Knowing When to Quit: Leadership Guide to Escalation of Commitment
In a culture that reveres grit, determination and persistence, we neglect equal esteem for those who know when to pull the plug on a failing course of action.
We have created a culture that rewards commitment to a chosen course of action, even with overwhelming odds, signals to change course and diminishing returns.
At the same time, "quit" has become a four-letter word marred with shame, disappointment and failure.
How do we move beyond the glorification of those who stick to it despite the odds, examine the probable cost of persistence and learn to celebrate those who make the difficult decision to call it quits?
The answer is recognizing the role Escalation of Commitment plays in our decision-making.
Not long ago, I was sitting on the sidelines watching my daughter’s soccer team chase the ball using a mob-mentality offense only seven-year-olds seem to understand. I heard a fellow parent trying to motivate his crying daughter to join the fray by saying
“we committed to the season, and we aren’t quitting now.”
I sat there in my folding soccer mom chair and wondered which lesson was the right one – sticking to it and honoring decisions despite diminishing returns, or honoring our feelings of dread and exhaustion that tell us something just isn’t worth it anymore? The parent in me may not have the answer to that question but the coach in me certainly does.
Humans falsely assume what's driving commitment to a failing course of action is our reluctance to admit we are wasting time and money, but the real reason for Escalation of Commitment runs much deeper than we realize.
Escalation of Commitment
Escalation of commitment is defined as
the decision to persevere with an unsuccessful decision, idea or action rather than admitting it was a mistake.
It can happen in all areas of life - from dead-end jobs to failing projects and even languishing romantic relationships – where we stubbornly rationalize, make excuses and commit to our past decisions even when those decisions are not yielding desirable outcomes.
In fact, almost any decision, particularly those high-stakes choices that we perceive as subject to scrutiny by others, is susceptible to Escalation of Commitment.
Escalation of commitment follows a similar pattern – we commit resources to a course of action. That action does not produce a desired return, so we increase the cost of failure by committing more resources to turn things around and recover the initial investment. The more resources are invested, the more we commit to the original course of action, and around and around we go. Before we know it, we are locked into a cycle of commitment where withdrawal becomes increasingly difficult.
Causes of Commitment Escalation
Understanding the features of commitment escalation is one thing, but understanding what makes leaders susceptible to a cycle of over commitment is another.
Although we believe ourselves to be rational decision-makers, human psychology can work against us to make objective decision-making more challenging.
Sunk Cost Bias: We do not want to admit we have wasted time and money or admit we made a bad decision, so we subjectively convince ourselves of the necessity for further investment to mitigate any potential losses or disappointments.
Confidence Bias: We believe we can create successful outcomes better or differently than others, so we overestimate our influence to turn things around.
Reinforcement Bias: Managers who have been rewarded for perseverance, even when outlooks appear grim, are especially susceptible to the false belief that things will turn around – even when the track record of payoff after adversity is intermittent.
Confirmation Bias: We easily accept information that is consistent with our beliefs while easily dismissing, discrediting or ignoring information to the contrary.
Fear of Failure: Even when we recognize losses, we are likely to choose further investment to mitigate the likelihood we will have to admit failure.
In addition to psychological influences, specific project features can increase potential for sticking to a losing course of action.
Expected short-term problems: when setbacks are seen as planned and temporary, it becomes more challenging to evaluate the potential they are red flags.
Belief in long-term payoff: when initial commitment requires patience for a long-term gain, we underestimate the danger of early warning signs.
Project salvage value and high closing costs: awareness of high irretrievable expenditures and expensive closing costs can reinforce a commitment to stay the course for too long.
Both societal and organizational pressures can unintentionally keep leaders committed to a failing decision by subjecting them to implicit expectations about how leaders should behave.
Good leaders do not make mistakes – when we tie a leader’s fate to successful outcomes, there is a strong pressure to justify executive decisions. They aim to preserve their reputations as good leaders and work to avoid the organizational disruption that comes along with risk.
Good leaders persevere in the face of adversity – we recognize and reward perseverance that leads to positive outcomes, particularly in uncertain circumstances. We revere those who see what others cannot and fail to account for the long-term costs of high commitment in uncertain circumstances.
Recognizing Escalation of Commitment
Although recognizing our susceptibility to Escalation of Commitment is a challenge, it is possible to ask some key questions to evaluate risk and identify warning signs of over commitment.
Do I have trouble defining what would constitute failure for this project or decision? Is my definition of failure ambiguous, or does it shift as the project evolves?
Would the failure of this project radically change the way I think of myself as a leader or as a person? Will this project establish my reputation, success or credibility?
Would there be a relationship cost to abandoning this project? Do I worry I will sacrifice the good opinion of others if this project fails?
Do I have trouble hearing other’s concerns about this project or do evaluate other’s competence on the basis of their support of this project?
Do I generally evaluate how events and actions will affect the project before I think about how they will affect other areas of the organization or the company as a whole?
Protecting Projects from Escalation of Commitment
Understanding the dangers of Escalation of Commitment is an important aspect of leadership competency, however developing resilience to over-commitment when strategic planning is an advanced leadership skill.
To extended commitment to a failing decision at the onset of the project planning process:
Firmly establish project evaluation criteria and insist on frequent, accurate and timely information. Leaders are more likely to withdraw from escalating situations when they can see objective, unfiltered evidence of the high costs of continuation.
Determine project “kill switches” that should immediately signal cause for project termination discussions at the onset of strategic planning. Make conscious decisions about the criteria that should signal withdrawal to decrease the likelihood of rationalizing or dismissing negative outcomes.
Appoint devil’s advocates on the team with the sole purpose of identifying weaknesses and vulnerabilities with the current plans. Encourage ruthless scrutiny and leverage those with a critical outlook to challenge over-commitment.
Establish regular opportunities to step back and evaluate the project with an outside perspective. Invite those who were not responsible for the initial project green light to compare costs to gains and evaluate conditions for optimal outcomes. By placing this evaluation in the hands of those removed from the original decision, we mitigate the pressures to continue with plans despite waning merit.
When possible, separate decision makers from those who are responsible for designing, implementing and executing the decided course of action. This decision group is in a position to make more objective decisions about the costs and benefits of a plan if they are not the ones who own design and implementation responsibility.
Organizations that celebrate failure as often as they celebrate success ultimately rescue the company from the costs associated with over-commitment. Recognizing and rewarding those with the courage to pull the plug on a failing course of action positively reinforces risk taking, as well as decisions made for the greater good. Also, be wary of celebrating persistence despite the warning signs, and recognize these occasions as luck versus a sign of leadership strength.
While protecting projects and individual leaders from the dangers of commitment escalation is a worthy pursuit, it is important to remember leaders and projects reflect the culture in which they live. I hope we learn to extend our attention to a larger scope and create organizational contexts where we celebrate and admire those willing to admit they made a mistake. I hope we leave behind the adage "winners never quit and quitters never win" (sorry Vince, but I'm a Pats fan), and celebrate those who understand the heroism that comes along with quitting. You see, my courageous leaders,
quitters are willing to sacrifice ego, make themselves vulnerable and admit failure in the short-term, in order to ensure health for the greater good in the long term.
They are willing to accept the criticism and judgement that comes from admitting their mistakes and risk their reputations for the best interest of the organizations they serve. I hope one day, we create more organizations that recognize the heroism of quitting, and honor the seven-year-old in all of us who knows when enough is enough.