At one of my companies, we had a very successful product and strong relationship with our client, the post office. That was great, but it also made us nervous. We were heavily dependent on one customer relationship, and we worried about what might happen if it went away.

So we decided to develop other products. On paper, that was a sensible decision. We wanted other sources of revenue, and we didn't want the future of the company tied to just one partner.

I personally worked on one of those new products for about two years. We spent roughly $1 million developing it. After all that work, what did we have? A product that looked okay. Not great. Okay.

Meanwhile, our existing product was working. It had customers and a strong relationship behind it. The new one was taking resources like money, people and management attention away from the business that was actually succeeding.

My Advisory Board looked at the situation and said, “Let the big dog eat.” The big dog was our post office business. With their encouragement, we killed product number two and moved ten people working on it over to product number one, where we already had about fifty people.

I still believe that was the right call.

I remember the founder's wife saying she wished she could have the million dollars back that we’d spent on the other product. Of course she did. So did we. But that's not how business works. Sometimes you spend a lot of money and put in years of effort for it to go nowhere.

This is why big growth decisions are so difficult. You may be right that the company needs to diversify. You may also be wrong about which opportunity is worth pursuing. There's a cost to the existing successful business while you find out. Understanding opportunity cost is critical.

Before making a major bet, ask yourself these questions:

• What's the real problem we're trying to solve? Are we pursuing a real customer opportunity, or are we motivated because we’re worried about a risk that may never happen?
• What evidence do we have that customers will buy the new product or service?
• How unique is the new product or service? Is it differentiated from competition?
• How much money, time and management attention can we afford to put into this without hurting the core business?
• What results would convince us to invest more? What results would tell us to stop?

From my experience, here are some specific approaches you can use to make this decision:

1. Put your two investment options side by side.

Create a simple comparison showing what would happen if you invested the next $500,000 in your existing business versus the new opportunity. Estimate the revenue potential, likelihood of success, time to payback, and people required for each. Include the potential downside of concentrating further on your existing business. You may discover that the exciting new opportunity isn't actually the best use of your resources.

2. Require customers to put some skin in the game.

Before committing significant development resources, find three to five prospective customers willing to make a meaningful commitment. That could be a paid pilot, a deposit, or a conditional purchase agreement. Enthusiastic feedback is nice. A willingness to spend money is much stronger evidence that you're solving a real problem.

3. Set a kill date before you start.

Give the new initiative a specific budget, deadline, and measurable milestones. For example, you might allow six months and $250,000 to secure three paying pilot customers. If you don't achieve those milestones, the default is to stop or redesign the effort—not automatically authorize another six months. Any extension should require new evidence that changes the investment case.

4. Hold a meeting where someone has to argue for shutting it down.

Ask two or three experienced people who aren't emotionally invested in the project to review the evidence. Give one person the explicit assignment of making the case for stopping the initiative and reallocating its resources. This forces the discussion beyond defending what you've already spent. It's essentially what Chris's Advisory Board did when they told him to "let the big dog eat."

Chris's Lesson: Let the Big Dog Eat

CEOs need to be ambitious. If you're never willing to take a risk, you probably won't grow very much. But there's a difference between taking a calculated risk and continuing to fund something because you're emotionally invested in it.

I spent two years and a million dollars on a product we eventually shut down. Nobody was happy about that. But once it was clear the product wasn't strong enough, we had to make a decision about where the next dollar and the next hour should go.

The lesson for me was to pay attention to what's actually working, even when that's less exciting than the new idea.

Sometimes the smartest growth decision is to stop chasing a second opportunity and give the first one everything it needs.

On we go.  Let's Start a Conversation.