Tuesday, August 21, 2007

Why is it so hard to pull the plug?

MBA students seem intent on building, creating, and rescuuing businesses. Even when it is the most obvious solution, they resist pulling the plug on a venture.

McKinsey has a chart summarizing the cognitive biases that make it so hard for us to shut down, exit, or divest a business unit.


  1. McKinsey Quarterly, in 2006, published an article discussing managerial biases when making continuance or cessation decisions. Sunk Cost Fallacy and other 'clouding factors' are considered.

    The article is currently available via a guest account, but reverts to premium content around 9/1/2007.

    Full Link:

    Word Wrapped Link:


  2. Luke - not just students but also grads - a business often becomes like a child to the owners and they dont want to abandon it even if it is "mis-behaving". Also we dont like to give up - reminds me of something my 15 year old says - "rehab is for quitters".
    August 23, 2007 4:15 PM

  3. Business is something which we should always be keen to learn and work with creating solid plans. At the moment working in Forex, it is really great work and makes trading all so much easier. I trade with OctaFX broker where they have ideal conditions which include low spreads starting from just 0.1 pips to high leverage up to 1.500 while there is also solid trading platform that really helps with trading and allows me to be successful easily without any trouble.