Finance chiefs can get at least some of that proof by taking gradual steps to test their theories. "Instead of thinking it's going to cost $100,000 to launch this project and we can't afford it, think about spending $10,000 on market research or $50,000 to test part of the technology," Anthony says.
He cites Procter & Gamble as a company that frequently tests small batches of new products before investing in a complete rollout. Amid the recession, other companies are following suit. "People are trying to figure out smart, creative ways to test ideas without running through gobs of money," says Anthony. Online surveys, small-batch tests, and computer simulations are all tools companies can use to test promising concepts.
Looking for patterns and trends, rather than analyzing a single project in isolation, can also help finance executives vet big ideas, says Anthony. Management teams can try to identify the factors that have driven growth in their industry and company in the past, and look for those characteristics in the ideas they're considering. For example, Jim Frates, finance chief at biotech company Alkermes, says the company's long-term focus is on so-called non-substitutable drugs. "Me-too products, where there's just a tweak to make them slightly better, will not be good enough," he says. — K.O'S.
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