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Sunk Costs Don’t Matter When You’re in a Process

When you’ve invested a lot in a process, a person, a project, or a procedure, and it doesn’t work, you might be tempted to stick with it anyway.

Sunk cost thinking is the idea that since you’ve invested so much, you might as well invest a little more.

And a little more.

And a little more.

Until you’ve invested so much time, energy, and effort that you’re exhausted emotionally, psychologically, and even financially.

Sunk Cost Don't Matter

And so is everyone around you.

Sunk Costs Don’t Matter When You’ve Done Work That Matters

Here are a few examples of sunk cost thinking:

You’ve spent 5 years on a blog that gets little traffic. So, you stop and go do something else.

You’ve spent 10 years building a moderately successful pizza business in your town, but then your entire customer base shifts its behavior toward vegan options. So, you switch to vegan pizza.

You’ve carved out a very prosperous niche in an underserved market around delivering a service, but then, a lower cost vendor appears, and they leverage technology against you to do what you can do, quicker and better. So, you switch your business model and compete against them in your space.

Sunk Cost Don’t Matter…Except In Your Thinking

Here’s an idea for managing the impact of sunk cost thinking and people management in an organizational culture situation: instead of investing more and more and more, why don’t you shift your emotional investment toward the actions, thinking, and attitude areas which can give you the greatest returns?

Sunk Cost Don't Matter

So, if 80% of your emotional energy has been invested in the 20% of people who are causing conflicts on your team, it would probably be a really good idea to shift 80% of your energy to the 80% of people who are interested in changing.

And leaving the other 20% (and the sunk cost of the time, energy, and effort you’ve invested with them) to their own devices.

This isn’t sexy thinking, and it won’t get you an award. But it is the type of thinking and the type of focusing that we need more of, not less of, in the modern world.



Administrator for Jesan Sorrells