Escalation of Commitment
1 April 2009
Our daily reality is becoming increasingly complex requires us to make decisions in conditions of uncertainty. Situations in which we must decide whether to stop investing in failing courses of actions or perhaps invest in it more patiently are dilemmas every decision maker must face. Experience shows that in decision makers facing such a dilemma usually act irrationally and forget that sunk losses are irrelevant. Decision makers therefore continue investing time, money and effort in initiatives that were proven unsuccessful despite the investment proven unwise. This phenomenon in which past investments are the basis for current decisions and the investments profitability, is referred to as "Escalation of Commitment".
This escalation is common in all areas of our life: in our personal life, we invest money in repairing a car that repeatedly breaks down; in our organizational life, we continue to maintain a failing project that will probably not be worth its investment (I'll let you guess the Israeli national manifestations of this phenomenon). Despite the difference between its various expressions, there are several main properties common to all situations involving escalation: firstly, the individual or organization is involved in an activity targeted at attaining an objective and invests various resources for this purpose; secondly, a while after embarking on this journey it is explicitly clear to said individual/ organization that the investment will not be returned as expected. Thirdly, the decision makers are conflicted: should they abandon the project or further invest in it, knowing that their chance of returning the investment is slim at best. Finally, said decision makers decide to invest in failed route.
Just imagine a situation in which your organization has invested during the last three years a substantial amount of money, time and effort in a project and yet the KM solution still doesn't seem to be taking off. Entries are at a staggering low, organizational attention has been diverted elsewhere, the content experts and do not feel a need to maintain the content and even the focus group you held answered that this solution doesn't seem like a useful tool. Is it worthwhile to keep on investing at this point? Unfortunately, many organizations begin a project fired up and finish it unenthusiastically; nevertheless, the organization continues funding this project, hoping to resuscitate it. Do we have a hard time saying goodbye to unsuccessful applications? Is it our gut that instructs to try again? Why do we continue investing in the project even when it will clearly not produce the desired results?
Over the years, several theoretical explanations have been developed and presented for this phenomenon. The first is the 'self -justification theory'. According to this theory we tend to continue and invest in failing courses of action due to our need to justify our actions and prove to ourselves and others that our initial decision was correct and reasonable. Enforcing our commitment is meant to reaffirm our decision. If this need is great i.e. if there is much need to justify the decision due to the decision being public or has been made before, this tendency is even greater. A Knowledge Management project is one that receives much attention in most organization and as such is in the spotlight for an extended period of time and in turn must justify its actions. According to this theory, that is the reason for its escalation in commitment.
An alternative explanation is supplied by the 'consistency theory', according to which as soon as an individual act to attain a certain goal, their inherent inert urges creates another complementary goal: completing this task. As time goes by, this goal competes and eventually overrules the urge to attain the original objective. The need to complete the task becomes even stronger when it is perceived as more valuable by the decision maker.
How can one handle this situation? Like in many cases, the first step is awareness. To be aware of the problem and know to stop we at the right stage despite the pain involved. A method proven effective is creating a meeting in which the future of the project will be discussed by both of its sides as well as participants that weren't involved in the initial decision-making process. These participants do not harbor a strong need for self-justification; their decisions will therefore be as neutral as possible. One main problem is that project members view the project as part of their identity and their level of identification with it is sky-high. In these cases, those that oppose the change must be detected; their identity must be differentiated from the project.
Another way to handle this phenomenon is by presenting the possible harm clearly. The more bluntly we illustrate the project's possible implications, the greater the chance we generate less escalated behavior.
A complication is this solution was offered to solve a need which (since the solution was revealed to be useless) is still intact and therefore we consider this harmful solution once more. In this case, the problem must be reanalyzed in order to detect another way to approach it. If an alternative is found, great; yet if it wasn't, you must nevertheless stop investing in a solution proven to be ineffective and therefore wasteful.
While it is never pleasant to recede, it is sometimes better to cut your losses and focus your energy on solutions that can positively benefit the organization in both the short and long run.
Fox, S (1998). The Physiology of objection to change. Ramat Gan: Bar Ilan University