The power of loss
There can be projects in an organisation that should not exist but do because we won’t let them go. It seems the more we invest in something – our time, our hopes, our memories, our money – the harder it is to release. Its why we stay in a movie when we realise we don’t like it and consider sunk costs in decision making even though irrelevant. We have made the investment and don’t want to suffer the pain of its loss.
Loss aversion is a behavioural adaptation. Its hardwired within us: For organisms on the edge of survival the loss of a day’s food could cause death. Gaining extra food would not necessarily extend life, not without extra effort.
When we make a decision we do so believing it to be sound.
Each dollar and hour committed reinforces this belief. To sell or walk away means losing all we have invested so we hold on to avoid the pain.
To gain release requires a fight with human instinct. How best to handle this?
- Reframe outputs. State what’s lost if resources are not freed (NOT what’s to be gained if they are)
- Remove all blame
- Keep emotions cool
For new projects, avoid the problem:
- Set exit criteria
- Assess criteria vs performance through investment life
- Keep the big picture in mind
Some earlier posts:
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