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Understanding the Science of Success
The previous article in this series introduced a startling statistic: Only one idea out of fifty has what it takes to succeed in business. For project managers and other professionals that don’t always get to brainstorm, it’s easy to fall in love with an idea. However, experienced business veterans understand the importance of performing “due diligence" on what may seem like a slam-dunk idea. Experts have documented four moments in the life of a business when the importance of a feasibility study is greater than ever.
1. Launching a New Business
Many entrepreneurs look at the launch of a new business as a short-term project that can get them to a sustainable profit level. Business veterans often review two feasibility studies: one to determine the long term viability of the business, and another to understand the resources necessary for a successful launch. During the original “dot com bubble" in the late 1990s, many companies overlooked the importance of feasibility studies, leaping into venture-backed businesses without abandon. Anyone who remembers Pets.com, Kozmo.com, Webvan.com, or hundreds of other high profile failures understands what can happen when companies can’t sustain themselves.
2. Creating a New Product or Service
General Electric has become famous for experimenting with new products and services, some of which might not seem like a perfect fit for a company with roots in engineering. However, a company that understands the importance of feasibility studies can make strategic decisions that reap major dividends. Building a routine process for feasibility studies within an organization helps develop a culture of experimentation without putting the entire company at risk.
3. Changing an Existing Internal Process
Many project managers face the challenges of implementing new internal systems, like customer relationship management software or communications tools. Subjecting new ideas to a feasibility study before contracts are signed can keep a company from investing too heavily in systems or processes that will fail to gain traction or meet customer needs.
4. Deciding on a Partnership or Vendor
Shareholders and employees require assurance that a merger that looks good on paper will actually fly in the real world. Likewise, white papers and glowing customer testimonials from a prospective vendor won’t matter if their product or service doesn’t address critical issues. Feasibility studies become important tools to separate the reality of a deal from the short term gains enjoyed by participants.
The Importance of a Feasibility Study
Project managers can cover the first four phases of the project cycle by conducting a comprehensive feasibility study.