A Leader's Guide to Knowing When to Quit
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 celebrate knowing when to quit?
The answer is recognizing the role Escalation of Commitment plays in our decision-making.
Not long ago, I found myself on the sidelines, watching my daughter’s soccer team deploy a mob-mentality offense only seven-year-olds seem to understand. Amidst the chaos, I overheard a fellow parent trying to motivate his crying daughter with the words, “We committed to the season, and we aren’t quitting now.”
Sitting in my folding soccer mom chair, I wondered which lesson was the right one to follow – the one that encourages sticking to commitments despite diminishing returns or the one that acknowledges our feelings of dread and exhaustion, signaling it might not be worth it anymore. The parent in me might not have the answer, but the coach in me certainly does.
People often assume that our commitment to a failing course of action stems from our reluctance to admit we're wasting time and money. However, the real reasons behind Escalation of Commitment run 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 manifest in various aspects of life - from dead-end jobs to failing projects and even stagnant romantic relationships. IN these situations, we tend to stubbornly rationalize, make excuses and continue to invest in our past decisions, even when they are not yielding desirable outcomes.
In fact, almost any decision, particularly high-stakes choices subject to scrutiny by others, is susceptible to Escalation of Commitment.
The pattern of Escalation of Commitment typically involves committing resources to a course of action. When that action fails to yield the desired results, we escalate our commitment by investing more resources in an attempt to turn things around and recoup the initial investment. The more resources we invest, the more we become committed to the original course of action, trapping ourselves in a cycle where withdrawal becomes increasingly difficult
Causes of Commitment Escalation
Understanding the features of commitment escalation is one thing, but understanding what makes individuals susceptible to a cycle of over-commitment is another challenge.
Despite considering ourselves rational decision-makers, human psychology can work against us, making objective decision-making more challenging. Several biases contribute to this phenomenon:
Sunk Cost Bias: We resist admitting that we've wasted time and money or made a poor decision, leading us to convince ourselves that further investment is necessary to avoid potential losses or disappointments.
Confidence Bias: We overestimate our ability to create successful outcomes and believe we can turn things around better than others.
Reinforcement Bias: Managers who have been rewarded for perseverance, even in challenging situations, tend to falsely believe that things will eventually improve.
Confirmation Bias: We easily accept information that aligns with our existing beliefs and dismiss or discredit contradictory information.
Fear of Failure: Even when losses are recognized, we may choose further investment to avoid admitting failure.
In addition to psychological influences, specific project features can increase potential for sticking to a losing course of action, such as:
Expected short-term problems: When setbacks are seen as planned and temporary, it becomes difficult to evaluate whether they are early warning signs.
Belief in long-term payoff: When initial commitment requires patience for a long-term gain, we underestimate the danger of early signs of failure.
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.
Societal and organizational pressures can unintentionally encourage leaders to remain committed to a failing decision, subjecting them to implicit expectations about how leaders should behave.
Good leaders do not make mistakes – Tying a leader's fate to successful outcomes puts significant pressure on them to justify their decisions and preserve their reputation.
Good leaders persevere in the face of adversity – Perseverance is highly rewarded, particularly in uncertain circumstances, often neglecting the long-term costs of high commitment.
Recognizing Escalation of Commitment
Although recognizing our susceptibility to Escalation of Commitment is challenging, we can ask key questions to evaluate risk and identify warning signs of over-commitment.
Do I have trouble defining what constitutes 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 impact how I view myself as a leader or as a person? Will it define my reputation, success, or credibility?
Will abandoning this project come at a cost to my relationships? Do fear losing the good opinion of others if the project fails?
Do I have difficulty accepting other’s concerns about this project, or do evaluate their competence based on their support of this project?
Do I generally evaluate how events and actions will affect the project considering the impact on other areas of the organizations or the company as a whole?
Protecting Projects from Escalation of Commitment
Understanding the perils of Escalation of Commitment is a crucial aspect of leadership competence. However, developing resilience against over-commitment during strategic planning is an advanced leadership skill. To guard against committing to a failing decision from the outset of the project planning process:
Establish project evaluation criteria and demand frequent, accurate, and timely information. Leaders are more likely to step back from escalating situations when they have access to objective, unfiltered evidence showcasing the high costs of continuation.
Identify project “kill switches” at the outset of strategic planning. These switches should instantly trigger discussions about terminating the project. Make conscious decisions regarding the criteria that should signal withdrawal to reduce the likelihood of rationalizing or dismissing negative outcomes.
Appoint devil’s advocates within the team, individuals with the sole purpose of identifying weaknesses and vulnerabilities in the current plans. Encourage rigorous scrutiny and leverage those with a critical outlook to challenge over-commitment.
Create regular opportunities to assess the project with an external perspective. Invite individuals who were not initially responsible for approving the project 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 reduce the pressure to continue with plans despite diminishing merit.
Whenever possible, separate decision makers from those responsible for designing, implementing, and executing the chosen course of action. This decision group is in a better position to make objective decisions about the costs and benefits of a plan when they are not the ones responsible for design and implementation.
Organizations that celebrate failure as often as they celebrate success ultimately rescue the company from the costs associated with over-commitment. Recognizing and rewarding individuals who have the courage to halt a failing course of action positively reinforces risk-taking, as well as decisions made for the greater good. Be cautious about celebrating persistence despite warning signs, and recognize such instances as luck rather than 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 exist. We should strive to extend our attention to a broader perspective and create organizational contexts where we celebrate and admire those who have the courage to admit their mistakes. We should move beyond the adage "winners never quit and quitters never win" (apologies to Vince, but I'm a Pats fan), and celebrate those who understand the heroism that comes with knowing when to quit. Courageous leaders are
willing to sacrifice their ego, make themselves vulnerable, and admit failure in the short-term, to ensure the long-term health of the organizations they serve.
They are prepared to accept the criticism and judgement that come with admitting their mistakes and risk their reputations for the greater good. We hope that one day, we create more organizations that recognize the heroism of quitting, and honor the inner seven-year-old in all of us who knows when enough is enough.