Just watched a TED Talk with Julia Galef. She gave the best way to understand something we all do, and something that we as writers and entrepreneurs have to always be cautious of the – Sunk Cost Fallacy.
What is it?
Julia tells us, “Imagine you are going to the store and you are halfway there and you realize, ‘hmm the store is actually closed today’. But you figure, ‘well I have already come ten blocks, I might as well go all the way, so my walking ten blocks will not have been wasted’.”
This of course is a ridiculous concept but it does illustrate a pattern of behaviour that many of us follow. It could be something as simple as starting a Netflix movie or series and partway through realizing you are not enjoying it at all. But you go ahead a finish it, because of the time you have already put into it. Or continuing to write a story that you are no longer “into”, but you feel have to finish. This is the Sunk Cost Fallacy.
So, Sunk Cost is the time, effort, and/or money you have already put into an activity, story or business. The ‘Sunk Cost Fallacy‘ is making a choice, not based on what is going to be the best thing going forward, but on effort and/or money you have already put int go to waste.
From a business perspective maybe it is time to look at any parts of your business or operation that are not producing what you want or need. You have already invested time and money effort into it now is the time to decide what choice is going to product the best outcome for the future.
Once you start to understand the Suck Cost Fallacy you will start to see somethings you would like to do differently. For example, you are making daily posts on Facebook but it is to the same twenty-five people you have been posting to for the last six months. They have bought your book or product, they don’t need another one. But in your mind you are saying, ‘Well Maybe they will tell so one new or maybe someone will happen across my page. Besides I have all ready put so much time into it would be a shame not to continue.
But the truth is that just as important as it is to make posts it is just as important to “curate” an audience. An audience generates leads, leads get sales. A few years back. I looked at how much time, effort and money I had put into social media and was not gaining any new customers. I had a small and loyal following, but they already owned my product and I was not reaching anyone new. I had to ask myself ‘Do I give up what I invested’?’ It took some time to convince myself but yes I did. And I put that marketing money into something more applicable to my target audience.
Is it time for you to get started looking at your ‘Sunk Costs” and what it is really costing you!
A great way to get started is: log into Netflix (then Prime, Disney, and Crave) and start deleting all those shows on ‘Continue Watching For (You)’ that you started and said, ‘I’ll get back to that show one day.’ And you never did. Then look at your business. Any sunk costs there? Start eliminating them. You will get more control of your business and your life.
“Having the Sunk Cost Fallacy on your radar will
help you make better choices in the future.”