Giving Negative Feedback - The right way

IN that specific situation i would take a “question approach” vs Telling them

Start off with : it is great that you have brought this idea forward, and im interested in understanding more. Lets talk through your though process a little.

Let them tell you why they think it is a good idea. Asks them some probing questions:

  1. Help me to understand the value to the market - is this solving a problem?
  2. How do you see this being of value to the company - do you think we can make money on it?
  3. I think we would need to better understand X - to help determine how this idea could advance, but we need to make sure we understand it’s value

the conversation needs to be encouraging and not discouraging for the person. Like you stated, you don’t want to have them stop bring ideas, but this may be an opportunity for you to help educate them on they way they need to think when evaluating ideas. Any feed back that is destructive and not constructive is a fail, honesty is needed but communicated in a respectful way. I have found that this approach sometimes helps me to see something that i may not have seen, and or see a path that if we where to build on the idea it could be come of value. While at the same time helping to grow the person with the idea on how they can evaluate other potential ideas they have.