Recently I’ve sat through multiple investment committee decisions on new products and new ventures where there was excitement from executives to proceed, but the teams were given some conditions to meet before they could get a yes. The “yes, but…” where you need to change your plan or pitch, has a hidden cost that isn’t discussed and sometimes isn’t worth it.
Receiving a ‘no’ is easy, because you just stop. Receiving a ‘yes’ is also easy, because you just proceed. But what I see again and again in product and venture land is “yes, but…”.
“Yes, but change pricing, then come back for a green light.”
“Yes, but please think about how you will include a partnership with CoolCorp a bit further down the line”.
“Yes, but how can we have confidence in [the thing you’re proposing to validate with the investment]?”
In these “yes, but…” situations, the team needs to go away and replan, then work to address the condition.
Sometimes not greenlighting the investment in order to have conditions met might be justified. Where I see it being justified is:
- Where the condition will materially alter the plan and approach for the next phase of the investment under consideration. Too often, I see conditions being imposed that are relevant, but to later phases that rely upon the next phase – the one under consideration – being undertaken.
- Where the condition will materially alter the budget, or alter it in an unknown way. Too often I see conditions being imposed simply because budgets have some special status (e.g. a $500 cost being forgotten on a $1m investment decision – who cares just get on with it). It might even be easier just to say “have 10% more, let’s get going”.
From time to time, the condition could easily be addressed in flight as the team continues on their path after a straight yes. Acting more like variables that feed into how the team executes, rather than conditions on whether they get investment.
The Hidden Costs of Answering the Conditions
Teams – the ones pitching for investment – also have a tendency to overthink and overwork meeting these conditions placed by an investment committee. After all, an Important Executive asked the question or imposed the condition, so you don’t want to offend them and, more importantly, you want to impress them.
Executives making decisions about investments need to consider the hidden costs when imposing a condition, doing a “yes, but…”. Because saying “hey, I don’t want to approve the budget for this until you do XYZ” is actually saying “I’m approving an open-ended, hidden budget for you to answer XYZ”. This hidden cost of answering the condition(s) needs to be weighed against just getting going.
Hidden costs are activities like:
- Conducting further research.
- Holding more meetings.
- Talking with stakeholders that have an inconsequential say (just to make them feel heard).
- Adjusting presentations (don’t dismiss this, I’ve easily spent hundreds of hours on minor adjustments due to minor, inconsequential feedback from investment committees or the gatekeepers).
- Often it will also include external costs from consultants, lawyers, analysts, data providers, and more that manage to hide themselves, as they come from other budgets.
- The cost of executive and management attention, returning to something, usually through a formal process, that maybe they didn’t need so much formality or further attention. Just trust that the team will alter the plan or an informal follow-up.
An idea I’m toying with is, when faced with a “yes, but…”, teams should then say “OK, answering XYZ will cost $X. So, are you approving that?” entering some kind of “yes, but…” inception loop. (hah!)
At the very least, we need to make more conscious decisions about “yes, but…”, and we need to make the hidden costs of answering the condition visible.
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CEO & Founder
Scott has been involved in the launch and growth of 61+ products and has published over 120 articles and videos that have been viewed over 120,000 times. Terem’s product development and strategy arm, builds and takes clients tech products to market, while the joint venture arm focuses on building tech spinouts in partnership with market leaders.