Author: Dr. Nicole Olynk Widmar, Associate Head and Professor, Purdue University Department of Agricultural Economics

Warren Buffet famously said (and has since repeated), “The most important thing to do if you find yourself in a hole is to stop digging.” Sounds simple and makes good sense.

The problem is that we don’t listen. Alice (of Alice in Wonderland) said it best,

“I give myself very good advice, but I very seldom follow it.
That explains the trouble that I’m always in.”

When did we lose our way?

We’re all (seemingly) adults in business; we got here by making decisions, sticking with them and eventually persevering. Over our lifetimes and as we get further along in our careers, persevering seems to shift in connotation (if not definition) from something that looks like winning (envisioning oneself on the top of the mountain) to simply being pleased about surviving a Wednesday afternoon and making it halfway through the work week. At what point did reaching the mountain peak morph into maintaining one’s existence on the job for another day?

Admittedly, that was extreme. But the sentiment remains – why are we so afraid to pull the plug on projects, investments and endeavours in business? Why can’t we admit when we need to ‘stop digging’ and start changing directions, ending a project or discontinuing an investment activity?

Children understand how to ‘stop digging’

Interestingly, children – those honest and outspoken creatures that they are – do not suffer from the inability to stop digging. If children decide halfway through an acitvity that they no longer like it, they pull the plug and get out of there. Take a trip to meet the Easter Bunny as evidence. At first you’re just a kid sitting on the lap of a bunny in the local mall, and it seems okay. The décor is questionable and you are secretly wondering what your parents are getting out of this experience, but so far, so good. So you sit there (looking adorable) until you glance over your left shoulder and catch an up-close glimpse of this mall bunny character. Yup, that’s a 1980’s style mall bunny. He’s scary, and he smells a little funny too. So, naturally, you scream your baby head off and get the heck out of there. Why? Because you weren’t afraid to reassess the situation, change your mind and pull the plug on this whole “Taking My Picture with the Easter Bunny” operation.

During a routine evaluation, the project underway (Operation Mall Bunny) was determined to be decidedly bad…so child pulled the plug.

Why don’t we pull the plug?

What’s wrong with the adults? Well, quite a few things. To name just a few:

  • We lose track of what was intended to be permanent versus a ‘trial’ in the first place (or we were never explicit up front on what is a forever commitment versus a ‘for right now’ commitment).
  • We overestimate the costs of ‘stopping’ or fall victim to a variety of sunk cost fallacies.
  • We have been repeatedly patted on the back for sticking it out in the past and we feel social pressure.
  • We are afraid of the politics of wanting to reverse course on the decision of our predecessor or higher-ups.

What can you do?

Admitedly, I’ve mixed personal examples into my attempt to make the point that the ability – and willingness – to pull the plug on business/professional activities, initiatives and investments is important and underappreciated. Interestingly, we tend to be a bit clearer in our personal lives in what is a long-term or forever commitment versus a short-term arrangement. We enter into marriage vows ‘until death do us part’, making clear the commitment timeline. We buy homes with 30-year mortgages, making clear the relatively weighty commitment, at least relative to a one-year apartment lease or one-week hotel stay. Seldom are we this deliberate in our intended timelines/investments professionally.

Professionally speaking, we can aid ourselves by being deliberate in our intended timelines/length of commitment. If a project is being undertaken as an experiment, then being deliberate in saying so and setting a timeline for evaluation is critical. Evaluation by decision makers not responsible for the initial project launch can help.

Food for thought

Much of the problem around pulling the plug is tied to us as human beings. If the project or investment lead manager has a job title that mimics the project’s name, can you really expect that person to feel comfortable ‘pulling the plug’ on that project if it is no longer the best use of company resources? Maybe, but it would take deliberate cultivation of culture, support systems, safety nets for honest managers and decision making frameworks to make that possible. Additionally, it would take even more effort and nuturing of culture to make it probable.

Acknowledgements and Inspiration

This Consumer Corner letter was inspired by Straw and Ross, “Knowing When to Pull the Plug”, Harvard Business Review, March-April 1987 – and –10 years of co-teaching strategic decision making with Dr. Allan Gray and Dr. Michael Boehjle in which I was privileged to teach decision traps and pulling the plug.

Additional Decision Making Resources

ConsumerCorner.2020.Letter.16