Organization Design

Escalation of Commitment and the Project Nobody Will Kill

Learn why the decision to continue a failing project is almost never made by anybody, and install the three structural changes that make stopping a thing somebody can be right about.

  • Advanced
  • 13 min total
  • 14 chapters

What decision this helps you make: Whether to continue, time-box or kill a project that is behind, and who in your organisation is capable of making that call honestly given what it costs them to be the one who says stop.

What this topic is

Escalation of commitment is the tendency to put more resources into a course of action because of what has already been spent on it, rather than because of what the remaining spend will buy. It is not the same as stubbornness and it is not confined to bad managers: it is produced reliably in laboratory conditions by people with no personal stake, and it is amplified enormously by ordinary organisational features: reputation, budgeting cycles, and the fact that nobody is ever promoted for a cancellation.

Why it matters

Escalation is where most of the waste in a mid-sized company lives, and it does not show up as waste. It shows up as a roadmap, a headcount plan and a series of reasonable-sounding extensions. Because each individual increment is small and defensible, no meeting ever contains the decision to spend the total, and the total is frequently the largest discretionary number in the business.

Who should learn it

Anyone who approves project funding, runs a portfolio review, sponsors an internal build, or has quietly known for two quarters that something should be stopped and cannot work out how to say so.

What you will understand

  • The forward-looking test that decides continue-or-stop, and the two corrections that make it honest
  • Why the structural drivers of escalation matter more than the psychological ones inside a company
  • The de-escalation techniques that survived testing, and the popular ones that did not
  • How to write a kill criterion before you start that will still be usable when it triggers

Prerequisites

Common misconception

"This is a sunk-cost fallacy, and people just need to be reminded that past spend is irrelevant." The reminder does almost nothing, and the reason is that inside an organisation the past spend is not irrelevant to the individual deciding. It is attached to their judgement, their promotion case, and the headcount they justified. Staw and Ross separated the drivers into project, psychological, social and structural, and it is the last two that dominate in companies: escalation persists because stopping is personally expensive, not because anybody has forgotten how arithmetic works.[4] Any fix aimed only at the reasoning will fail against a fix aimed at who decides and what it costs them.