One reason for this is because of the “sunk costs” that accrue as you go.

In this post I’m going to explain what sunk costs are, why they make big projects a pain, and how a process borrowed from group software development can help you avoid the agony they can bring, whether you’re writing a book, launching a multi-media information product, painting a masterpiece, or writing a symphony.

The solution I will advocate comes from a practice called SCRUM. We’ll get into more detail about the “SCRUM” process — or part of it anyway — in a couple posts.

Scrum, in its full glory, is made for teams, but I see no reason individuals cannot benefit from planning big projects as a series of shorter sprints, each of which ends in an opportunity for feedback. In fact I know from personal experience that this pays big dividends.

Sunk Costs

So, sunk costs. What are they? And how do they apply to our big projects?

Let’s say you’re writing a book, and it’s going to take 6 months to write. At the 3 month mark, you’ve done a lot of writing, and you cannot undo it. You can abandon your project, but you can’t get that time and effort back. It’s gone.

Those three months are a “sunk cost”.

Sunk Costs and Doubts

Sunk costs become a problem when we start having doubts about our projects.

Let’s say at the three month mark you start having doubts about your book. You’re now unsure anybody will like it.

When you started with the outline of your book, you could imagine everyone loving it. It would be published and become an underground success. Hollywood would come calling, and you’d get royalties from movie ticket sales for the movie that would be made.

But now you’re not so sure. Your plot has taken turns you didn’t anticipate, and some of your characters are starting to annoy you.

Let’s also say that you’re mulling over 3 other projects that seem like they might be better to work on than the one you’re in the middle of.

What do you do? This can be agonizing. Some people leave their manuscript aside and begin working on other projects, intending to get back to this one when inspiration strikes again. Others plow through.

The Dilemma

What SHOULD you do?

That’s not an easy question to answer.

What if your project really is a dud, and you sink another 3 months into it?

But what if it’s actually quite good, and you don’t work on it?

Also, if you abandon the project, how do you justify the way you spent the last 3 months — to yourself, and others who might be depending on you to finish a successful project?

On the other hand, decision theorists will warn you not to fall for the “sunk cost fallacy”. The idea here is that, at any point in time, you should choose the path that has the most promise, regardless of how much time, money and effort you’ve already sunk into the current project.

If you’re 3 months into a book, and Steven Spielberg comes calling for you to write a screenplay for a movie he wants to produce, and he gives you a $100,000 advance, you switch horses. No-brainer, right?

But our choices aren’t usually that stark. We often have to choose between that current project we’re doing, and another that feels more promising, but has just as many unknowns attached to it as the one we’re working on.

And, while the sunk cost fallacy can be a problem, there is another problem that can arise for those who virtuously avoid it. Let’s say you take on a 6 month project, and at the 3 month mark a better opportunity comes up that will also take 6 months. So you switch horses. Then, in the middle of that project yet another even better opportunity comes up. And so on ad infinitum.

In this case, by always making the “rational” choice, you wind up never getting anything completed. You might well have been better off just finishing the first project and living with its meager payoff rather than eternally deferring ever bigger payoffs.

So, opposed to the “sunk cost fallacy” we have the “chasing rainbows problem”.

Dilemmas like this can be discouraging, and sometimes even debilitating.

Looking Forward to Solving the Dilemma

Fortunately, I think sunk cost dilemmas are largely avoidable. (Note: the “sunk cost dilemma” discussed here is different than the one traditionally discussed by economists. But it’s just a real!) Or, at the least, we can make them less dramatic.

The key is to plan our big projects in such a way that we get more feedback on them along the way.

But it has to be the right kind of feedback.

Stay tuned for more.

Comments welcome (as always!)

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