Why You Stick With Your Business Long Past When You Should
The escalation of commitment and how to know when to quit.
“How do you keep going, when things have been really hard and you want to give up?” Anthony asked the panel of entrepreneurs.
We all answered generically and predictably. We said that entrepreneurship is hard work, but you just have to start and keep going no matter what.
No matter what?
Well, yes. That was our advice because we collectively had no experience in quitting. Our interview panel was biased — we were all young and within the first five years of our first business. We did not have the wisdom of someone older, more experienced and on their third, fourth, or twentieth business. I pondered how they might have answered this question? Would they have emphasized to keep going no matter what?
The dominant messaging in business is to keep going, pivot, pick yourself up, re-strategize but never to just stop. A decade later you feel stuck with a business that you should of let go of a long time ago. You committed and kept committing long past when you should. This is the escalation of commitment.
The theory of the escalation of commitment
The first description of the escalation of commitment came from a 1976 paper by Barry Shaw called “Knee-deep in the big muddy: a study of escalating commitment to a chosen course of action.” His study showed that the persons who committed the greatest amount of resources into a business were likely to invest more resources if they felt responsible for the negative consequences. They felt an unidentified sense of guilt which they sought to resolve by investing more in hope that the business would not fail.
Simply put, the escalation of commitment as Shaw described is when you continue to invest despite facing increasingly negative outcomes. You continue on the present path instead of trying a new one. You try to convince yourselves and others that your behavior is rational and the best course of action. You select information to support your decision and negate the evidence that says it's not the best choice. You do this because you want to maintain consistency in your actions and save face.
In behavioral science, this is called the sunk-cost fallacy. According to this theory, we continue to invest money or effort into a decision because we have already invested so much. We do not want to ‘waste’ our previous investment despite evidence showing that the cons of continuation outweigh the pros. The value we place on the prior investment or the “sunk cost” makes us unable to see that the future cost of continuing is high and likely outweighs the expected benefit. This is embodied in the proverb of “throwing good money after bad.”
In sociology, similar behavior is called commitment bias. This is when we remain committed to behaviors that the public knows about, even if the outcomes no longer have any personal benefit. Since inconsistency is an undesirable trait, we want to reflect consistency to others.
Some common scenarios
- You are 3 years into your first business and while you were passionate about it in the beginning you are no longer passionate now. You think about moving on to something more fulfilling but you feel a sense of pressure to keep going. You don’t want to be seen as a quitter. You pride yourself on being reliable and committed and in finishing everything you start.
- You made a personal resolution to yourself that you would commit to writing one article a week, every week for a year. You are 3 months in and exhausted. You have hit a creative block and find it hard to get back in the creative flow. You don’t want to break the promise to yourself even though taking a break may be exactly what you need to write a successful article.
How to know when to stay and when to quit
Here are 5 pointers to help you avoid commitment bias.
1. Become aware of the deeper reasons behind your decision making
This requires a deeper level of introspection and honesty with yourself. Take some quiet time to get to the bottom of why you are continuing to commit to this business. If you find that you are making the decision to save face, to prove something to yourself or others, or because you are holding on to some ideal then this is likely commitment bias.
2. Face the consequences
All of our decisions have consequences. Some consequences are favorable and others not so much. When you understand that consequences are an unavoidable part of life, then you are able to make peace with them. By accepting them, you will no longer make decisions that are solely aimed at avoiding them.
3. Commit to personal growth above all else
Commit to only what aligns with your current goals and values. Your personal and growth and evolution is the most important aspect of your life. There is no reason to remain committed to some business that doesn’t serve you. Variety and change add dimension and depth to life — it is to be sought after, not avoided.
4. Resolve to make a better decision next time
Every poor decision we make presents an opportunity to learn a lesson that will help us to make a better decision next time. Take the time to reflect on the decisions you made in the past and what you could have done differently. What might have been the better decision and why? Hindsight is 2020.
5. Stop worrying about what others may think
We place so much importance on what others think about us, we do not take the time to nurture what we think of ourselves. This is the only opinion that counts. If it is a negative opinion, you have the opportunity to work on it until it is a positive one. There will always be people who judge you and disagree with you and this has nothing to do with you. Most of the time people are thinking about themselves, anyway.
Summary
The escalation of commitment is when we continue to make decisions that are in line with previous decisions even though the outcomes are unfavorable. We do this because we want to prove to ourselves and others that we can remain committed and consistent and that we make sound decisions. You can avoid this by firstly becoming deeply aware of what are the real reasons behind your decision-making. Be open to facing the consequences and resolve to make a better decision next time. Remember that personal growth, not rationalized commitment should be the goal.
If you find yourself in a hole, stop digging.
Thanks for reading.
Kim
