Don't Fall Prey to the Sunk Cost Fallacy

You probably haven’t heard of Vasili Alexandrovich Arkhipov.

But he might just be the man who saved the world.

According to National Geographic , at the height of the Cuban Missile Crisis, a Soviet patrol submarine B-59 almost launched a nuclear-tipped torpedo. It was surrounded by American destroyers near Cuba and dived to avoid detection. As a result, it couldn’t communicate with Moscow for days.

The captain of the B-59 mistakenly thought that the war had probably already started and ordered the nuclear torpedo to be fired against the American fleet.

Oops.

The submarine political officer agreed, but thankfully at the last minute – Arkhipov – the commander of the sub-flotilla, stopped the captain from bombing and convinced him to surface and await orders.

Hooray for Mr Arkhipov.

And hooray for teams who change course at the 11th hour.

As many of us can attest, saying no at the last minute can be a messy, humiliating, public affair.

It can be all egg on your face-y.

It can also be pretty darn costly to pull the plug at the last moment. And if you’re a people pleaser, it can be positively excruciating.

It’s never too late to pull back from pressing the metaphorical button (world leaders currently locked in battles around nukes, please take note).

A red face or a few grumpy stakeholders are small prices to pay when the stakes are high. Especially when your decision on whether to plough ahead or not involves the people you lead, not just yourself.

Of course, there’s something to be said about making sure you have robust decision-making systems that allow you to change your mind earlier in the process – like at the 9th hour. Here are just a few:

Ask yourself if there’s a third option if you’re tossing up between two options.

Play devil’s advocate to your preferred decision – this is especially important if you’re passionately wedded to it or if there’s high emotion involved. Even better, ask others to challenge your assumptions.

Give it the overnight test. It’s amazing how many times I’ve gone to bed chewing over a decision and woken up clear in my mind about the way forward.

Pay attention to your gut. If your intuition is saying no, don’t ignore it. Complement your intuition with data if possible, but pay attention to it nevertheless.

But even if you adopt these wise decision-making checks and balances before the 11th hour, today’s leadership environment is so volatile and quick to change, that what you thought was current context in one moment can change in the very next. New information can emerge quickly, changing the decision-making landscape in an instant. Keep the process open as long as possible before converging on a final choice. Ploughing ahead when your gut is telling you not to is the fodder of cautionary tales and painful hindsight.

Why do we so commonly fall prey to saying yes when deep down we know that the best thing to do is say no?

It’s usually got something to do with a thing called The Sunk Cost Fallacy. It describes one of the biggest fallacies around decision making – and that is that people make rational decisions based on the future value of objects, investments and experiences.

Related: The 'Dip Your Toe in the Water' Approach Can Save You A World Of Pain

The Truth? Your decisions are tainted by the emotional investments you accumulate, and the more you invest in something, the harder it becomes to abandon it.

The most important step to take to free yourself from making poor decisions based on sunk costs is to recognise the logical fallacy in the first place and be attuned to when you’re following it.

So, the next time you’re faced with the decision to launch something (bombs or otherwise) especially if you feel pressure to go ahead when your inner pilot light is warning you not to, remember it’s never too late…until it is.