In Lugano, when should you stop a project you have already invested too much in?

In SHR’s “Management complexe” programme, the choice between continuing, redirecting and stopping deserves particular attention. The specific question is: how can a troubled project be reassessed without allowing past investments and responsibility for launching it to outweigh its future prospects?

What the literature establishes

Barry M. Staw (1976, Organizational Behavior and Human Performance) showed in a resource-allocation experiment that responsibility for an initial decision could encourage renewed commitment following unfavourable results. Decision-makers may then be doing more than assessing an opportunity: they may also be seeking to justify an earlier choice. This finding documents a mechanism of escalating commitment, not a general inability among managers to correct their decisions.

When past expenditure becomes an argument

Hal R. Arkes and Catherine Blumer (1985, Organizational Behavior and Human Decision Processes) describe the sunk-cost effect: having already invested money, time or effort can increase the tendency to continue. Their work highlights, among other factors, the desire not to appear wasteful of resources already committed. The reasoning thus shifts from what an additional investment might deliver to what stopping would appear to render pointless.

The premature conclusion

One might conclude that any project with disappointing results should be stopped; the research does not justify that rule. Continuing may remain reasonable if expected future benefits, costs that can still be avoided and the consequences of withdrawal make it preferable. Truly irrecoverable expenditure must be distinguished from contractual obligations, reusable assets and opportunities for further learning. (our executive and employee training programmes)

What the evidence does not settle

These studies provide no universal stopping threshold for a banking transformation, a fashion collection or a trading activity. Their designs do not reproduce the full duration, interdependencies and obligations of a real organisational decision. They help identify a risk in reasoning, but do not establish that an independent review alone would improve outcomes in Italian-speaking family SMEs.

A practical check in Lugano

As a practical application of the “Management complexe” programme in Lugano, a bank, fashion business, trading company or Italian-speaking family SME could test an Italian-language review sheet distinguishing sunk costs, future expenditure, the consequences of stopping and an explicit condition for changing course. Over a six-week pilot period, measure the proportion of additional funding decisions supported by this sheet and a review by someone uninvolved in the initial choice. The ratio of documented decisions to additional funding decisions can be checked against the records; it measures the traceability of the assessment, not project profitability or the elimination of bias. To go further: explore the Complex Management training in Lugano in the canton of Ticino, or browse our executive and employee training programmes in Switzerland.

In pictures: Complex Management in Lugano

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