The British and French governments spent over a billion pounds developing the Concorde. Long before the first commercial flight, it was clear the aircraft would never be profitable. The sonic boom restricted its routes, the fuel consumption was astronomical, and the market was moving toward mass capacity rather than elite speed.
Yet, they kept funding it. They couldn’t stop because they had already spent too much to walk away. They fell into the trap of believing that past investment justifies future waste.
This is the Sunk Cost Fallacy. In economics, it is a lesson. In leadership and politics, it is a catastrophe.
The assumption we make is that our past effort has created a value that must be protected. The reality is that the money, time, and reputation you spent yesterday are gone. They are “sunk.” They should have zero weight in your decision about what to do tomorrow.
We see this most vividly in political ideologies and movements. Once a person has publicly tied their identity to a specific cause, a candidate, or a world view, the “cost” of being wrong becomes psychologically unaffordable. To admit the movement has failed or the ideology is flawed would be to admit that years of their life were spent in error.
Instead of cutting their losses, they double down. They ignore the second-order effects. They prioritize the preservation of their ego over the reality of the outcome.
In organizations, this manifests as the “Zombie Project.” It is the software rollout that isn’t working or the new department that is hemorrhaging cash. Leaders keep pouring resources into these failures because “we’ve come too far to quit now.”
The trade-off of this persistence is the death of opportunity. Every dollar you spend trying to save a ghost is a dollar you cannot spend on a new frontier.
True strategy requires the intellectual discipline to view every day as “Day One.” It requires the courage to look at a billion-dollar investment and say, “If we weren’t already doing this, would we start today?” If the answer is no, the only rational move is to stop.
The consequence of failing to walk away is that you eventually lose the ability to lead at all. You become a curator of past mistakes rather than an architect of future wins.
Leadership is not defined by the height of the mountain you climbed. It is defined by your ability to realize when you are climbing the wrong one.
What are you continuing to fund simply because you are afraid to admit it’s over?
I am a Canadian insurance and investment professional and the President and Chief Executive Officer of Chazz Financial Inc. and Chazz Capital Assets. I write about leadership, markets, insurance, investing, and decision making, with a focus on how structure and incentives shape outcomes.
I hold a business degree and I am a Fellow of the Canadian Securities Institute (FCSI®), a Chartered Life Underwriter (CLU®), a Chartered Financial Planner®, a Certified Health Specialist and a Mutual Fund Investment Representative.
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