Quit: The Power of Knowing When to Walk Away

Interlude I: Quitting When the World is Watching

  • This is the story of Alex Honnold’s free solo climb of El Capitan in 2017, one of the greatest athletic feats of any time, according to the New York Times. It also tells the story of his decision to quit in 2016 when he was less than halfway to the top in spite of the cost and inconvenience to his crew. Our goal is to be more like him when making stick or quit decisions.

Section II: In the Losses

4. Escalating Commitment

  • Escalation of commitment to a losing course is common among people, organizations, and governments. We hear the story of a man who opened a chain of successful stores in California. When Kmart opened stores near his, profits plummeted. He only threw more money at the problem and ended up destitute. Likewise, President Lyndon Johnson continued to throw more money and troops at the war in Vietnam, only to sink his political career. Not learning from this, the US stayed in Afghanistan for 20 years before leaving and turning the country over to the Taliban.

5. Sunk Cost and the Fear of Waste

  • The sunk cost effect is a systemic cognitive error in which people take into account money, time, effort, or any other resource they have previously sunk into an endeavor when making decisions about whether to continue and spend more or quit. This effect causes people to stick in situations where they ought to be quitting. Even people who are fully aware of this effect are subject to it.
  • Stock traders are subject to it as they tend to stick with losing stocks, hoping they will turn around. What they should do is ask, would I buy this stock now based on what I know? If the answer is no, they should sell. Governments are especially susceptible to this effect. They think that money already spent on a futile project is wasted if they don’t waste some more. If you increase your commitment in the face of negative consequences, you are only likely to experience more negative consequences.

6. Monkeys and Pedestals

  • The metaphor of building a pedestal with a juggling on it is used here. It’s easy to build a pedestal, but it’s impossible to teach the monkey to juggle. The point here is that you have to tackle the hard things first rather than the easy things. California’s bullet train is a good example. They built the flat parts first and still haven’t figured out how to build it through the mountains.
  • Early on in a project, you need to establish kill criteria. These are rules of thumb that tell you that if you aren’t at a specific state of completion by a certain time, you should quit. This is like turning around if you don’t reach your goal on Mr. Everest by 1:00 pm. Consider using a premortem to help create your kill criteria. A premortem is a process where you try to think of everything that could go wrong with a project before you start..

Interlude II: Gold or Nothing

  • Here we have the story of Sasha Cohen, the last American to win a medal in the women’s singles figure skating competition at the Winter Olympics in 2006. Like all athletes she overcame injuries to also win gold at the US Championships. She tried for one more Olympics but came in fourth in qualifying. By that time, at the age of 25, she had aged out, which didn’t seem like quitting to her. She now has a successful career and family.

Section III: Identity and Other Impediments

7. You Own What You’ve Bought and What You’ve Thought: Endowment and Status Quo

  • The endowment effect is a cognitive bias where we value something we own more than we would if we didn’t win it. The same is true for our ideas and beliefs. People who create and own companies are more likely to stick with them long after they have a positive future expected value. Sticking with the status quo is a decision, even if it doesn’t seem like one. We are more tolerant of bad things that come from inaction than those that occur due to our actions. Sunk cost, endowment, and status quo bias distort our decision-making.

8. The Hardest Thing to Quit is Who You Are: Identity and Dissonance

  • Sears Roebuck started in 1896 with its catalog delivery service. It expanded to retail outlets, which became its identity. Along the way, it added Allstate Insurance and multiple successful financial services. In the 1970s, it faced competition from companies like Walmart, Target, and K-Mart in the retail space. Instead of focusing on its other successful businesses, it sold them off and doubled down on retail, only to go bankrupt in 2018. What it couldn’t do was quit its identity.
  • The most painful thing is to quit who we are. It also becomes harder to quit when we are worried about how others will judge us. Unfortunately, we are often wrong about what others think about us, which is a good reason not to worry about it. The more extreme a position we take, the more we are likely to stick with it in the face of information that suggests that we should quit. Stop sticking to things that slow you down, and make sure you have kill criteria for quitting.
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