In Lugano, when should you stop funding a disappointing project?
In SHR — Swiss Human Resources’ “Management complexe” programme, the choice between persistence and withdrawal warrants a precise question: what reasons justify the next expenditure on a disappointing project? In Lugano, this question could concern a banking transformation, a fashion collection, a trading activity or an investment undertaken by an Italian-speaking family SME.
What the literature establishes
Barry M. Staw (1976, Organizational Behavior and Human Performance) showed experimentally that responsibility for an initial decision could encourage the commitment of additional resources after negative feedback. The finding highlights a specific risk: defending a past decision can take precedence over evaluating the next investment. It does not establish that all persistence after a setback is irrational.
The sunk-cost mechanism
Hal R. Arkes and Catherine Blumer (1985, Organizational Behavior and Human Decision Processes) studied the tendency to continue an activity because money, time or effort had already been invested in it. Their work notably highlights the concern not to appear wasteful of those resources. Yet an irrecoverable expenditure is not, by itself, a reason to incur another.
The premature conclusion
One might conclude that a struggling project should be stopped or routinely handed to a new manager. These studies support neither blanket rule: continuing can remain defensible if expected future benefits outweigh future costs and risks. The useful distinction is between forward-looking reasons to continue and justifications drawn from what has already been spent. (our executive and employee training programmes)
What the evidence cannot settle
These studies provide neither a universal stopping threshold nor an estimate directly transferable to Lugano businesses. In practice, exit costs, contractual obligations and interdependencies make the decision more complex than an experimental situation. Invoking a bias therefore does not remove the need to examine these constraints; conversely, invoking complexity does not suffice to justify continuation.
A practical check in Lugano
As an exercise in the “Management complexe” programme, a Lugano team could review every request for additional funding over one month using a form in Italian that separates sunk expenditure, future costs, expected benefits and exit costs. In a bank, fashion business, trading company or family SME, the form would also specify an observable condition for reconsideration and a review date. The measure would be the proportion of approved requests accompanied by a complete, dated form before approval, verifiable in the decision register. This indicator would check decision-making discipline, 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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