Can You Afford Loopbacks?

In a world of limited resources and time, is it smarter to fund developing separate, duplicate paths, or to focus all energy on the most promising, least risky path?

Often our tendency is to think we only have enough time and resources to pursue one path, with the key being selecting the least risky solution. After all, how could you possibly develop alternative processes in the same time it takes to produce just one, with the same amount of resources?

But consider the cost of failure at the end of the development effort. What do you do when your least risky path fails? You loop back and start over with a different concept, which was probably already proposed, but only after the initial path was chosen and under way. The cost of a loopback in R&D far outweighs the cost of developing multiple paths at the front end as this graph indicates:

Clearly, the cost of investigating alternatives is the lowest at the front end of the development phase, and increases significantly toward the end. In addition, the number of alternatives capable of being investigated is highest at the front end. We should use this differential to our advantage. Put more resources on investigating multiple paths at the front end of a project when the cost is least and resource availability is highest. Then select the better of the two paths at the end of the development phase. Toyota uses this approach in their product development system to achieve the highest innovation rate in the industry, using the least amount of resources and having the least development cycle times. They NEVER miss project milestones because they never have loopbacks.