businessman from giant head opens his head two thought bulbs light bulbs scaled

One of the findings that surprises most, is the fact that high-performing teams report more mistakes than their counterparts. High performing teams take risks, make mistakes, and evaluate their mistakes in public. Average and underperforming teams hide their mistakes, take fewer risks, and are unable or unwilling to speak up about difficult topics or decisions.

I recently observed an interesting parallel in a team I’m working with. I have argued elsewhere (here and here) that the most important function a team’s performs is the making of decisions. Without the capacity to speak up about difficult topics or decisions, teams’ inevitability make poor choices. One of the most important decisions a team needs to make is to decide what not to do.

This is especially challenging with projects, products or ideas for which you have already invested a lot of creativity, time, money and energy. One of my favorite YouTube video clips is a scene from The Lion King (Click here, or here for the longer version). The monkey Rafiki hits Simba over the head with his walking stick. “What was that for?” Simba asks. “It doesn’t matter,” replies Rafiki, “It’s in the past.”

How do we decide when to stop investing in something we’ve poured a lot of time, money, and energy into? When do we walk away from so-called sunk costs?

It may be that you invested a lot of money into a new CRM, and it’s been a nightmare. Don’t dwell on the expense or repeatedly bring it up as a reason for not investing in future technology. Instead, consider it a sunk cost and move on. Dwelling on it does not serve you.

Your next decision should be based on the information you currently hold, the lessons you have learned in the past, and where you want to go.

High performing teams make mistakes. Lots of them. Those mistakes come at a cost, but those costs are in the past. If you let them get in the way of future investments, you risk playing it safe.

One team I was working with had invested in a website they thought would address several of their needs. Lots of money later, the new website was worse than the original one. Half the team was in the never-again corner. The other half had accepted their mistakes and learned from them. They accepted the sunk cost and were ready to take another run at a new website. They believed the capabilities promised by a new website were critical to their future success and rebuilding their website was something they just had to do. The team was neatly split into two groups, where one accepted the sunk costs, and one did not.

Your choice to pursue a particular activity because you have already invested in it—even if it has proved itself to be a poor experience—should be the based on your strategic direction. You cannot do anything about sunk costs. Deciding to never take a particular approach will not get you more of what you want.

What can you learn from the experience?

  1. Don’t ignore better alternatives simply because you previously invested in a particular activity.
  2. Don’t refrain from investing because the last time you did so it was a nightmare.
  3. Bold actions involve taking reasonable and responsible risks.
  4. You’re sometimes going to make mistakes. When you do share them to your team, evaluate them to determine what you can learn and quickly move to the next best action that brings you one step closer to your goal.
  5. Your decisions should be primary guided by where you want to be five or ten years from now.

Are there any sunk costs that are influencing your choices today?

If you want to learn more about how you can effectively nurture your team, and how to foster team performance, download our free eBook “A Guide to Building High Performing Teams.”