How to change direction after you’ve already invested a lot of effort?

Overcoming the sunk cost fallacy

November 6, 2024
Man walking back on a road

Change seems to be inevitable now more than ever. We start down one path, but then circumstances are different, and we’re unsure if we’re still on the right path. 

If you’ve ever known you need to make a change, but you’re feeling the weight of how much work you’ve already put in, this article is for you as we discuss:

How do you navigate a change when you’ve already invested a lot in the current plan?

Because if you don’t do anything and keep moving in the same direction, it’s only going to get worse. Let’s explore the sunk cost fallacy and see how to understand the impact of our emotions in this kind of situation. Then we’ll walk through the steps for making such a change.

Does life ever feel like a hack rather than on purpose?

What is the sunk cost fallacy?

The workday is over and you’re swiping through Netflix to find something to watch. You pick a movie you haven’t seen and start watching. It’s terrible. The acting, the plot and the cinematography all leave a lot to be desired. But you keep watching because you’ve already invested over an hour and there’s only 35 minutes left. This is the sunk cost fallacy.

It's hard to let go when we’ve invested a lot of work, money, or time into something. Even when our mind knows we should cut our losses and move on, our emotions keep us from moving forward. 

We like to think of ourselves as intellectual agents making rational decisions, but research has shown that we’re not that different from mice or rats in the sunk cost fallacy. 

It's hard to let go when we’ve invested a lot of work, money, or time into something.

It has to do with the regret of making a wrong decision. To change requires an acceptance of a bad decision. The sunk cost fallacy is strengthened even more by a culture that makes us more sensitive than ever to shame and failure.

How to avoid the sunk cost fallacy?

Avoiding the sunk cost fallacy is easier said than done, but here are two strategies to help you.

  1. Keep short cycles of review.
  2. Name the past and move to the future.

Keep short cycles of review.

The more we’ve invested in something, the harder it is to shift away from it. Holding regular reviews helps you evaluate where you are frequently, thus minimizing the amount of change needed. Short review cycles also may mean you have a series of iterative changes rather than one big change. 

I’ve seen numerous teams benefit from implementing Scrum because it allows the team regularly evaluate and adjust. Whether through daily stand-ups or sprint retrospectives, the team is always keeping things visible, evaluating and replanning. It’s the difference between minor adjustments to the steering wheel to keep a car on track versus the sharp overcorrecting turns of a new driver.

Short review cycles also may mean you have a series of iterative changes rather than one big change.

Keeping the cycles short reduces how much has been sunk into the current course. The sooner the change is made, the less power the sunk cost fallacy has.

Name the past and move to the future.

While you can and should learn from the past, you cannot change it. The effort, time, or money you’ve invested is already spent, and taking ownership of this reality is crucial to moving forward. 

Sometimes it’s simply saying aloud to the team, “When we started the project, we looked at factors X and Y and decided to do Z, but now things have changed, and Z is not the right strategy for reaching our goal.” 

The sooner the change is made, the less power the sunk cost fallacy has.

So often, bringing the truth out into the light disarms all the lies we’re tempted to believe. All of the “you should’ve…” and “if only…” statements shame us into submission and keep us stuck on the same path. 

But when you take ownership of the decisions made and the outcomes and call them what they are, then you can set them down and turn your attention to what’s ahead. 

Putting the past behind you is the biggest challenge to changing direction. Now we’ll look at how to lead in a new direction.

How do you lead in a change of direction?

Once you and your team have identified a new direction, now comes the next big challenge, making the change. Some of this will depend on the size of your project or organization. It’s easier to turn around a canoe than a cruise ship. 

Here is a checklist for making a change of direction.

  1. Clearly state the new direction.
  2. Create a communication plan
  3. Identify strategies for the change process.

Did you know Scrum applies to more than just developing code?

When you understand the essentials of Scrum and the nuance of how to apply it, you can use it to level up aspects of everyday life.

Clearly state the new direction.

One of the top tasks of a leader is to create clarity for your team. Once a new direction is set, outline how to communicate it.

  • Where have we been? 
  • Where are we right now?
  • What is now the destination we are heading towards? 
  • How will we get there from here?
It’s easier to turn around a canoe than a cruise ship.

Changing direction requires a new direction. Without clarity on the goal, the new “direction” will feel preferential at best. In a change process, people don’t know what has changed and what has stayed the same, and you must communicate this explicitly. Another set of questions to answer include:

  • What are we doing now?
  • What will we keep doing?
  • What will we change?
  • What new things are we now doing?

Create a cascading communication plan

If you’re in a large organization and there are layers of leadership, you need to cascade the communication down. Leaders need to know first what is happening so they can be a part of leading in this new direction. 

Now we all know people talk, so I recommend a shorter cycle of time for the communication to move from leaders only to everyone. Otherwise, you will be battling gossip and misunderstanding. 

Leaders need to know first what is happening so they can be a part of leading in this new direction.

Hopefully, you involved these leaders in the evaluation and problem-solving process, which will also make the cascading of communication easier.

