The Silent Killer Of Good Leaders: The Decision You Keep Postponing

Five years ago, I watched half a million dollars disappear. Not in a market crash or a bad hire. It was a slow, painful project death that I saw coming for months and refused to stop.  

We had invested in a new Learning Management System for Learnit, brought in a high-priced COO to lead it, hired consultants, and spent months evaluating platforms. Within three months of launching, I knew in my gut we had made the wrong call. The technology was wrong. The project was going nowhere.

And still, I told myself we'd turn it around.

That is the sunk cost fallacy at work.  It's one of the most common and costly traps that leaders at every level fall into.  

And the more you've invested, the harder it gets to walk away.

What Is the Sunk Cost Fallacy?

Simply: it's when you continue to invest in something because you've already put time, money, or energy into it. The past investment, or the sunk cost, becomes the reason to keep going rather than a reason to honestly evaluate whether you should.

The research on this is striking. In a now-classic study, psychologists Hal Arkes and Catherine Blumer showed that people who had already paid more for something were significantly more likely to continue using it even when it stopped serving them. We're wired to not want to "waste" what we've already spent.  

The problem is, continuing to invest in a failing direction doesn't recover the loss. It compounds it.

You can see this play out at scale too. The Concorde supersonic jet is one of the most well-known business examples. British and French governments continued pouring money into it for decades despite mounting evidence it would never be commercially viable, largely because of how much had already been spent. The phrase "Concorde fallacy" became another name for exactly this trap.

For leaders and managers, the fallacy shows up in quieter ways: the underperforming team member you've been coaching for two years, the product feature that nobody uses, the vendor relationship you keep renewing because you've always renewed it.  

The five steps below are what I've learned, often the hard way, about breaking free.

Step 1: Name It for What It Is

The first move is the hardest: call the situation what it actually is. Not "we're still figuring it out" or "it's a work in progress."  

If a project is failing, say it. If a strategy isn't working, name it.

Leaders are often the last to say this out loud because they championed the idea in the first place. There's real pressure, both internal and external, to maintain the story. But clarity is the precondition for everything else. You can't fix what you won't acknowledge.

Practically, this means creating space for honest conversation. Ask your team, without leading them toward a particular answer, how they really see the project progressing. The people closest to the work often know long before leadership does.

Step 2: Stop Throwing Good After Bad

More resources poured into a broken foundation don't fix the foundation. They just make the eventual collapse more expensive.

With the LMS project, every additional consultant we brought in and every extra month we gave it just delayed the inevitable and cost more money. The instinct to "give it one more chance" is understandable, but it needs to be grounded in real evidence that something has structurally changed, not just hope.

As a leader, ask yourself: "If I were evaluating this project fresh today, would I fund it?" If the answer is no, that's your signal.  

Step 3: Put Your Ego on the Shelf

This one can be uncomfortable. Pride keeps us mired in sunk costs. Admitting a project is failing means admitting you made the call to start it. Nobody wants to be wrong, especially in front of their team.

But the leaders people respect most aren't the ones who are never wrong. They're the ones who can look at a hard situation clearly and make the call to change course. That takes more courage than staying the course ever does.

Reed Hastings famously pivoted Netflix from a DVD-by-mail service to a streaming platform, essentially admitting the old model had a ceiling. Separating his identity from the existing business model is part of what made Netflix what it became. Ego can be the most expensive item on your balance sheet.

Step 4: Set a Go/No-Go Line Before You Start

One of the most practical tools I've adopted is setting a clear go/no-go threshold at the beginning of any significant project. Before you're emotionally invested, decide: what does success look like at the three-month mark? What metrics or milestones would need to be hit? And if they're not hit, what happens?

Writing this down matters. When you're six months in and things are rocky, it's easy to move the goalposts. Having a pre-agreed definition of "this isn't working" makes the conversation much cleaner.

Many venture capital firms operate this way structurally. Milestone-based funding means money is released in stages, contingent on hitting defined targets. It's a discipline that protects against the sunk cost trap before it can even take hold.

Step 5: Pressure Test It With Your Team

Halfway through any major initiative, ask your team one question: "If we were starting from zero today, would we build this the same way?"

If the room goes quiet, that's your answer.

Outside perspectives cut through the confirmation bias that builds up around decisions we're emotionally tied to. We naturally look for evidence that validates what we've already done. A trusted peer, a board member, or even a frank conversation with a senior team member can surface things you're too close to see.

When COVID hit and we had a brand-new office building sitting empty, one my brother and I had bought with tenant improvements already completed, my first instinct was to move Learnit in anyway because of everything we'd already put into it. But the business had changed. Most of our team had gone virtual. The numbers didn't support it. And when I pressure-tested it honestly, the answer was clear. We kept the building. We did not move the business in. That was the right call.

Your Action Plan: 6 Questions to Ask Right Now

Apply this to any project, decision, or commitment that might be holding you back:

1. Is there a project or initiative in your organization that you're continuing primarily because of what's already been invested? Name it.
2. If you were evaluating this from scratch today, with no prior investment, would you approve it? Be honest.
3. What would have to be true in the next 30 to 60 days for this to still make sense? Write it down and commit to it.
4. Who on your team has the most unfiltered view of how this is really going? Have that conversation.
5. What would you be free to pursue if you stopped this? Think about the time, money, and energy that would be released.
6. What is the cost of continuing versus the cost of stopping? Map it out concretely.

Cutting losses is not failure. It's one of the sharpest leadership skills there is. The leaders who build great organizations are not the ones who never make bad calls. They're the ones who recognize bad calls quickly, learn from them, and redirect their energy before the losses become permanent.

Stay curious. Keep learning.

Follow Damon Lembi on LinkedIn for insights on leadership, learning, and building organizations that grow.

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