Why do not top managers leave unprofitable projects, and you - unloved work
We often make not the most profitable investments. It can be emotions, work, of course, money. And our most valuable. Time. Let's talk?
So, why do top managers for a long time not close unprofitable projects, and you - do not leave unloved work? The titans of strategic consulting - Mckinsey & Company - somehow calculated that the probability of reaching a profit-making enterprise does not exceed 35%. However, most managers for a very long time cannot take a willful decision and close or sell an asset that prevents them from living.
We give an example from the automotive industry. In 1985, the guys from GeneralMotors GM launched the Saturn project. The basis of the new enterprise was a simple idea - “Japanese cars became a fetish for Americans, let's sell cars that look like them.” But for several reasons, by the mid-1990s, it became clear that the project was not paying off. Instead of immediately shutting it down, GeneralMotors gave it hold on to 2010 and invested several billion dollars in an attempt at resuscitation. In other words, they kept the unprofitable enterprise afloat for 15 years and spent company money on it.
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Another example is the famous Concorde aircraft design. In 1962, jointly, the United Kingdom and France began to create their own passenger supersonic aircraft. In 1973, the first flight took place and even then it became clear that the project would never be profitable. However, Concord flew another 30 years.
The reason for this behavior is a psychological error known as sunkcostfallacy. Remember, in the Game of Thrones Petyr Belylish crucified, how he hates unsuccessful investments? It was also very difficult for GM's management to admit that the forces were wasted and the money was wasted.
In addition to the fear of recognizing losses, a phenomenon such as cognitive dissonance also plays a certain role. Let us explain what we are talking about. When you, as CEO, make a strategic decision, you do it on the basis of your beliefs and ideas about the world around you. For example, the GM management believed that American consumers would happily buy fakes of Japanese cars and stubbornly adhered to this belief for several decades. Their views are generally extremely difficult to adjust - that is why a company's policy usually changes only with a change in management.
But sunk cost fallacy works not only in situations when it comes to global issues. This phenomenon is also manifested in everyday life - when, for example, a wife cannot leave her unloved husband, arguing that they have been through a lot. A student who does not dare to change the subject of a diploma to a more interesting and personally understandable one, can also be under the influence of sunkcostfallacy.
Similarly, the situation is with the change of work. There are a huge number of factors that keep you from changing jobs, and the first one is sunk cost fallacy. Having worked for some time in a new place, you begin to create your own mythology about your high purpose of nailing and the existential value of your activity. It starts to happen simply because this is how our brain works. Plus, of course, such an employee’s world view is very beneficial to the employer.
And when you have the opportunity to change jobs, your brain starts to itch - “Think of the millions of nails that you have already hammered. Are you ready to simply give up all this? ”
Should I clarify that your answer should be - "Yes, I am ready."
For example, we will tell you a story about a girl who, for many, many, many years, worked in the same position for a salary that has not been indexed since 2008. She was afraid of something to change in her life and waited, and when it will raise for merit. She was afraid that her efforts would be ruined at once and would be reset. Needless to say that such an employee was very profitable for the authorities and nobody was even going to raise it? As far as we know, in the end, one day - after almost 6 years - her nerves could not stand it, and she threw a big scandal, after which her position improved slightly. The key word is “a little bit”. She was never able to honestly tell herself that nothing good was shining in that office and the only way out was to change her place of work. If our information is correct, it is still there, it gets ridiculous even by the standards of office plankton and inject money for three.
// How to avoid exposure to sunk cost fallacy?
As in all situations with different cognitive distortions, the thesis “knowledge is power” works. Personally, the very realization of the fact that I just fell into a mental trap and should be selected helps me a lot. Every time you start to argue your desire to linger on the hateful work with phrases in the style - “I have done so much here” - you know, you are under the influence of sunk cost fallacy.
Finally, awareness of time constraints is still very helpful .
Judge for yourself, every extra day that you sit on a tired place makes you somewhat poorer (inflation, sir). But this is not the main thing. The main thing is that the older you get, the harder it will be to change something in your life. That is why - never cling to the place. While you are young and full of energy, you can choose.
Our advice for those who are afraid to get stuck in one position for a long time.
I hate bad investments. True, I hate it. They harass me.
Petyr Beylish, Game of Thrones series
So, why do top managers for a long time not close unprofitable projects, and you - do not leave unloved work? The titans of strategic consulting - Mckinsey & Company - somehow calculated that the probability of reaching a profit-making enterprise does not exceed 35%. However, most managers for a very long time cannot take a willful decision and close or sell an asset that prevents them from living.
