Decision Making Blunder - Sunk Cost Bias - how to overcome

 

OCTOBER 24, 2011

Don't Make Decisions Based on Sunk Costs

It's tempting to make choices that justify past choices. For example, you may refuse to end a suffering project because of the time and effort already put into it. But these sunk costs are in the past. Here are three ways to make decisions that focus on the future: Get a second opinion. Listen carefully to people who were uninvolved with earlier decisions and unlikely to be as committed to them. Be easy on yourself. Even the best managers make mistakes and it's okay to reverse a previous decision. Don't encourage a fear of failure. When evaluating decisions, look at the quality of the process, not just the outcomes.

Today's Management Tip was adapted from Harvard Business Review on Making Smart Decisions.