Pulling the plug

We make decisions and defend them with our lives, rarely if ever admitting that we might have taken the wrong road even when it is evident to other folk. In management terms it is what probably leads to escalation of commitment which simply put, means throwing good money after bad.

Defined as the "Tendency to invest additional resources in an apparently losing proposition, influenced by effort, money, and time already invested." 


This is always a managerial quandary and some of the spectacular failures of the recent past are The Lockheed L 1011 fiasco and the Washington Public Supply System debacle (commonly referred to as WHOOPS) are spectacular examples of organizational failure. Decisions to persist with these crippled ventures caused enormous losses. Closer home many of India's welfare schemes may fall in this category, where enormous funds have been wasted in unproductive and wasted schemes that yielded no results though the initial thought that triggered the decision might have held a germ of truth.


While escalation of commitment is an interesting phenomenon and I'm sure that many people do understand its implication, the decision to pull the plug on a failed project is always difficult. For many managers justifying the lost resources is difficult and it is easier to pretend that things are hunky dory and coast.

Escalation of commitment is a cognitive bias.The fear of change, failure, the fear of admitting we were wrong, the fear of wasting time, money, and energy, can all be enough, even on a subconscious level, to keep people motivated and working hard at something that is false and untrue. On occasion I ponder as to why seemingly intelligent people follow sadhus, clerics and other such religious nuts  who lead them up the garden path both in organized and unorganized religion.

Sometimes the best thing we can do is accept our wrong decision, cut our losses while we can, and get a move on.  This is often more frightening, especially when the stakes are high.  But we need to be able to learn how to cut our emotional attachment out of the equation and look at the objective reality.  Do the math with your head, not your heart. 

Escalation of commitment can be very dangerous when we try to manage impression. This particularly holds true in adolescent youngsters and manifests itself as peer pressure where a destructive course is charted and navigated just to confirm.

We need to be able to admit defeat and admit that we are wrong on occasion and simply pull the plug !