Your middle managers are essential, they aren’t the decision-makers, yet they interact with those doing the work that is being scrapped.  You want to empower your leaders to lead their teams through these three points.

  • This is what is happening.
  • This is how it affects our team.
  • This is what we’re going to do.

What you want to avoid is someone asking their leader a question about the change and they answer, “I don’t know what’s going on, this is all news to me.” That answer will kill trust in upper leadership and confidence in the new direction.

Keep very short (daily) cycles for communication during change. If you take a few weeks without updates so you can “get it all figured out,” you’ve likely lost everyone before you get to communicate with them again.

Identify strategies for the change process.

Once you have clarified the new direction and established a communication process, you can look at strategies to facilitate the change.

Change can be tricky, and it's not always clear how to implement change. The book Switch is an excellent resource for understanding how to bring about change, and it uses a metaphor of a man riding an elephant to illustrate three areas to cultivate change.

  1. Directing the Rider. The rider represents the rational, logical mind of people. Appealing to the rider is usually the default approach but will have a limited effect on its own.
  2. Motivate the Elephant. The elephant represents our emotions, and if not properly engaged, it will steam role our rational plans every time.
  3. Shape the Path. How can you change the environment in which the change is being made? Can you make the new behavior extraordinarily easy and the old one difficult or impossible?

Action Plan

Change is inevitable, and leading in change is hard, but you’re not alone. I hope this article has helped you identify strategies for changes ahead of you.

This post is part of an upcoming Design Sprint Guide, where I walk through how to run design sprints and share lessons learned from facilitating them both in-person and online. The Design Sprints Guide will release at the end of 2022.

Frequently Asked Questions

Team Leadership

What is team leadership?

Team leadership is a management approach focused on leading and guiding a group of individuals working together towards a common goal. A team leader is responsible for providing direction, support, and guidance to the team members, while fostering a positive and productive work environment.

Team leadership involves setting clear goals and expectations for the team, communicating effectively, and building trust and relationships with team members. It also involves empowering team members to take ownership of their work and contribute their unique skills and perspectives to the team's success.

Some key characteristics of effective team leadership include:

  1. Communication: Team leaders communicate clearly and effectively with their team members, keeping them informed about goals, expectations, and progress.
  2. Vision and strategy: Effective team leaders have a clear vision for what they want to achieve and a strategy for how to get there, while also being flexible and adaptable when necessary.
  3. Empowerment: Good team leaders empower their team members to make decisions and take ownership of their work, while also providing support and guidance as needed.
  4. Trust-building: Team leaders build trust and strong relationships with their team members, creating a positive and productive work environment.
  5. Results-oriented: Finally, effective team leaders are results-oriented, focusing on achieving goals and driving performance while also valuing the well-being and development of their team members.

Overall, team leadership is a collaborative and empowering approach to management that values communication, trust-building, and results-driven performance.

Learn more about leadership.

What are the different styles of team leadership?

There are several different styles of team leadership, including:

  1. Democratic leadership: In this style, the leader encourages open communication and participation from all team members in decision-making processes.
  2. Autocratic leadership: This style involves the leader making decisions and taking control over the team's direction, often with little input from team members.
  3. Transformational leadership: This style focuses on inspiring and motivating team members to achieve their full potential, often by setting a clear vision and communicating goals effectively.
  4. Servant leadership: A servant leader prioritizes the needs of their team members, focusing on serving and empowering them to achieve their goals.
  5. Laissez-faire leadership: In this style, the leader provides minimal guidance or direction, allowing team members to take ownership of their work and make decisions independently.
  6. Transactional leadership: This style involves setting clear goals and expectations for team members and providing rewards or discipline based on performance.
  7. Situational leadership: This approach involves adapting one's leadership style to fit the specific situation or needs of the team at any given time.

Overall, each style of team leadership has its own strengths and weaknesses, and effective leaders may use a combination of different styles depending on the situation and the needs of their team.

Learn more about leadership.

What are the different skills required for team leadership?

There are several key skills required for effective team leadership, including:

  1. Clear: Team leaders must be to communicate effectively with their team members, setting clear expectations and goals, providing feedback, and keeping everyone informed about progress and changes.
  2. Active listening: Leaders need to be able to listen actively to their team members, hear their concerns, ideas, and suggestions, and work collaboratively to find solutions.
  3. Empathy: Good team leaders value empathy, recognizing and understanding the perspectives of their team members, and working to build trust and strong relationships
  4. Decision-making: Leaders must be able to make informed decisions based on available information and input from team members, while also being decisive when necessary.
  5. Problem-solving: Effective team leaders must be able to identify and solve problems that arise within the team, working collaboratively to find creative and effective solutions.
  6. Motivation and empowerment: Leaders must be able to motivate and empower their team members to take ownership of their work, overcome challenges, and achieve their full potential.
  7. Delegation and management: Team leaders must be able to delegate tasks effectively, manage resources and timelines, and oversee the work of the team to ensure quality and efficiency.

