Harvard Business Essentials, Decision Making

Each decision in the sequence is treated as an experiment, a prac-

tice that produces learning that feeds into the next decision (see fig-

ure 7-2). For example, if the new business needs $1 million in

venture capital, a VC may provide an initial investment of $200,000

and then set up a set of milestones that must be reached within a

certain period. When that time comes, the business’s progress and

current circumstances are reevaluated, and another go–no go deci-

sion will be made, involving another milestone and another infu-

sion of capital.

This staged decision approach should be familiar to anyone in

new product development, where the

stage-gate system ...