There are plethora of reasons for the economic demise of an innovative project. Some are systemic whereas some unsystematic. Some emerge from within the organization whereas some are generated from the outside of the organization. Some of the reason for the failure of the innovative projects are briefed below.
Death of the project in infancy
Some of the project though being captivating is not able to go a long way, they die in the introduction stage of its life cycle. Due to incorrect timing and level of cut-throat competition in the market, it cannot sustain. Virgin Cola, the drink initiated by the Virgin group, though was liked by the customers could not sustain the pressure from the Coke Cola (Clifford, 2017) and has to give up.
The lengthy product development period
Some project trajectory is a real financial and regulatory cumbersome and before the product is commercially launched, it consumes lots of investments capping the project’s ability to generate revenues and return. Elon Musk’s electric car Tesla and SpaceX has still not been able to generate return due to its which development cost.
Lack of dominant design
The projects start to gain the profit whenever it settles with its dominant design, the dominant design comes with positive learning and networking effect (Schilling, 2017), it comes with productivity, lower cost, and higher market acceptance. But due to tough competition and rivalry often the company cannot settle with dominant design and has to frequently work on competing for the resources against the competitor leading to increasing the expenses.
Lack of project diffusion
The diffusion of the product into the markets infers the products are well accepted by the market. The well-diffused product comes with dominant design and along with standardization and economies of scale. But sometimes due to the cut-throat competition, the project could not penetrate well or diffuse into the market and cannot generate enough revenues. Nokia mobile was not able to diffuse itself to the market as it was not able to compete with iPhones and androids at that time.
Lack of synchronization between market requirement and organization offering.
It is not about offering the best product, it is about offering right products to the market at the right time, means the innovation has to be equally demand-pull as well as science-push, a product without the desire of the market could not sustain. But due to the cognitive biases like “sunk-cost fallacy”, the company often goes on investing in the pessimistic project, thinking it will pay off but ultimately leads to cost overrun of the project.
Except this the management often takes the wrong decision and crafts inappropriate strategies, have lack of market understanding and orientation which also leads to the economic demise of the projects (Hengsberger, 2018). So, there could be organizational structural fallacies or external environmental factors that may impact the project, hence it is of utmost importance to constantly revise and access the status of the project.
Bibliography
Clifford, C. (2017, February 7). What Richard Branson learned when Coke put Virgin Cola out of business. Retrieved from www.cnbc.com: https://www.cnbc.com/2017/02/07/what-richard-branson-learned-when-coke-put-virgin-cola-out-of-business.html
Hengsberger, A. (2018, October 4). 4 reasons why innovations fail. Retrieved from www.lead-innovation.com: https://www.lead-innovation.com/english-blog/why-innovations-fail
Schilling, M. A. (2017). Strategic Management of Technological Innovation, 5thed. New York: McGraw-Hill Education.
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