How to say no to a new project

And make a strategic choice

Strategy development practice

And make a strategic choice

Peter Drucker is credited with the idea that managers must regularly ask themselves two questions about what their companies should begin doing to thrive and what they should stop doing to thrive. Terminating projects that don’t have a chance to succeed and eliminating unpromising activities and unprofitable products can help an organization free up precious resources and redirect them to the zones of high potential.

Sounds logical. But how can managers tell promising initiatives from insidious resource-eaters? This question is critical when employees are overwhelmed by many ideas, initiatives, or new projects coming from above. It is often the case when a company is managed by people with entrepreneurial mindsets. There are many ways, but I use the following simple but efficient approach.

Every company prospers if it is able to deliver value for five stakeholders groups

First of all, they may ask if this project or initiative is in line with the strategy. If not, there are two options:

1. To postpone the project

2. To change the strategy

But the second step should be taken only if there are compelling reasons to do so. Otherwise, it is better to opt for step one. Strategy, among other things, is an agreement between different governance actors about what the company should do and what it shouldn’t.

But if the CEO or founder insists that a new project must be incorporated into the strategy, there is a simple way to check whether it is a good idea or not. Every company prospers if it is able to deliver value for five stakeholders groups:

1. Customers

2. Employees

3. Shareholders

4. Partners

5. Society

If so, the company’s leadership should give the green light to initiatives that help it create more long-term value for stakeholders than others.

So, when C-suit managers feel challenging to choose between many projects when each of them looks attractive, I recommend they ask two questions:

1. Does this particular project deliver value to several groups of stakeholders or even to all of them? If a project is profitable, it creates value for shareholders only, but what about the rest of stakeholders?

2. Does this particular initiative deliver more long-term value than others?

If a new initiative satisfies the requirements of three or more stakeholder groups and if it delivers more value than other ideas or projects, it is worth considering as a new strategic option. If it doesn’t, it makes sense to turn it down or put it off.

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