A team member says, "Our company really needs to stop throwing good money after bad. We keep projects going that are clearly doomed and just swallow our resources. It's clearly irrational. It's stupid." How might you respond to him about reasons escalation of commitment occurs?

Question

Quizplus · Accepted Answer

The Answer is There are certainly many reasons for escalation of commitment. One problem, of course, is that, as noted by Rosabeth Moss Kanter, every major project looks like a failure in the middle. As such, people may simply believe that things will improve, that there's a light at the end of the tunnel. And, of course, it's easy to "see" in hindsight that a failed project was doomed; this is caused in part by hindsight bias. However, we are often unable to ignore sunk costs, the resources that have already been expended. We ask, "How can we end this project after we've spent millions on it?" Or, "How can we end this war after so many lives have been lost?" Further, as long as the project isn't cancelled nobody has to admit failure; people may hope they'll be transferred or promoted, find a new job, or retire before the project ultimate failure. There are also social rewards for persistence; we tend to admire people who stick to their guns in the face of opposition and bleak odds. Still, it is important to "know when to fold 'em." That is why it is important before and during a project to follow good guidelines to minimize escalation of commitment.

A Team Member Says, "Our Company Really Needs to Stop