Complex management: when should an industrial project be stopped?
In Neuchâtel's microtechnology, watchmaking and precision microelectronics activities, a development project can accumulate tests without establishing its viability. For SHR — Swiss Human Resources' “Management complexe” programme, the question is specific: how can managers decide on an additional test without treating past expenditure as a justification?
What the literature establishes
Barry M. Staw (1976, Organizational Behavior and Human Performance) shows, in an investment decision experiment, that personal responsibility for an initial decision can encourage renewed commitment after negative outcomes. Managers therefore do not necessarily assess the next step independently of their previous involvement. This finding highlights a risk of escalating commitment, not a general inability among managers to discontinue projects.
The weight of what cannot be recovered
Hal R. Arkes and Catherine Blumer (1985, Organizational Behavior and Human Decision Processes) demonstrate the sunk cost effect: a prior investment can increase the tendency to continue a course of action. Their work links this effect notably to the desire not to appear to waste resources already committed. In industrial decision-making, this suggests distinguishing past expenditure that is no longer recoverable from a future test that could yield useful information.
The premature conclusion
One might conclude that a struggling project should be stopped as soon as past investment is invoked. That would confuse an indication of bias with a diagnosis of non-viability: earlier tests may also have generated knowledge that genuinely changes the outlook. The relevant question remains the costs, benefits and learning expected from the next stage, compared with other options. (our executive and employee training programmes)
What these findings cannot decide
These studies provide no validated stopping threshold for a watch manufacturer or a microelectronics business in Neuchâtel. Their experimental settings do not reproduce the full range of qualification requirements, customer commitments and industrial interdependencies. A project review therefore does not become objective simply by setting past expenditure aside: it must also make the remaining uncertainties explicit.
A practical check in Neuchâtel
In a Neuchâtel microtechnology, watchmaking or precision microelectronics business, an exercise associated with the “Management complexe” programme could involve documenting each authorisation for an additional test in a dated record. This record specifies the uncertainty to resolve, the future cost, the technical success criterion, the stopping condition and the review date, without changing applicable qualification requirements. Over an observation period set in advance, measure the proportion of authorisations with a complete record before expenditure is committed, then check at review whether the criterion was met and the stopping condition was respected. This indicator checks the traceability of the decision; it does not, on its own, demonstrate its economic quality. To go further: explore the Complex Management training in Neuchâtel in the canton of Neuchâtel, or browse our executive and employee training programmes in Switzerland.
In pictures: Complex Management in Neuchâtel
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