Recently I bought a course called "The Art of Critical Decision Making" from The Teaching Company.
Definition
Sunk Cost Effect: The tendency to escalate commitment to a failing course of action if one has invested a great deal of time, money, and other resources that are not recoverable.
I have seen this happen several times in business. We start out all fired up. We have an idea, a budget, and some skilled people to help deliver the vision. About mid-way through the project it starts to fall apart as resources, people, and competing ideas turn heads.
What should happen is a meeting where the original group meets to see if the idea, budget, and skilled folks still think the idea has merit and is a priority. What often happens is the Senior Leader draws a line in the sand and says we must now dive in and "rescue" the project. The project is given to the "fixer" who has the reputation for getting things delivered. They do what they feel needs to be done. Of course, this is often at odds with the original idea. This causes dissent and the original team distances itself from the idea.
We now have an idea delivered that no one claims, and no one wants to look after for the next 18 months to ensure it's woven into the fabric of the company.
Solution
One idea, one team start to finish. Once the company commits, the project team regularly communicates an update on the project in order to keep the leadership team updated and energized by the progress.
If events happen that cause a shift of priorities then the project lead is the one that makes the decision to hit the kill switch rather then limping along for the next couple of years.
Sunk Costs in Personal Life
What works in business doesn't always work in real life. We have tremendous sunk costs in our families and friends. It is rarely a good idea to abandon people.
"Goodness is the only investment that never fails" - Henry David Thoreau
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