Stop doubling down on your failing strategy: how to spot (and escape one before it's too late)

Vermeulen, F and Sivanathan, N (2017) Stop doubling down on your failing strategy: how to spot (and escape one before it's too late). Harvard Business Review, 95 (6). pp. 110-117. ISSN 0017-8012


People have a tendency to stick to an existing course of action, no matter how irrational. In the management literature, this is known as an escalation of commitment, and in nearly every academic case study on the demise of a former industry leader, it played a major role. The story of the British music company HMV—whose managing director dismissed downloadable music as “just a fad”—is a classic example.

Escalation of commitment is explained by a number of mutually reinforcing biases, among them: the sunk cost fallacy, loss aversion, the illusion of control, the preference for completion, pluralistic ignorance, and personal identification. The authors describe six practices that can help counteract these biases: (1) Set decision rules. (2) Pay attention to voting rules. (3) Protect dissenters. (4) Expressly consider alternatives. (5) Separate advocacy and decision making. (6) Reinforce the anticipation of regret. Overcommitted executives, they write, are prone to ignore signs of their company’s imminent collapse. These practices will encourage managers at all levels to make decisions more objectively.

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Item Type: Article
Subject Areas: Organisational Behaviour
Strategy and Entrepreneurship
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© 2018 Harvard Business School Publishing

Date Deposited: 09 Feb 2018 15:13
Last Modified: 06 Jun 2022 15:48

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