How to give green light to new projects?

"Managing bias" and "getting more people involved" help us better choose which R&D projects get funding.

The business world is full of stories of rejected ideas that went on to become huge successes. The opposite is also true; In some cases, companies invest in futuristic ideas that have disastrous results. Choosing new innovative projects for further investment and development is very important and difficult. In the following, we will read together the five main categories of problems that selection boards have in research and development.

Common issues in how companies choose projects

Many organizations form specialized committees to review proposed projects and evaluate their merits. Because these boards are usually made up of senior members of the organization and are precious resources, they can become very problematic for five main reasons:

1. Boards tend to show a strong bias against very new ideas. They are more likely to fund projects with a moderate level of innovation. Too much innovation reduces the chances of getting funding.

2. A wide range of studies have shown that the people present in the expert boards suffer from a lack of "diversity" and in most cases are composed of high-ranking male managers. The inherent uncertainty of innovation causes boards to unconsciously prefer the projects of authors to worthy projects that look similar to themselves when selecting; Like preferring ideas of men over ideas of women, people with familiar names over unfamiliar names, and so on. These biases can be reinforced over time among homogenous groups. When reviewers evaluate projects for investment based on textual descriptions alone, without consulting other reviewers, they are less likely to be influenced by the author's gender and degree. In contrast, when judges make their evaluations after watching a short question-and-answer session, gender and educational background become more important in their evaluation. Additionally, when high speed becomes important in the evaluation, it can lead to more biased choices.

3. Tech companies usually form their expert boards of scientists and engineers who tend to focus on the technical aspects of an idea; Without considering business opportunities and challenges. They are also prone to systematic errors in evaluating truly new ideas.

4. The board's decision-making process itself may also lead to poor results. As with most collective decision-making, the discussion of items requiring confirmation is often framed by one panel member in a way that creates an artificial consensus in support of that person's position.

5. Improper timing of the process can also lead to poorer decisions. For example, meal times affect the judges' agreement on decisions. Also, the order of reviewing projects is a

Making smarter decisions: before, during, and after the selection process

Before selection

Remove names and demographic information. A simple and low-cost experiment that an organization can run is to hide the identity of the originator of the idea to see if there is bias against certain people in the organization. It should be noted that differences based on gender can be reflected in the writing style of project proponents. This suggests that organizations must continuously and proactively assess whether they are falling prey to bias.

Standardize the registration of requests. This can be done by providing a precise and standard format for requests. In this way, we help both the selector and the applicant to have an idea about the initial screening process. Another advantage of standardizing requests is that we can easily have searchable archives of accepted and rejected ideas.

when choosing

Seek different opinions from people within the organization. Having a more diverse board of directors, with different demographics and expertise and professional backgrounds, not only helps the organization overcome bias against women and people of different backgrounds and races, but also leads to products that cater to people with different needs and interests. Various are more attractive. Additionally, greater diversity of knowledge increases the likelihood of funding for new projects. One relatively easy way to make selection teams more diverse is to have people with both technical and non-technical backgrounds. This ensures that projects are evaluated not only on technical aspects, but also related to market capacities, business planning, strategic fit, and financing.

Use the principles of crowdsourcing - inside or outside the organization. The basic principle of crowdsourcing is that sometimes the collective wisdom of a large group can lead to a better result than the decision of a few experts. In internal crowdsourcing, companies provide an imaginary currency to all employees or a large group of them and allow them to invest that currency in the idea they think has the most potential. Interestingly, sometimes we reach results that do not agree with the results obtained by the managers of the organization. Some companies also involve external groups in choosing innovation. Lego Ideas is a popular crowdsourcing platform that allows people around the world to share their ideas for new Lego sets, vote on suggested ideas, and determine how much they're willing to pay for them. By delegating the burden of screening ideas to the crowd, Lego can focus on the most promising ideas and their fit with the Lego business model.

Use the workshop approach. Another way to evaluate innovation projects is to use workshops that bring together experts from different fields to get feedback from other experts and collectively select projects for funding.

Leave it to chance. Some organizations introduce a factor of "chance" into R&D decisions, especially when selecting projects of moderate quality. Due to the difficulty of predicting the outputs of average projects, random selection is probably as effective as "educated guesswork".

Make head-to-head comparisons. When organizations need to rank a set of ideas, they can pit them against each other in head-to-head competition. Competitive strength is important. Companies can rank ideas from best to worst by comparing just two ideas to each other and repeating those comparisons in other combinations. This approach simplifies the process of evaluating a wide range of potential options.

After selection

Give feedback about the proposed designs. Selection boards should provide specific feedback on all proposals and make them available throughout the organization. This type of feedback should help idea makers to better structure the plans they submit in the future, reduce the effect of possible demotivation due to idea rejection, and increase confidence in the fairness of the decision-making process.

Track failures and learn from them. One of the important components of cultivating failure tolerance is showing failures and learning from them. Without such information, it is difficult to know whether the selected projects have met expectations. Or has the organization missed an opportunity that will eventually be followed by another entity? By monitoring the results of the selection process—both successes and failures—it is possible to assess how well the current selection process is working. In this step, it is better to go in search of answers to questions like these: Can this process identify valuable ideas? Does the portfolio of projects and/or innovators fully reflect the organization's broad range of talent and skills? Are selection boards too risk averse?

Translation and summarization: Fanap Holding, Vice-Chancellor of Innovation and Digital Ecosystem Development

Source: MIT Sloan Management Review

https://sloanreview.mit.edu/