Last week I got caught up in “research-mode” for a blog post. I took far longer than I should have. The more information I uncovered, the more questions I had.
It was a bottomless rabbit hole of nutritious information.
Once I had amassed a series of research papers, authoritative blogs and video links by respectable academics and scientists, I put myself to writing a summary of what I had learnt to support my personal findings on the subject.
The goal was to write a 500 word blog post.
Furiously typing to include all that I had learnt, I ended up with a 4000 word article. I spent another 2 days trying to edit it down to match the goal.
All that effort. All that time. All that research. I had knowledge to offload! I needed to show that my time was well spent, because I wanted my readers to learn what I had learnt.
I could not complete my content piece, because it had become an unfinished university thesis. At 4000 words, I left my readers scratching their heads rather than walking away with a simple core message.
I went back to the drawing board and started again. I wrote an article in 2 hours. Then I spent another hour editing it and getting it ready for publishing.
3 hours. Job done.
What I had failed to complete over several days was done in 3 hours. This was only possible once I had let go of the sunk costs.
Sunk Cost Fallacy
“Sunk costs” can be time, money, and or energy spent. The Sunk Cost Fallacy is when you continue to work on a project or goal, purely because of already having spent these resources rather than basing your decision on good projections and reliable data.
"I will invest more, because I have already invested so much."
The Sunk Cost Fallacy is a decision-making bias, and it is a double-edged sword. By the time it has played out, you have not only failed your goal, but wasted more resources than you should have.
Falling victim to this bias means one cannot accept that one should cut one’s losses.
The sunk cost fallacy is most often associated with big business decisions, but it can apply to all decisions, big and small. Some people will stay in terrible relationships on account of having been in the relationship for years already. But as we now know, it can also be not knowing when to stop during the creation of a content piece.
Unfortunately, the best way to avoid falling victim to this thought paradigm is through experience.
This is a harsh truth, because it implies that failure to avoid it is inevitable. Well, failure is inevitable, but it does not always have to be of major consequence and suffering. So here are 4 tips to become more aware of your own Sunk Cost Fallacy bias.
Beware the Motivational Hype
I love a great motivational video. That forceful, reassuring voice resonating in your ears. Those plentiful gems of insight compressed into a few enjoyable minutes, like the crown jewels themselves. Those delectably crafted visuals to incite excitement and heaps of FOMO.
"That was so good. I think I’ll watch another one instead of doing what they are telling me to do."
There is a fine line between motivational videos helping and hindering people. Whether we want to blame the content design, or perhaps the platforms these videos are consumed on, is irrelevant for the moment. The point I’m aiming at here is that we must make sure to not become fanatical about the messaging of any motivational speech.
“Never give up.”
“Never let go.”
“You have to see it through.”
“Persistence is the only key to success.”
These little nuggets are all very well and true, but only in moderation and under the right circumstances. Having zealously believed these things led me into many a loosing battle over the years.
For example, there was a time I REALLY should have stopped a marketing campaign for a startup business that was not working too well. Instead of stopping and looking at my options, the “Never give up” voice blindly led me into debt. The business collapsed, and it left me fighting my way out of debt over the next 2 years. Sunk Cost Fallacy 101.
Motivational videos and speeches are great, but do not let them overpower rational decision making with their idealistic “bites of wisdom”.
Revolving Doors Mental Model
In the ikario podcast 004: How to get your sh*t together - part 3 Free Your Mind Shane speaks of the Revolving Doors Mental Model as a resistor to the Sunk Cost Fallacy. The idea is to imagine that you just walked in on the situation as a completely different person.
For example, imagine that you were just hired for the position you already have. Pretend you don’t know any of the people you work with. You have no attachment to the work that’s already been done.
You would make critical work decisions based on the facts, right?
All past effort, time and money spent is not on your conscience. They are irrelevant for you to do your best as the new appointee. Only the facts matter.