Overall, effective team leadership requires a combination of interpersonal, decision-making, and management skills, as well as the ability to inspire and empower team members to work collaboratively towards shared goals.

Learn more about leadership.

What is servant leadership?

Servant leadership is a leadership philosophy and management style that emphasizes the importance of serving others first before considering one's own needs and desires. It's an approach to leadership that focuses on the well-being and growth of others, rather than solely on achieving organizational goals.

A servant leader prioritizes the needs of their followers or team members, providing them with support, guidance, and mentorship. They are committed to empowering their team members to reach their full potential and achieve their goals.

Some common characteristics of servant leaders include:

  1. Empathy: Servant leaders value empathy, placing themselves in the shoes of their followers to better understand their needs and motivations.
  2. Listening: They are active listeners, taking the time to listen to their followers' concerns, feedback, and ideas.
  3. Commitment to development: Servant leaders prioritize the growth and development of their followers, providing opportunities for learning and development.
  4. Humility: They recognize their own limitations and seek input from others to make informed decisions.
  5. Stewardship: Servant leaders view themselves as stewards of their organization, working to create a positive impact for all stakeholders.

Overall, servant leadership is about creating a supportive and empowering environment for others to thrive. By prioritizing the needs of their followers, a servant leader can inspire trust, loyalty, and commitment, ultimately leading to better outcomes for the organization as a whole.

Learn more about how to cultivate servant leadership.

Servant Leadership

What is servant leadership?

Servant leadership is a leadership philosophy and management style that emphasizes the importance of serving others first before considering one's own needs and desires. It's an approach to leadership that focuses on the well-being and growth of others, rather than solely on achieving organizational goals.

A servant leader prioritizes the needs of their followers or team members, providing them with support, guidance, and mentorship. They are committed to empowering their team members to reach their full potential and achieve their goals.

Some common characteristics of servant leaders include:

  1. Empathy: Servant leaders value empathy, placing themselves in the shoes of their followers to better understand their needs and motivations.
  2. Listening: They are active listeners, taking the time to listen to their followers' concerns, feedback, and ideas.
  3. Commitment to development: Servant leaders prioritize the growth and development of their followers, providing opportunities for learning and development.
  4. Humility: They recognize their own limitations and seek input from others to make informed decisions.
  5. Stewardship: Servant leaders view themselves as stewards of their organization, working to create a positive impact for all stakeholders.

Overall, servant leadership is about creating a supportive and empowering environment for others to thrive. By prioritizing the needs of their followers, a servant leader can inspire trust, loyalty, and commitment, ultimately leading to better outcomes for the organization as a whole.

Learn more about how to cultivate servant leadership.

How can servant leadership be beneficial in the workplace?

Servant leadership can be beneficial in the workplace in a number of ways, including:

  1. Improved employee engagement and job satisfaction: When employees feel supported, valued, and empowered by their leaders, they tend to be more engaged and satisfied with their work.
  2. Increased collaboration and teamwork: Servant leaders prioritize communication, collaboration, and trust-building, which can lead to stronger relationships and more effective teamwork.
  3. Higher levels of productivity and innovation: When leaders empower their team members to take ownership of their work and contribute their ideas, it can lead to higher levels of productivity and innovation.
  4. Reduced turnover and absenteeism: Employees who feel supported and valued are less likely to leave their jobs or call in sick, leading to reduced turnover and absenteeism rates.
  5. Improved organizational culture: Servant leadership can create a positive organizational culture that values growth, development, and well-being for all stakeholders, which can lead to improved morale and outcomes.

Overall, servant leadership can lead to a more positive, productive, and fulfilling workplace environment, benefiting both employees and the organization as a whole.

Learn more about how to cultivate servant leadership.

How does servant leadership differ from other leadership styles?

Servant leadership differs from many other leadership styles in several key ways:

  1. Focus on serving others: Servant leaders prioritize the needs and well-being of their followers over their own interests, while many other leadership styles focus more on achieving organizational goals.
  2. Empathy and listening skills: Servant leaders value empathy and active listening skills to better understand the needs and perspectives of their followers, while some other leadership styles may be more focused on asserting authority or making decisions without input from others.
  3. Collaboration and teamwork: Servant leaders prioritize collaboration and teamwork, seeking to empower and develop their followers to achieve their full potential, while other leadership styles may be more focused on competition or individual achievement.
  4. Humility and accountability: Servant leaders view themselves as stewards of their organization, prioritizing the well-being of all stakeholders and taking responsibility for their decisions, while some other leadership styles may be more focused on personal ambition or avoiding blame.

Overall, servant leadership is characterized by a focus on serving others, prioritizing empathy and collaboration, and taking a humble and accountable approach to leadership. While other leadership styles may be effective in different contexts, servant leadership can be a powerful tool for creating positive change and empowering others to reach their full potential.

Learn more about how to cultivate servant leadership.

Ready to level up your company? Get in touch today!