The Escalation of Commitment: Why Good Managers Fund Bad Projects
Why the "Escalation of Commitment" traps smart managers in failing projects, and the cognitive tools required to fold a losing hand. Introduction Organisations often have a “Zombie Project”, an initiative that is clearly failing, deadlines are missed, the budget has ballooned, and it has gone wildly off course from the initial ROI analysis. For the ground team, the solution appears to be obvious: cut the losses and move on. Nevertheless, the manager in charge often does the exact opposite and doubles down. Budget extensions have been approved, and staff have been reassigned to the initiative. While this behaviour may be attributed to ego or stubbornness, that is seldom the case. Indeed, more often than not, the continued pursuit of failing projects results from a cognitive trap known as the “Escalation of Commitment”. The manager’s brain is not weighing future benefits against future costs; it is weighing the pain of past losses against the faint hope of redemption. The Sunk ...