In 1997, a well-known microchip company began work on developing an innovative chip that would accomplish what it normally took three separate chips to accomplish. The team working on developing the chip had over 100 people on it and the cost of developing the chip was estimated to be many millions of dollars.
The plan was based on a very significant and central base assumption: The cost of the memory component used in the chip was very high at the beginning of the project but would drop significantly as the project progressed, making the new microchip financially viable—quite a reasonable assumption given the frequent changes in this field of technology.
The crew worked for two years on planning and developing the microchip. It seemed indeed that the chip was pioneering in the field of engineering. Nevertheless, a significant problem remained that dampened the team’s enthusiasm: The price of the memory component did not drop as expected. The product was brilliant, but completely unjustifiable financially—a wonderful product that simply could not be sold.
The big mistake was not that the project was approved in the first place, but rather that it was not abandoned sooner; there were no clear gates with well-defined exit criteria. The project lead was head over heels in love with the project, so much so that he was unable to reach the wise decision to abandon the project at an earlier point.
The decision to “kill” a project after investing millions of dollars and two years of work is one that any sane manager will find it almost impossible to make. So the decision is made to continue for a little longer, then a little longer after that, until it is entirely too late and the project is sinking.
The conclusions from this failure are clear. A project should not be approved before defining two central points: the measures of success in the project and the conditions in which it should be canceled. When these are defined before “falling in love” with the project, and before many resources are invested in it, it is far easier to be realistic and objective about such decisions.
Nonetheless, it is a shame to “waste” an epic failure such as this one; the company built a new processor on the ruins of this project. This new processor became one of the biggest successes of the company—so all was not in vain.
