Leadership d'excellence: knowing when to stop a project in Zurich
In Zurich's financial services, insurance, tech and European headquarters of international groups, stopping a project puts both budgets and reputations at stake. For SHR — Swiss Human Resources' « Leadership d'excellence » programme, the question is specific: how can managers distinguish justified persistence from commitment sustained by the original decision?
What the literature establishes
Barry M. Staw (1976, Organizational Behavior and Human Performance) demonstrated experimentally that responsibility for an initial decision can encourage further investment following negative outcomes. In his study, participants personally responsible for the first choice committed more additional resources than those who were not responsible. Defending a project may therefore also mean defending one's own judgement.
The weight of resources already spent
Hal R. Arkes and Catherine Blumer (1985, Organizational Behavior and Human Decision Processes) documented the sunk cost effect: a past investment can increase the tendency to continue an activity. Their work highlights, among other explanations, the concern about appearing to waste resources already committed. This mechanism complements the first: even without having personally authorised a project's launch, people can give excessive weight to resources that cannot be recovered.
The premature conclusion
Concluding that a struggling project should therefore be stopped would be another mistake. Sunk costs do not, on their own, justify a further allocation, but expected future benefits, exit costs and contractual obligations remain relevant. The useful question is therefore: given the current situation, which option now offers the best prospects? (our executive and employee training programmes)
What these findings cannot settle
These classic studies do not directly measure decisions by Zurich investment committees operating under regulatory requirements and shared accountability. They establish the possibility of bias, not an automatic diagnosis whenever a project continues after a setback. Conversely, a highly structured financial presentation does not guarantee that its assumptions are free from the need to justify the original choice.
A practical check in Zurich
An exercise suitable for « Leadership d'excellence » is to require, before each new funding tranche, a note distinguishing sunk costs, future costs and benefits, exit costs and explicit stopping conditions. In a Zurich bank, insurer, tech company or European headquarters, someone who did not sponsor the initial decision would review this note. Over a predefined period, measuring the proportion of renewed funding decisions supported by both the note and a documented review would verify decision-making discipline, without claiming that this alone demonstrates improved performance. To go further: explore the Executive Leadership training in Zurich in the canton of Zurich, or browse our executive and employee training programmes in Switzerland.
In pictures: Executive Leadership in Zurich
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