PULLING THE PLUG TO STOP THE NEW PRODUCT DRAIN

Although an important aspect of managing new product introductions is to recognize and quickly take action when a product launch has failed (i.e., ''pull the plug''), senior managers in a new product launch set ting tend to remain committed to a losing course of action. The author s investigate this issue with controlled experiments, using senior lev el executives as subjects. Their results suggest a strong bias toward continued commitment to failing new products. Consequently, the author s devise and test the effectiveness of five decision aids aimed at red ucing this bias. Improving the quality of the information environment does not greatly reduce bias, nor does precommitment (at time of launc h) to self-specified decisions rules. The most effective methods of re ducing commitment to a losing course of action appear to be either pre commitment to a predetermined decision rule or introduction of a new d ecision maker at the time of the stop/no stop decision. Of these two m ethods, the latter produces marginally less commitment to a losing cou rse of action. However, none of the tested decision procedures complet ely reduces commitment to a losing course of action relative to the co ntrol condition.