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Date
In Part I of this post, I discussed the Sunk Cost Fallacy, by way of referencing the abandoned Cincinnati Subway project of the early 1900s. It got some interesting feedback and generally readers agreed that this is an important aspect of human behavior – especially group behavior – of which project leaders should make themselves aware.
I indicated that Part II would discuss the sustainability aspects of this. Warning: there is Post Creep here. This is now a 3-part post.
So here is Part 2 (or II, if you count in Roman numerals)...
To move this post series over to the topic of sustainability and project leadership, let me start by dissecting the middle word of the Sunk Cost Fallacy – Cost.
Cost includes, of course, the dollars, yuan, pounds, Euros, yen, dinars, rubles and/or cryptocurrency, that we continue to “throw down a black hole of a project”. But what about the non-monetary elements of cost? How about the social and environmental impacts of a project that don’t show up at the ribbon-cutting ceremony?
I want to challenge your thinking here and talk about the converse of the Sunk Cost Fallacy and instead ask you if you have ever considered the Spending/Saving Money for Irrational Reasons Fallacy – SMIRF® (I just coined that!).
There are indeed SMIRF examples in which projects DON’T spend money (or effort, or research, or resources) on efforts that have to do with long-term impacts of the project’s outcome, when those outcomes should be front-and-center during planning.
There are other SMIRF examples, in which organizations spend money to try to work around a compliance item (usually involving safety or environmental controls or constraints imposed by a government agency).
Sometimes SMIRF is not really even about saving money, but rather an odd cultural motivation to ‘outsmart a government agency’ - to make this an 'us-versus-them' battle (when really 'us' and 'them' are on the same overall team).
In all of these cases, these SMIRF project behaviors are in the name of ‘saving money’ and ‘staying on budget’, or in some cases, ‘being on time’ – especially in beating a competitor to market. When this happens, the project has become so narrowly driven by the cost and/or time constraint, that it consciously or subconsciously severs all ties with the objectives not only of the project, but the strategic goals, objectives, vision, and mission of the organization. This can be worse than the Sunk Cost Fallacy, because the outcomes are not simply wasted money, but potentially horrific events and impacts that affect people and planet.
Since this blog post is one that challenges your thinking, I will avoid blathering on and on here, and instead seek some reaction and even examples. I have my own that I will share with you in Part III.
They won’t be pretty. But they’ll be fodder for lessons learned to avoid SMIRF.
Posted
by
Richard Maltzman
on: February 19, 2022 10:59 AM |
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