Tip 1: Treat exits as strategic wins, not failures

In corporate innovation, “exits” often come with a stigma. That mindset can prompt leaders to delay tough calls, allowing underperforming ventures to quietly drain time, capital, and focus.

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A well-timed exit is actually a mark of discipline. It shows you’ve recognised when a venture’s potential no longer justifies the investment and have the courage to reallocate resources to higher-impact opportunities.

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“An exit is not the end of innovation. It is a strategic choice to focus your energy where it will create the most impact.”

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Set that expectation from day one. Positioning kill calls and exits as a stage in the venture lifecycle helps teams act decisively and without fear when the moment comes.

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Tip 2: Harvest maximum value before shutting down

Even a venture that doesn’t scale leaves behind assets worth keeping. These assets can take the form of technology, IP, market insights, proven processes, and, perhaps most importantly, talent.

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Take a disciplined approach to capturing that value before you wind down:

• License technology or IP to partners or even competitors.
• Transfer learnings into other products or business units.
• Archive and reuse processes that proved effective.
• Redeploy top talent where they can apply their capabilities to new challenges.

“The venture may end, but the people, insights, and assets can and should continue to deliver value. The key is to separate the outcome of the venture from the value of its contributions."

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Tip 3: Use a balanced framework to guide kill calls

Without structure, kill decisions can devolve into politics or “gut feeling”. A clear, pre-agreed framework keeps the process objective and focused on facts.

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Sergio advises building your framework around the following criteria:

1. Strategic Fit

• Does the venture still align with the original strategic purpose?
• Have market conditions or core assumptions changed fundamentally?
• Is there a sustainable competitive advantage?

2. Business Performance

• Are critical milestones being repeatedly missed?
• What do the unit economics and growth trajectory look like?
• Is there a clear path to meaningful scale for a large corporation?

3. Operational Readiness

• Can the company successfully scale and sustain this business?
• Is the IP position defensible?
• Are operational requirements aligned with corporate capabilities?

4. People and Culture

• Is the team still engaged and driving the vision?
• Do leaders still believe in the opportunity?
• Is there energy and momentum, or signs of burnout?

When these criteria are built into governance from day one, you create a shared decision-making language. That makes exit calls faster, cleaner, and far less prone to political deadlock.

Tip 4: Spot the red flags early and take action

The faster you recognise trouble, the greater your chances of exiting cleanly and preserving value. Too many ventures limp along for months (or years) simply because no one wants to admit the writing is on the wall.

Sergio recommends watching out for these red flags:

• Structural performance issues: Consistently missed milestones across cycles often indicate deeper, structural flaws.
• Stalling velocity: Growth has plateaued, the pipeline of ideas has dried up, and energy is fading.
• Team mood shifts: When collective enthusiasm turns to doubt, it’s rarely just a coincidence.
• Lack of customer traction: If repeated market approaches fail to generate meaningful interest, it’s time to reassess.

The key is to act on these signals early. Delaying the call only burns more resources and makes the eventual exit harder than it needs to be.

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Tip 5: Secure stakeholder alignment with a two-level strategy

Stakeholder alignment is often the make-or-break factor in exits. Without it, decisions stall, politics flare, and execution drags.

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Sergio recommends using a two-level alignment strategy:

• Top-down alignment: Create an incubation review board of senior leaders who meet quarterly to review milestones and make clear calls on pivots or exits.
• Bottom-up alignment: Keep key corporate functions like legal, compliance, and HR closely engaged so they can adapt processes and provide the flexibility ventures need.

“There are always politics and different points of view… accept that 100% alignment is impossible. Instead, focus on getting decision-makers aligned and moving forward decisively.”

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Tip 6: Manage exits with launch-level discipline

A poorly executed shutdown can destroy as much value as a failed launch. To avoid this, Sergio emphasises treating exits with the same operational discipline you’d apply to a high-stakes market entry.

His exit playbook breaks the process into three parallel tracks:

Track 1: Strategic decision & preparation

• Secure alignment with the venture’s sponsor and key decision-makers.
• Get HR and legal validation early to avoid compliance or contractual surprises.
• Assess any “hidden commitments” that could delay or complicate the shutdown.

