In today’s post, Seth Godin (Marketing Genius) reminds us that sunk costs (those costs already paid) are not a good reason to continue forward.
When making a choice between two options, only consider what’s going to happen in the future, not which investments you’ve made in the past. The past investments are over, lost, gone forever. They are irrelevant to the future.
He (quite properly) deals with the monetary aspect of the sunk cost (it is called a “cost” after all). In his final example he points to the sign in the photograph on his blog, and reminds the reader that, regardless of the cost of the sign, having the largest word on the sign spelled correctly is, as they would say in the Visa commercial, “Priceless.”
But another point worthy of consideration is the emotional investment. Quite often we fail to let go of efforts gone awry for emotional reasons. How often have you been so wrapped up in a project that you haven’t been able to step back, take a deep breath, and see the “forest for the trees”?
When we are engaged in projects we need to be able to step back, as an outside observer for advice, and change. We need to be able to realize that, no matter how vested we feel about a project, no matter how emotionally entangled we are, it is time to ignore the “sunk costs” of emotional investment and cut the ties.
Am I arguing that we should always just “walk away?” Not necessarily. If the “outcome” you want to achieve is still worth achieving then strive for that outcome. But don’t continue to spend time heading down a fruitless path. Don’t walk down a road heading away from your destination, simply because you have paid for that road, either emotionally or with cash.
Move on. Chart a new course.
Incredibly relevant to todays socioeconomopolitical environment.
Sunk Costs?
Think TARP, Bailout, Single Payer, etc. etc.