moving past sunk costs

I’ve long been impacted by the writings of Seth Godin (though we use the word “tribes” in different ways), but it’s been awhile since I’ve regularly read his blog. I might start again; it’s always extremely invigorating and has all sorts of principles to use in ministry.

In any case, a recent post hit a topic he taught me long ago (maybe in The Dip?). It talks about being willing to walk away from “sunk costs,” from those decisions we’ve acted on that required investment but aren’t worth sticking with. He explains:

Simple example: You’ve paid a $10,000 deposit on a machine that makes widgets at a cost of a dollar each. And you’ve waited a year to get off the waiting list. Just before it’s delivered, a new machine comes on the market, one that’s able to make widgets for just a nickel each. The new machine will pay for itself in just a few weeks… but if you switch to the new machine, you lose every penny of the deposit you put down. What should you do?

It’s pretty clear that defending the money you already spent is going to cost you a fortune. Ignore the deposit, make a new decision.

Which makes perfect sense until it gets personal. And the work we do, the art we make, it’s personal.

There’s more fleshing-out there (especially of that last point), and I’d encourage you to read the post. But the principle is vital for us in ministry.

It’s very natural to avoid letting go of sunk costs – it’s incredibly painful. We’ve laid down a new methodology for the year, advertised to the hilt, and less than a year in need to make a change. Awful.

We’ve spent a lot of money and time on a rebranding, or a new staff position, or developing an international partnership. But sometimes things change, and we have to decide to stick with something rather than move forward.

It’s also hard letting go of snap judgments about methods or people, hard(er) letting go of long-studied arguments when new factors arise that (should) cause us to discount what we once thought.

In any case, sunk costs stink but should weigh very little when making the decision about the future. Read that again – sunk costs aren’t a (good) reason to keep moving with that thing, whatever it is. And yet we use it all the time, whether in our own heads or when we talk to others.

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