Sunk Cost Fallacy: When to Ghost Your Failed Projects

I’ll be sharing a new concept or framework designed to help you make sense of the situations you find yourself in. Whether you’re grappling with a tough decision at work, managing the chaos of everyday life, or just looking for new ways to think about the world, these might provide clarity.

Situation: You’re six months deep into a project that’s looking about as promising as a flip phone comeback. But you can’t quit now, right? You’ve already put in so much time/money/effort. Sound familiar? Welcome to the sunk cost fallacy.

Why it matters: This sneaky little mind trick is the reason you finished that terrible Netflix series (we’ve all been there) and why product managers everywhere are clinging to failing projects.

What is a sunk cost?

The basics: The sunk cost fallacy is when you keep investing in something just because you’ve already invested a lot. It’s like doubling down on a bad hand in poker, but the only thing you’re bluffing is yourself.

It could look like

Persisting with Failing Projects: Product managers might continue to pour resources into a project that's clearly not meeting market needs or business objectives, simply because they've already invested significant time and budget.
Resisting Pivot Opportunities: Teams may be reluctant to pivot or change direction, even when market feedback suggests a need for drastic changes, due to the perceived "waste" of work already completed.
Overlooking Better Alternatives: The focus on recouping sunk costs can blind product leaders to more promising opportunities or innovative solutions that could yield better results.
Delayed Decision-Making: The fear of "admitting defeat" by abandoning a project can lead to prolonged periods of indecision, during which valuable resources continue to be expended without clear direction.
Compromised Product Quality: In an attempt to justify past investments, teams might push forward with launching subpar products rather than cutting losses and starting fresh.

Why is it a problem?

Because those resources you’ve already spent? They’re gone. Poof. The real question is: Is this still the best use of your resources going forward?

How to break up with your sunk costs:

Reality check: Set up honest conversations with your team (or yourself) about whether a project is still a good idea. And I mean real, "is this actually working?" chats, not just status updates.
Create a ‘Safe to Fail’ zone: Foster an environment where it's okay to say, "Hey, I think we might be barking up the wrong tree here." Trust me, it's better to hear it sooner rather than later.
Play ‘What If’: Sometimes, the best way forward is sideways. Be ready to take what you've learned and apply it in a new direction. It's all part of the learning process!
Embrace the pivot: Sometimes, the best way forward is sideways. Be ready to take what you've learned and apply it in a new direction. It's all part of the learning process!
Celebrate the learnings: When you do decide to cut your losses, focus on what you've gained from the experience. Every "failure" is just education in disguise.

Tech Fails

Remember Google Wave? No? Exactly. Google launched it in 2009 with more hype than a royal wedding. It was supposed to revolutionize communication. Spoiler: it didn’t. But here’s the kicker – Google pulled the plug after just a year. They knew when to fold ‘em, and that’s a power move.

AI Plot Twist

What’s happening: The healthcare industry is eyeing AI like it’s the last slice of cake.
Why? They don’t have the tech baggage other industries do.
Why it matters: While healthcare’s choosing between pens and AI, other industries are stuck justifying their existing tech spend. It’s like trying to explain why you need another pair of airpod pros – we’ve all been there. The big Q: Are we sleeping on AI because of what we’ve already spent elsewhere? Think about it.

TL;DR

We all hate admitting we’re wrong. But sometimes, cutting your losses isn’t defeat – it’s your ticket to the next big win. So next time you’re tempted to push on with a failing project, take a step back. Pour yourself some wine (or coffee), and ask: “Is this really the best use of our resources?” Remember, every product is a hypothesis. We’re not psychics (if you are, call me!).

So let’s obsess over problems, not solutions, until we know we’ve got it right.

Katie