Track 2: Operational execution

• Review all vendor and partner contracts, then terminate or renegotiate as needed.
• Archive every asset, from code to documentation, and ensure IP is protected.
• Plan and execute retrospectives to capture lessons learned while it’s still fresh.

Track 3: Value transition

• Redeploy team members where their skills can create impact quickly.
• Preserve IP and knowledge so it remains accessible for future initiatives.
• Transfer or license technology, assets, or capabilities that can still generate value.

Following this structured approach ensures nothing is missed, preserves maximum value, and protects your organisation’s reputation through the transition.

Tip 7: Use strategic clarity in all communications

How you communicate an exit can determine whether it’s seen as a strategic choice or a quiet failure.

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Sergio stresses the importance of balancing transparency with discretion. "You need to give people enough clarity to trust the decision, while still protecting sensitive information."

Some of his key principles for effective messaging include:

Start with the “why”

Clearly explain the rationale for the exit so stakeholders understand the decision, even if they don’t fully agree with it.

Maintain balance

Don’t oversell the benefits if they won’t outweigh the investment, but don’t underplay the real wins and value created.

Tailor your messaging

Different audiences will want different types of information:

• Executives want the strategic and financial reasoning
• Teams need clarity on next steps and roles
• External partners require transparency without breaching confidentiality

“Try to be transparent, but at the same time preserve their respective confidentialities… It’s about building trust and protecting the company’s reputation.”

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Tip 8: Prioritise the human side of exits

Exits can be an emotional process. Some team members will fight to keep the vision alive at all costs, while others may already be disengaged. Both extremes can undermine a clean, productive transition.

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Sergio stresses the importance of managing these dynamics with a balanced, thoughtful approach:

• Shape the narrative carefully: Craft a message that brings over-enthusiastic optimists back to reality while giving pessimists reasons to stay engaged.
• Set clear expectations: Everyone should know exactly what the transition involves, how long it will take, and what’s expected of them.
• Incentivise knowledge transfer: Offer recognition, rewards, or other incentives for those who stay until the very end to ensure nothing valuable is lost.
• Recognise contributions: Publicly acknowledge the team’s work and make sure people are placed in roles where they can continue making an impact.

“You need a very balanced narrative…grounded for the optimists, motivating for the realists.”

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This approach preserves morale, protects your innovation culture, and ensures valuable talent and knowledge are retained.

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Tip 9: Run post-mortems that go beyond internal perspectives

Internal reviews often miss blind spots due to silos or internal bias. Inviting external perspectives can reveal what insiders overlook.

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Sergio explained that one of his most valuable exit reviews came from an external entrepreneur who had joined HP through an acquisition. His outside perspective brought an end-to-end view that internal teams had missed entirely.

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Here are a few of Sergio’s tips to make your post-mortems more effective:

• Bring in external perspectives: Former founders, industry experts, or even customers can uncover issues and insights you didn’t see internally.
• Go beyond the obvious: Analyse not just what failed, but also what worked and why.
• Validate assumptions: Identify which starting assumptions proved right, which didn’t, and how they influenced the outcome.
• Capture actionable next steps: Document what you would do differently next time and ensure those lessons feed into future ventures.

The goal is simple: turn the end of one venture into a competitive advantage for the next.

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Tip 10: Institutionalise exits in your innovation systems

When clear pathways for winding down exist, decisions happen faster, and execution is cleaner.

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Sergio recommends making this part of your organisation’s operating rhythm:

• Bake exit criteria into governance: Define clear metrics and review cycles from day one so ventures are measured consistently.
• Create formal review boards: Assign decision-making authority to a cross-functional group that meets regularly to evaluate performance and make pivot/kill calls.
• Integrate into performance reviews: Reward teams for disciplined portfolio management, not just for scaling winners.
• Track and share outcomes: Maintain a central record of past exits, the rationale, and the value recovered, so future teams can learn.

Embed this discipline into your systems to keep your portfolio healthy and ensure every exit strengthens the organisation.

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Final thoughts

As Zaforas concludes: "The balance between strategic willingness of what to do and the discipline in operationalisation is super important." Master both, and your innovation portfolio will be stronger for it, even when individual ventures don't make it to scale.

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A big thanks to Sergio for taking the time to share his insights with us and the Bundl Venture Club. Be sure to sign up for our next roundtable. Hope to see you there!

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