If you have ever heard Chris speak or have ever attended one of his training sessions, for sure you have heard him talk about leading change and getting others to buy into it with their hands, heart, and mind. Buy why? How? It’s a common theme of ours because so many leaders struggle with it. And, surprisingly, it is often the leader – more specifically, their ego – who can’t change! And, it costs everyone a lot!

The Challenge:

I know, it is ridiculous, but it is a very frequent pattern in human behavior – especially at work and even more prevalent with leaders!

Jeffrey Katzenberg is best known for co-founding Dreamworks animation, serving as chairman at Walt Disney Studios for 10 years. He helped produce timeless hits like The Little Mermaid and Monsters Inc. Katzenberg most recently led the charge of raising $1.75B to fund a new company called Quibi – a mobile app focused on big stories in short bites. On a podcast, he was heard speaking very defensive, very arrogant about his new adventure. He was quoted saying, “Very, very good actually always works!” and “You’ve seen the content… there’s nothing like it!” Katzenberg’s ego got in the way. To make matters worse, he blamed the coronavirus for the app’s failure. “I attribute everything that has gone wrong to coronavirus.” Sure, coronavirus may have played a part in the company’s demise but so did poor decision making, arrogance, and ego.

So, why do we educated, smart, intelligent leaders fall for this? Two reasons: human preferences and decision making. Changing one’s mind and changing one’s behavior is difficult because it involves admitting an error – something wasn’t working so change is needed. Also, humans find it incredibly painful to lose. Leadership norms punish seemingly inconsistent behavior more than bad results; if a leader admits a problematic course of action and changes it, they are more likely to be punished than if they just went ahead with whatever idiotic thing they were going to do anyway. It’s been done like this for years… These factors make terrible decisions particularly dangerous.

Just because you made one bad choice doesn’t mean you have to make more.

Psychological Principle:

In psychology, the phenomenon coined “escalation of commitment” or also known as “commitment bias” describes our tendency to remain committed to our past behaviors, particularly those exhibited publicly, even if they do not have desirable outcomes. In layman’s terms, it is putting more and more effort into something that is failing. But why do we continue forward with a course of action despite the accumulating evidence of bad results?

The science shows that once people make a big initial investment in something – be it a project or a new hire, for example, when it starts to fail, they are at risk to not stop putting effort into it – they are at risk for increasing their investment of time, money, energy, etc. A big study at Michigan State University analyzed 166 different studies and found four reasons why people fall into the trap of “escalation of commitment”:

“Sunk cost fallacy” – the idea that so many resources have already been sunk into the project, why not invest more.
Anticipated regret – regretting that the project was not given one more chance.
Project completion – if I keep putting more into the project, I will get it right.
Ego threat – if I give up, I will look like a fool.

Barry M. Staw, who was the first to study and describe commitment bias, says that this psychology principle comes down to the fact that we are constantly trying to convince ourselves and others that we are rational decision-makers. We do so by maintaining consistency in our actions, as well as by defending our decisions to the people around us, as we feel that this will give us more credence.

Mindset Shift:

Be on guard for escalation of commitment early – Being aware of commitment bias is an advantage in more ways than one. By becoming aware of it, we can begin working towards avoiding it. Since this bias can cause us to make poor decisions, avoiding it can be advantageous. Dismantling this bias is a starting point for personal growth, as doing so allows us to admit when we have made a mistake and learn from our past behavior.
Things don’t always have to be the same – consistency isn’t the be-all and end-all. Heck, agility and flexibility are even admirable!
Check your ego at the door – In response to ego threat, people invest more and more time, energy, and resources – not because it is best for the project or the team or for the organization – but because they want to prove to others and themselves that they were right all along.
Be vulnerable – Furthermore, while we worry that others will think less of us if our decisions lead to negative outcomes, people actually tend to have more respect for those who are able to admit that they made a mistake.

Performance Shift:

Admit when things fail – Be honest with your team and communicate how projects have stopped because they were failing. Be vulnerable and share your war stories.
Teach executive thinking skills – Help your team members identify assumptions they are making about the new solution. And assist in identifying the assumptions that if proven wrong, would make the whole project unfeasible. In our experience, that is the best way to avoid escalation of commitment. Have teams realize themselves that their project is not worth pursuing further, based on the evidence they collected. That is the easiest way to make teams stop for the right reasons.
Celebrate change – As long as stopping is associated with being a quitter and a loser, there is not much pride to be gained in stopping. Therefore, it is essential to reframe the action. Embrace the action of stopping with a lessons learned report that describes what the organization should not do. And celebrate this outcome as a success. Make it easy for teams to say, “we stop here and we learned A, B, and C”.
Allow re-dos – Let your team know that there is always the opportunity to restart, in case new evidence comes up. So even if the project is stopped, not all is lost. Thus, add to the lessons learned report: “if these changes occur in A, B, or C in the near future, it will be worthwhile to reconsider this opportunity.” That makes it possible to stop a project and avoid wasting additional resources and time. However, without meaning that the opportunity is lost forever. If it turns out the project was stopped too early, the team should be encouraged to get back to it. The goal here is to take away any anticipated drop-regret.