Overcoming sunk costs to pivot faster

Economists call the sunk-cost fallacy our tendency to cling to past investments, even when they no longer deliver value. Early projects feel sacred because of what we’ve poured into them—time, money, or emotional energy. Yet behavioral science shows this leads to waste: we keep funding failures rather than cutting losses.

Picture a startup that spent six months building Feature A, only to see customer interest elsewhere. Leadership hesitates to abandon it after so much effort. But by reassigning the team to the more promising Feature B, they unlocked rapid growth and morale soared. This pivot wasn’t about forgetting past work; it was about optimizing future returns.

In experimental studies, groups that practiced ‘cost accounting’—assessing past investments separately from future outcomes—made better strategic decisions. They saved time, money, and avoided burnout. The skill is learning to mentally bracket what’s gone and focus squarely on what’s next.

By consciously auditing ongoing efforts and their next-quarter payoffs, you adopt a mindset that prizes adaptive learning. You embrace uncertainty, knowing that past efforts don’t guarantee future success.

Begin by listing all your ongoing efforts and noting the time and budget you’ve already spent. Then assign a simple score for anticipated benefit in the coming weeks. Finally, shift resources from the lowest-scoring projects to those with the greatest potential. This exercise frees you from the sunk-cost trap and aligns your focus with tomorrow’s gains.