the stage-gate process, and not seen as a separate process. It is an elegant method of fostering debate, and has the added advantage of using the organisation's own knowledge and competencies to challenge internal assumptions.

Killing infirm projects is surprisingly difficult. The exit champion can help you pull the plug. And you will find immense collateral benefits. An improved hit rate and conserved resources are obvious outcomes. Along the way, this will ensure more robust business plans, as challenged project champions work harder to prove their case, creating a culture that encourages candid debate and fosters decision-making based on research rigour rather than irrational optimism.

(The author is a Chennai-based management consultant. Karate-gy is the proprietary name of strategic exercises conducted by Paradigm Management Knowhow.)

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