When we are so caught up in our situation we can not see the forest for the trees; we cannot imagine things differently. If, like me, emotional detachment is a challenge for you, then seek advice from others.
Seek outside opinion
I asked the ikario team for feedback on my 4000 word blog article. I got two significant pieces of advice.
- Tim said he preferred the story of my struggle with this article over the article itself. The idea for the Sunk Cost Fallacy article was born. Although this did not help me directly solve my struggle with reducing the article, it allowed me to see value in the “wasted time”.
- Abhi asked me: “What was your goal?” This question struck me with a sense of clarity. Only in that moment did I realise the goal was 500 words about my personal experience. I had missed the mark entirely.
In both cases, I came to a conclusion I could not have imagined myself. My emotional attachment was blinding. They had none of it.
I need to add that one should obviously not be asking just anyone. Seek people that will contribute an informed, educated and where possible unbiased opinion. Gather data from various sources and draw your own conclusions.
The idea when asking other people is not to take their opinion, but rather aid your ability to imagine that which is obscured to you. Then revisit the Revolving Doors’ mental model again.
Setting clear goals and checkpoints
A great way to avoid the Sunk Cost fallacy, is to set a clear fixed goal or desired outcome. Then at strategic points, check if you are still on track.
When I have a defined goal, like write 500 words about my personal experience, then the moment I pass 500 words I must stop. This is the first checkpoint to reassess my trajectory.
Because I was “in the zone”, I missed the checkpoint and carried on to 4000. Fine, but then stop and reassess there. This is the second checkpoint.
Again, I ignored it and edited for two days. Two days, with no success in concluding the content piece!
Only when Abhi reminded me with his question, “What was your goal?” did I manifest the 500 words about my personal experience as my blueprint.
When I read my article again, I realised that 90% of it was not about my own experience. I had written about the history and mysteries of the subject. I had missed the goal entirely.
There was no rescuing it. That’s why I started again.
For me the idea of goal setting and checkpoints are now clear for all future posts. I can repeat this system and avoid losing days ever again.
Avoiding failure in life entirely is damn near impossible. Recognising one’s mistakes before making them is easier said than done. Quitting instead of ploughing on is terribly hard when we're all told to "never give up, even when the odds are stacked against you".
Removing biased thinking is one way to make these things easier.
Avoiding an overzealous prescription to the “Never give up” motivational rhetoric is a step in the right direction to open your thoughts to other ideas. Remove the blinkers and go on a quest for reliable data.
Learning about mental models (like the Revolving Doors model) to fight off biased thinking is another excellent step. Seeking insight from other people is a way to aid this process and broaden your sights beyond the limitations of your own views.
And setting clear goals with strategic checkpoints is a bold slap in the face of the Sunk Cost Fallacy.
I’m pretty sure everyone out there has had some experience of going too far, holding on longer than they should have. What’s your experience with the Sunk Cost Fallacy?
Tell us your story in the comments below.
For more information on biases that limit our minds, and the mental models to overcome them, don’t miss the ikario podcast 004: How to get your sh*t together - part 3 Free Your Mind.
Very well written. I greatly appreciate this article.
I am a member of a music group seeking to become a group of entrepreneurs ourselves. Countless times of investing in things that never quite panned out, or never quite met the mark of all of our goals. I am very familiar with these story.
It seems as if our newest sinkhole is becoming ourselves: Unable to band together to meet a majority of our deadlines.
Now I have a cross-road, attempting to figure out if our efforts as a group may be the rot; or perhaps our education on business is holding us back. Feedback?
Non-the-less, I am thoroughly thankful for the read!!!
Im so glad this resonated with you.
It really is a very complicated process to know when to quit and when to push on, but there are certainly indicators that we can learn to pay attention to.
I would ask: Do you have a crystal clear goal set out for the group? Then, is this goal well divided up into small tasks that can easily be identified as complete. Set a checkpoint and regroup often to see that you are hitting them.
If you have a solid game plan you will see where you are falling short. Identify weak spots and fix those up.