Advanced Business English Article for Leaders

When Holding on Hurts More than Letting Go

Imagine this: You’ve dedicated months of hard work, long nights, and a significant amount of your budget into a project, but the results are far below expectations. Maybe you have dedicated 10 years to a career that no longer fulfils you; or perhaps you have completed two years of a three-year university course, and you've realized it's not what you want to do. Should you persevere and finish what you started or cut your losses?

What is the Sunk Cost Fallacy?

After so much time and resources have already been invested, the idea of walking away in all of these scenarios may be unthinkable. There is an overwhelming feeling that you might as well see them through because you have come this far, even when the negatives outweigh the positives. This tendency to continue investing time, money, or effort into something simply because you've already invested a lot is known as the sunk cost fallacy. A painful dilemma which has led many businesses and careers to ruin!

Why we carry on

The decision to press on even when it doesn’t make sense is made even more likely by the fact that this kind of persistence is often glorified in business, and seen as a sign of a strong leader. In reality, what we call persistence may just as likely be stubbornness in a suit. One other perceived sign of strength is unyielding optimism; the idea that everything will work out in the end. This is known as “optimism bias” – the idea that bad things are for other people. We love a good comeback story, but sometimes the hero should have turned back two chapters ago. 

Other Psychological Traps that Feed into the Sunk Cost Fallacy

At its core, the sunk cost fallacy also plays into our loss aversion—another well-known psychological tendency that makes us fear loss more than we desire equivalent gains. So we hang on, not necessarily because it’s the smart move, but because walking away feels like admitting defeat. Add to that our old friend “Status Quo Bias” – the idea that keeping things the same feels so much safer than instigating change. All change is uncomfortable and might rock the boat. So we delay, rationalize, and kick the can down the road, hoping the future version of us will be braver, or at least have a better plan!

Adding more fuel to the fire is the fact that by this time all your time and effort feels very personal. It's a dream, a vision, a risk that you've proudly stood behind. Letting go doesn't just hurt your wallet; it can damage your self-worth and your whole identity!

The Jeopardy of the Sunk Cost Fallacy 

The damage from the sunk cost fallacy can be catastrophic. Ploughing limited resources into projects that no longer align with market demand can really jeopardize a company’s health, leading to poor cash flow, frustrated investors, and in the worst-case scenario, a business that quietly collapses. Investing time into one misaligned project means missing so many other much more worthwhile opportunities at the same time.

The Benefits of Pivoting Early

On the other hand, founders who recognize the signs and pivot early often unlock new paths to growth. Many successful, well-known startups began with one idea which evolved into something different after they accepted the original plan wasn’t working.

Some Signs to help you to avoid falling victim to the sunk cost fallacy!

• You justify further investment based on past efforts rather than future prospects. 
• “I’m afraid I can’t go along with you there…” You miss warning signs because you ignore or dismiss negative feedback.
• You are so emotionally attached that you cannot assess the project objectively.

How to Break Free and Outsmart our Own Brains 

• Set regular milestones or ‘reality checks’ to evaluate whether a project is still aligned with your long-term vision.
• Ask yourself: “If I hadn’t invested anything yet, would I start this project today?”
• Get outside opinions. Bring in advisors or peers who aren’t emotionally involved. They can offer an unbiased take and help you see options you may have overlooked. 
• Accept and enjoy the pivot. Changing direction isn’t failure—it’s strategy. Plenty of success stories started with a “failed” idea that led to a better one.  
• Have an exit plan before you start. Defining thresholds for when it’s time to cut your losses will make that difficult decision much easier. 

Letting go doesn’t mean giving up. It means making space for better ideas and smarter use of your resources. In entrepreneurship, leadership, or your career path, the ability to adapt, pivot, and move on can be your most valuable asset.

Business English Phrases Used in this Article

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