Why Teams Don’t Cancel Failing Projects (Even When They Should)

 

There is something deeply human about sticking with a decision that no longer makes sense. We see it in everyday life. You buy groceries you never eat. You keep a subscription you forgot to cancel. You sign up for a gym in January, go twice, and still pay for it all year. But you don’t cancel. Why? Because canceling feels like giving up.

That’s exactly what economists Stefano DellaVigna and Ulrike Malmendier studied. In their research "Paying Not to Go to the Gym," they tracked people who chose expensive monthly gym plans, thinking they’d go often. Most ended up going just a few times but kept paying for months. People prefer to keep spending than to face the emotional cost of admitting they were wrong.

Now think about your team at work.

How many projects are still running, even when it’s clear they won’t deliver value? How many backlogs are full of ideas that no one really believes in anymore? And how often do you keep pushing through, simply because stopping feels worse than continuing?

This is not just about money. It’s about psychology. And teams fall into this trap all the time.

There are a few reasons why this happens:

1. The fear of looking inconsistent

People want to be seen as reliable, committed, and confident. Saying “we were wrong” or “this is not working” feels like failure, even when it’s actually a smart move. Leaders especially fear the judgment that comes with changing direction. But consistency isn’t the same as wisdom. Sticking to a bad plan is not leadership. It’s just inertia.

2. The sunk cost fallacy

The more time, money, or energy you invest in something, the harder it is to walk away. This is a powerful bias. We say, "We already spent months on this," or "We can't stop now, we are too far in." But that’s backward logic. The cost is already gone. What matters now is whether continuing will create value in the future.

3. Lack of psychological safety

In some teams, people don’t feel safe to speak up. If someone says, "This project isn’t worth it anymore," they fear being seen as negative, lazy, or disloyal. So everyone stays quiet, even when the problem is obvious. A healthy team needs space for honest conversations, even if they are uncomfortable.

4. Overconfidence in the original plan

Many teams mistake initial enthusiasm for guaranteed success. Plans made in slide decks six months ago are treated like promises carved in stone. But markets shift, users respond differently, and unknowns appear. Flexibility is not a weakness. It’s a sign of maturity.

5. Too much pride in effort

There is emotional weight in work already done. You feel attached to what you built. You remember the long nights, the heated meetings, the compromises. Killing the project feels like throwing all that away. But effort without outcome is not progress.

Now, let’s flip the perspective.

The best teams are not the ones that finish everything they start. They are the ones that know what to stop.

They build pause points into the process. They ask early: Are we still solving the right problem? They revisit assumptions. They measure reality, not just intention. They know that changing course is not the same as failure. It’s adaptation.

In Agile frameworks, this should be natural. We talk about iteration, learning, responding to change. But too often, Agile becomes just rituals. Sprints keep happening. Backlogs keep growing. Velocity gets tracked. And nobody asks the real question: Should this exist at all?

Here’s something simple your team can do:

At the end of every sprint or quarter, ask: If we had to decide today, would we start this again from scratch?

If the answer is no, it’s time to stop. Or at least to rethink.

Leaders have a responsibility to model this thinking. To show that changing your mind is not a sign of weakness, but of awareness. To create space where teams can be honest about what’s working and what isn’t.

The gym contract study wasn’t just about fitness. It was about identity, pride, and loss aversion. And that plays out in every workplace too. The longer you hold on, the harder it is to let go. But letting go is often the smartest move you can make.

Smart teams don't just deliver. They decide. And deciding what not to do is half the work of good leadership.

Canceling is not quitting. It’s choosing again, with better information.

That’s strategy. That’s clarity. That’s progress.