Why are we so prone to throwing good money after bad?
The Concorde was a state of the art supersonic plane that could fly its passengers from London to New York in just three and a half hours.
Fifteen years on from when the plane last flew, the same journey now takes seven and a half hours.
Not exactly what you’d call progress, is it?
Unfortunately, despite its grace, pace and technological sophistication, the Concorde was forced into early retirement.
You see, the British and French governments both started out by spending enormous sums of cash on the project. Half way through, when they could see that the aircraft would never be economically viable, they could have called it quits to save themselves from wasting even more.
But they didn’t.
They figured, we’ve spent so much already, we might as well carry on.
In the end, after spending billions, and (not making much profit because the Concorde was so expensive to fly), the British and French governments finally gave up, and each sold their shares in the company for next to nothing.
What could have been just been a significant loss for them turned into a massive, gargantuan, mother-of-all losses.
It is a brilliant example of not knowing when to kill your darling.
Even though it’s tempting to carry on with something that cost you so much in the first place, you should abandon it as soon as you realise that continuing with it will cost you more time and money than the alternatives. This is known as the ‘sunk cost bias’ or ‘the concorde effect’.
This is similarly true for the ideas that you put forward as an entrepreneur. You will become emotionally attached to them. However, you will have to recognise when it’s time to let go of them. Either because they are not viable commercially or because you are not the right person to make them operational.
Try to avoid being the one to throw the good money after the bad.