Speaker 1: Helping leaders motivate their people to a higher level of
Speaker 1: performance through strong human relations, team building, and goal achieving.
Speaker 1: This is the seven Minute Leadership Podcast with your host
Speaker 1: Paul Fellovledo. Hello everyone, and welcome to the seven Minute
Speaker 1: Leadership Podcast. It's episode two ninety four. Today we're exploring
Speaker 1: a common leadership trap, the sunk cost fallacy. This psychological
Speaker 1: tendency can cause leaders to stick with bad decisions simply
Speaker 1: because they've already invested time, money, or effort. It's a
Speaker 1: dangerous mindset that can keep organizations stuck in inefficiency and
Speaker 1: prevent growth. The sunk cost fallacy occurs when we continue
Speaker 1: in investment not because it makes sense for the future,
Speaker 1: but because of what we've already put into it. And
Speaker 1: you've likely seen this in businesses that refuse to abandon
Speaker 1: failing projects, employees who stay in toxic workplaces because of
Speaker 1: the years that they've already spent there, or even leaders
Speaker 1: who hold on to outdated strategies or policies because they
Speaker 1: once worked in leadership. The key to overcoming this fallacy
Speaker 1: is to shift your focus from what's been spent to
Speaker 1: what's best moving forward, and so how it affects leadership
Speaker 1: holding on to failing projects. Maybe your company launched a
Speaker 1: new initiative that just isn't working. Instead of cutting losses,
Speaker 1: you keep pushing forward, hoping things will turn around simply
Speaker 1: because you've already invested time and resources in sticking with
Speaker 1: underperforming employees. If an employee isn't the right fit, but
Speaker 1: you've already spent months training them, it's tempting to keep
Speaker 1: them on board longer than you should. This harms team
Speaker 1: morale and productivity more than you may realize in refusing
Speaker 1: to pivot. Market trends change, but some leaders resist adapting
Speaker 1: because they're emotionally attached to pass decisions. This leads to
Speaker 1: missed opportunities. So how do you avoid this trap? Ask yourself,
Speaker 1: would I start this today if you weren't already invested,
Speaker 1: would this decision still make sense? If not, it's time
Speaker 1: to move on and separate emotion from logic. And this
Speaker 1: one is so important, your investment in time or money
Speaker 1: is already gone. Make decisions based on future benefits, not
Speaker 1: passed costs, and encourage a culture of adaptability. Leaders who
Speaker 1: admit mistakes and pivot when necessary build stronger, more resilient
Speaker 1: organizations and One of the toughest parts of leadership is
Speaker 1: admitting when something just isn't working. It can feel like
Speaker 1: you're giving up or admitting defeat, but in reality, it's
Speaker 1: about having the courage to pivot. Think about how much
Speaker 1: more damage is done when leaders double down on poor decisions.
Speaker 1: It drains energy, resources, and morale. Making a change, even
Speaker 1: a difficult one, often brings relief and clarity to a
Speaker 1: team that's been quietly waiting for a new direction. It's
Speaker 1: also important to create an environment where your team feels
Speaker 1: safe to speak up. Sometimes your employees know something isn't
Speaker 1: working before you do, but they stay silent out of
Speaker 1: fear or loyalty. Invite feedback. Make it clear that smart
Speaker 1: leadership isn't about always being right. It's about being willing
Speaker 1: to course correct. When you show that you're more committed
Speaker 1: to the future than to your ego, your people will
Speaker 1: follow you with greater trust and confidence. Letting go of
Speaker 1: bad investments isn't failure, it's leadership. The best leaders make
Speaker 1: tough calls that position their teams for future success, even
Speaker 1: when it means walking away from something they once believed in.
Speaker 1: I understand the emotional connection you may have had with
Speaker 1: something that worked ten years ago. But times change, so
Speaker 1: do policies, the workforce and what drives each individual that
Speaker 1: may work for you, So always keep what's best for
Speaker 1: the future of the organization as you're north Star and
Speaker 1: you'll never get lost. This has been the seven minute
Speaker 1: Leadership podcast and I thank you for listening. For more
Speaker 1: Paul Fell of Alito Podcasts, visit paulfellowalito dot com.