The Sunk-Cost Fallacy
Over the past 10 years, Chris Cook has spent his career in the construction industry. He has a Bachelor's of Science in Industrial Technology Management with an emphasis in Building Construction Management and Master's of Science in Project Management. He is an accredited PMP. Follow more of Chris's insights at his blog EntrePMeur.
Most organizations and leaders have succumbed to the sunk cost fallacy — sticking with a project or team member based on the time and money already invested, even though there is no sign of a turnaround. Being aware of this phenomenon is the first step in making sure ego does not trump rational decision-making.
Sunk cost fallacy, according to the Cambridge English Dictionary, is “the idea that a company or organization is more likely to continue with a project if they have already invested a lot of money, time, or effort in it, even when continuing is not the best thing to do.” This phenomenon is also described by the idiom “throwing good money after bad.”
Sport is an arena chock-full of sunk cost fallacies. A recent example is the Washington Redskins drafting quarterback Robert Griffin III. The team was in dire need of a quarterback. For the right to draft Griffin, the Redskins traded three years’ worth of first-round draft picks and a second-rounder to the Cleveland Browns. First-round draft picks are valued like gold. Giving up three of them for the chance at a franchise quarterback was like betting the farm.
Sunk cost fallacy rears its ugly head. The Redskins did not give up all those picks to have Griffin sit on the bench. Management and the team had a decision to make. Play Griffin risking his health or start Kirk Cousins who had a …
Please log in or sign up below to read the rest of the article.
|
"When I have a kid, I wanna put him in one of those strollers for twins, then run around the mall looking frantic." - Steven Wright |
