The Good Intention that Undermines New Business Ventures
From Gary Hamel’s The Future of Management:
There is no surer way to undermine a new business venture than to measure it by the profits generated, rather than by the learning accumulated.
He gives IBM as an example of a company that has learned this lesson:
IBM’s top-level growth team understood that when it comes to building a new business, you have to learn before you earn. Given this, they wanted to counter the debilitating assumption that if you’re not holding a new venture accountable for profits, you’re not holding it accountable for anything. Many of IBM’s past growth efforts had stalled when an early push for profits limited a venture’s potential upside by prematurely truncating the learning and experimentation that would have, in time, yielded a more powerful, and better targeted, business model.