The art of decision making separates the great leaders from good ones. As we rise through the ranks, it is our decisions that gives us an identity, recognition, and promotions. It also means that every decision that we take as leaders has a high cost associated with it. Unintentionally we all fall prey to the commitment trap at one point in time or the other. But before we go and look at how we can avoid that, let us understand what it is.
Suppose Tom is leading a team or a project. So this is the typical project life time
Tom starts working on the project much before point A and evaluates the cost benefit of investing in the project. A this point in time he genuinely believes the project is not only going to be revenue positive but also could change the fate of the company and as a result Tom’s. Tom identifies a few risks and devises strategies to counter the risks.
Point A: Tom does a project kick off to his executives to get a buy-in. He shows the detailed analysis on what the revenue upside of $15M may come as a result of investing in the project. Executives share some doubts or concerns that Tom addresses with his detailed analysis. At this point in time Tom has already associated himself with the project. The project is no more a project idea but Tom’s baby. Executives see the passion, acknowledge Tom’s commitment towards the company, and bite into the revenue upside. Tom gets the buy-in.
He moves onto socialize it with the team. Team starts talking about the project
Point B: At this point, Tom has convinced the senior leadership. Team members come back with some analysis on why some numbers shown in the revenue upside slides may not be correct and projected revenue upside may be a little too optimistic. The actual figure should be somewhere close to $5M. Tom dismisses that with some beliefs that the report failed to capture. He gets some doubt in his mind but he genuinely believes that $5M might be a lower bound but still ROI positive for the firm. This is the first signal that Tom ignores.
Point C: Tom is able to mobilize the team towards the project. Team works on an early prototype that shows some design assumptions that may be difficult to get around. Team realizes getting down this path may bring only $1M. It is too costly for Tom to announce to the executives and the team that he was incorrect. After all, this project is his baby. For Tom at this point in time too much is at stake. He is looking to complete the project successfully. Executives are expecting a huge upside of $15M. Tom’s promotion in the second quarter depends on this crucial project or so does he believe. Tom ignores the second signal and ostrich effect has set in.
Point D: Team pushes out the product in the field, early results start pouring in. The engagement is not that great. Tom starts looking for explanation on how to explain the results to the team. He brings up qualitative rational for pursuing the project.
Point Z: The project fails. Tom has already started working on the next project. Tom’s reputation goes down as the executive team has lost their faith and team does not feel valued as Tom discounted their initial warning.
This is typically how we all fall into the commitment trap. We have sold our ideas so much that any signals that it might fail or not achieve its objective seem alien for our mind to accept. Besides, acknowledging that the idea that you have been rallying after missed accounting for a corner scenario is often perceived as a bad decision, which becomes a public matter, inviting criticism from colleagues or management. Firing a poor performer whom you hired appears as a public admission of poor judgment. It gives a false sense of psychological safety to let him stay on, even though that choice only compounds the error. This is often also termed as the sunk cost fallacy.
Product managers are as likely, if not more, to fall into this trap. We are in the business of selling ideas and at times cannot distance ourselves from the features that we so dearly advocated for. During my initial years of Product management, I would fall into this trap. Since then I have become much more cautious.
The cycle typically go like this. I would championed for an idea, get the buy-in from the leadership, run the experiment, and finally the results did not match the initial hypothesis.
What did I do? I used UX, design, or other non-goals as arguments to justify shipping the feature.
As PM there are few things we can do to avoid ourselves falling into this trap
- State your hypothesis as clearly as possible. See here on how to frame a concrete hypothesis
- State goals and non-goals. Goals are what you are trying to achieve. Non-goals are the ones that you do not expect to move with this experiment. If you achieved non-goals but not the goal, declare the experiment as failed.
- Decision tree: Create a decision tree of what you would do if the results come out says less positive that we initially hypothesized, neutral, or negative. We are neutral when we are starting the project, the moment we started selling the idea, our brains get too attached to it. Creating a decision tree early on provides an objective ground that you and the team can use to identify the next course of action.
- Define milestones: At each milestone not only shall we regroup on what should be the next step but also whether our assumption when we started was right to begin with. If not then suspend the project immediately.
- Red hat Blue hat: Do not discount those who point out flaws or come with signals. In fact acknowledge their concerns, re-evaluate the projection, and involve a neutral third party view point to do an objective assessment.
- Hoping for A rewarding for B: Leadership creates culture where admitting a decision as a bad decision is seen unfavorably even though leadership encourages employee to review their decision in the light of new information. This is called ‘Hoping for A rewarding for B’. If you are at leadership position, it is important to create a culture where employees believe in owning its mistake. Acknowledging that good decisions can lead to bad outcomes will encourage people to cut losses instead of continuing on the same course.
I hope by acknowledging that we all can fall into such a trap will help us avoid going down the ego trip of the commitment trap.