We give an example from the automotive industry. In 1985, the guys from GeneralMotors GM launched the Saturn project. The basis of the new enterprise was a simple idea - “Japanese cars became a fetish for Americans, let's sell cars that look like them.” But for several reasons, by the mid-1990s, it became clear that the project was not paying off. Instead of immediately shutting it down, GeneralMotors gave it hold on to 2010 and invested several billion dollars in an attempt at resuscitation. In other words, they kept the unprofitable enterprise afloat for 15 years and spent company money on it.
')
Another example is the famous Concorde aircraft design. In 1962, jointly, the United Kingdom and France began to create their own passenger supersonic aircraft. In 1973, the first flight took place and even then it became clear that the project would never be profitable. However, Concord flew another 30 years.
The reason for this behavior is a psychological error known as sunkcostfallacy. Remember, in the Game of Thrones Petyr Belylish crucified, how he hates unsuccessful investments? It was also very difficult for GM's management to admit that the forces were wasted and the money was wasted.
Sunk Cost Fallacy (“the error of recessed costs”) is a feature of the human psyche known in the framework of behavioral economics and cognitive psychology, expressed in a desperate refusal to fix losses and move on.
In addition to the fear of recognizing losses, a phenomenon such as cognitive dissonance also plays a certain role. Let us explain what we are talking about. When you, as CEO, make a strategic decision, you do it on the basis of your beliefs and ideas about the world around you. For example, the GM management believed that American consumers would happily buy fakes of Japanese cars and stubbornly adhered to this belief for several decades. Their views are generally extremely difficult to adjust - that is why a company's policy usually changes only with a change in management.
But sunk cost fallacy works not only in situations when it comes to global issues. This phenomenon is also manifested in everyday life - when, for example, a wife cannot leave her unloved husband, arguing that they have been through a lot. A student who does not dare to change the subject of a diploma to a more interesting and personally understandable one, can also be under the influence of sunkcostfallacy.
Similarly, the situation is with the change of work. There are a huge number of factors that keep you from changing jobs, and the first one is sunk cost fallacy. Having worked for some time in a new place, you begin to create your own mythology about your high purpose of nailing and the existential value of your activity. It starts to happen simply because this is how our brain works. Plus, of course, such an employee’s world view is very beneficial to the employer.
And when you have the opportunity to change jobs, your brain starts to itch - “Think of the millions of nails that you have already hammered. Are you ready to simply give up all this? ”
Should I clarify that your answer should be - "Yes, I am ready."
For example, we will tell you a story about a girl who, for many, many, many years, worked in the same position for a salary that has not been indexed since 2008. She was afraid of something to change in her life and waited, and when it will raise for merit. She was afraid that her efforts would be ruined at once and would be reset. Needless to say that such an employee was very profitable for the authorities and nobody was even going to raise it? As far as we know, in the end, one day - after almost 6 years - her nerves could not stand it, and she threw a big scandal, after which her position improved slightly. The key word is “a little bit”. She was never able to honestly tell herself that nothing good was shining in that office and the only way out was to change her place of work. If our information is correct, it is still there, it gets ridiculous even by the standards of office plankton and inject money for three.
// How to avoid exposure to sunk cost fallacy?
As in all situations with different cognitive distortions, the thesis “knowledge is power” works. Personally, the very realization of the fact that I just fell into a mental trap and should be selected helps me a lot. Every time you start to argue your desire to linger on the hateful work with phrases in the style - “I have done so much here” - you know, you are under the influence of sunk cost fallacy.
If awareness alone is not enough, then a change in the angle of view will help. Let the main value for you will be the experience gained, not salary or, for example, career growth. In this situation, you can always say to yourself: “Yes, I didn’t have a promotion here, but I gained invaluable experience and will be able to apply it in a new place.” This setup will help you move on, not really regretting the time spent.
Finally, awareness of time constraints is still very helpful .
Judge for yourself, every extra day that you sit on a tired place makes you somewhat poorer (inflation, sir). But this is not the main thing. The main thing is that the older you get, the harder it will be to change something in your life. That is why - never cling to the place. While you are young and full of energy, you can choose.
Our advice for those who are afraid to get stuck in one position for a long time.
Source: https://habr.com/ru/post/291968/
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