“We decided to go in another direction.”

“We’re having budget issues.”

“Your project sponsor is no longer with the company.”

No matter how gently your client breaks the news, it’s painful when a pilot project fails. Your company was hoping for a successful proof of concept, or maybe a profitable contract. Now you’re looking at lost time and money, not to mention the hit to employee morale.

You can’t control your project’s outcome, but you can control how you respond. Here are some ways to come out ahead when a business experiment doesn’t work out.

Remember Why You Did The Project In The First Place

Collaborations come in many forms, with different goals. If a larger company is engaging with your startup or small business, it’s usually to meet a need that can’t be satisfied in-house. Your potential customer may want to:

• Access new ideas or new markets.
• Test-drive a new technology.
• See how much demand there is for a new product or service before they commit to providing it.
• Get good publicity from partnering with an innovator.

With a bit of luck and skill, a pilot project can meet these kinds of goals quickly and often quite cost-effectively. But what happens if your initiative misses the mark?

Can You Make It Work?

First, see if you can triage your project while it’s still going. If you’re struggling with limited resources, poor communication, or bad processes, you can try to confront those issues and work through them with your customer. Maybe you’ll have a frank discussion and decide to take the project in a completely new direction. But if the issues can’t be resolved, it may be time to move on.

Your product or service simply may not be a fit. Maybe your offering didn’t resonate with the other company’s customers. Or the pilot project couldn’t be finished on time or within budget. For tech-heavy pilot projects, your software or device might be too expensive, too experimental, too hard to manufacture or maintain, or simply incompatible with key systems.

Whatever the reason, failure is bad news for your potential customer just as it is for you. Your contact may lose budget, headcount, or other resources based on your shared experiment. But they’re still a potential customer, so don’t give up yet! Now’s the time to see what can be salvaged, and make an effort to preserve — or even improve — the relationship.

Understanding the Lessons Learned

The flaws in your pilot project might be productive failures that yield useful information.

First, get together with your client and identify the lessons learned. Consider scheduling a debriefing session immediately after the end of your project. At this point, you can present your corporate customer with new ideas for how to extract value from the pilot.

Your customer may not know what questions to ask to understand what went wrong. Here, you can add value by framing the issues for them to analyze. For example:

• Was there a cost overrun because it took too long to customize software? Explore what it would take to offer ready-made code.
• Were you unable to get enough customer feedback in time? The fix here might be simple, like extending the deadline to collect this information, or offering incentives for sharing useful data.
• Did management simply announce that they were pausing the project? Understanding the decision-makers’ reasoning could help you repurpose the work to meet other goals they may have in mind.

To prepare for a “lessons learned” debriefing session, take the time to identify the right team members on both sides. Subject matter experts as well as managers should weigh in on why the project didn’t go as expected. Your customer might not otherwise take the time to listen to these voices, especially if they come from low-level or frontline employees. Uncovering the real reason for the pilot project’s failure can expose useful information about your customer’s operations.

Data Collected During The Pilot Project May Have Its Own Value

Quantifying the project’s end results can be helpful: “We spent $X in time, materials, and opportunity costs, and we achieved result Y, with a value of $Z.” Both you and your customer now have a better idea of how to budget and plan similar efforts in the future.

During the pilot, your startup acts like an R&D consultant for your corporate contacts. Identifying what’s necessary to launch a new product or service has value in and of itself. Based on this information, your customer may be able to view your pilot as more of a scoping exercise. The process becomes less about launching a perfect product and more about finding out what exactly it would take to win in your customer’s market.

A Journey Of A Thousand Miles

Consider presenting your pilot project as one step in a long relationship. This iteration may not have worked, but a re-imagined product may be just what your customer needs.

If you’ve enjoyed a good working relationship, you and your customer may end up collaborating in other ways later on. An invitation to tackle a new problem together might come disguised as a complaint:

• “This is too complicated for our end-users.” But if you focused on just one of your many features, the streamlined product might be a hit.
• “We didn’t see a lot of internal interest in this SaaS platform.” Could it be reconfigured to serve a related need, like analyzing the data collected on the platform?
• “I don’t think this will save us any money.” But will it introduce you to more customers, or let you charging a premium for something you already sell?

On To The Next

As an entrepreneur, you’re used to pivoting when Plan A (or B, or C) doesn’t work. That approach can help you find the silver lining in your “failed” collaboration — and your corporate relationship may end up stronger as a result.

One Last Note: A short collaboration agreement signed by both parties before starting the pilot project can help deal with many of these issues before they become problems. Your collaboration agreement should protect your own IP and clearly allocate rights in any jointly-developed IP from the pilot project. It should also clearly explain each party’s responsibilities for the costs of the pilot project, as well as their rights around monetizing the results.

Disclaimer: This article is my opinion, and is not legal advice. If you have questions about how to run a successful pilot program with a large corporate customer, please feel free to contact me to discuss.