Sunk cost bias, admit failure to begin success
A lot of times, our fear of waste pushes us into making irrational decisions.
How many times have you been involved in a relationship that you knew was not going anywhere? How many times have you been part of a project that was obviously a failure, but you kept raising your efforts and resources in hope that if you just worked a little harder, all would come out well? The more you invest yourself in a relationship or a project, the harder it is to let go.
We’ve been programmed to fear the creation of waste.
This is the time when our judgment becomes biased, and is driven by what is called sunk cost bias. You’ve already invested this time in the relationship, so if you were to cut ties now, all would be a loss. You’ve invested all these resources into the project, and calling it quits would make it all such a waste. Because of that fear, we have a tendency to just keep going, forcing our way forward and hoping that at the end we’ll have something show for.
Admitting failure is hard. If you could just remove yourself and think rationally, you’d quickly realize that cutting your loss faster is the best action you can take towards success.
I saw a movie recently where one of the characters was driving to a wedding. He got lost. He stubbornly kept driving, at times in circles until hours later, he finally found the place. By then the wedding was over. He didn’t stop and ask someone for directions because he didn’t admit it to himself he was lost. While in denial, he spent hours driving failing to get to the wedding on time. The point of the story is that he was overly invested in the idea that he knew what he was doing, to the extend that he was unable to see that it wasn't working. And he paid for it by missing the wedding.
Sunk cost is the cost that you can not recover, whether it is time, money, or something else. And because we’ve invested ourselves in a situation and can not return our stake, we keep charging forward hoping that at the end it will all be worth it and we’ll get our payout. To counter the subconscious sunk cost bias we all have, we should bring forward our awareness of it. Once we’re aware of it, we can make a more rational decision that can pave the way to a successful outcome the next time around.
Recognizing a failing strategy when you see it, and pulling the plug on a project, takes courage. But by keeping yourself open to the possibility that your strategy might not be working, you give yourself the opportunity to recalibrate, and succeed.
