The sunk Cost Fallacy

Last summer the SheHive Operations Team began talking about the system we use to book classes, sell tickets, track memberships and manage our finances. Or, rather, I should say systems. Through the past three years we have pieced together no less than five different tools that help us do it all - and they have been effective, though cumbersome. When it comes to systems, we all believed that less would be more.

So, after a few months of research, we landed on a single, new system that would seamlessly integrate all the tools we used. Or at least that’s what the team selling the system promised us. We spent three months preparing - learning the system, testing it out and implementing it before we launched it in late December / early January.

Throughout the implementation we each started to express some frustration every time we discovered that a feature wasn’t available to us as promised, but kept plugging along. We had invested so much time and money into getting it up and running that we were all determined to make it work.

And then came January - normally our busiest month of the year - and attendance flopped. Like, FLOPPED. The new system kept returning errors when community members would try to register for an event. Support was scarce on the vendor’s end. Nothing was working like it was supposed to.

I started waking up every morning at 3 or 4 a.m. - wracking my brain trying to figure out what I could do to turn it all around. We had worked so hard and done our due diligence - we weren’t negligent in our choices, yet it just wasn’t working. Worse yet, we were locked into  a contract.

Last week, tired from not having a single night of full sleep in for-ever, and frustrated as hell with hindsight, I mindlessly sat in the SheHive and played on my computer to pass the time. A message popped up in our Facebook inbox:

I am trying to sign up for your class and it has been very frustrating.  I tried to click on the link to pay and it redirects me to create an account which I did but it says I have an account and I am positive I do not have an account with you. This has been very frustrating.  I guess I wouldn't expect this from an organization that is founded on reducing stress.

I wanted to respond, “Grrrrrrrrl, I feel you!”

Instead I made a snap decision and pulled the team together. “We have to pull the plug on this new system.”

I was scared to say it out loud - they had all worked so hard and had so much hope. I was scared they were going to be frustrated with me - angry that had wasted so much time. Instead they let out a collective sigh. “Thank god. This shit isn’t working!”

I’m a silver lining kinda girl with a firm belief that mistakes are only a waste of time if you don’t learn from them, so I started making a list of the lessons learned. Lesson like never implement a new CRM system in the busiest month of the year and never sign a contract without a grace period. The biggest lesson, however, was the realization that an investment doesn’t justify further expenditures of time, resources or effort if it’s not working. (This is known as the Sunk Cost fallacy in economics and decision making.)

No matter how hard we worked, there was no way to recoup the costs of implementing a failed system. And spending even one more day trying to make it work would be another day we couldn’t focus on the real work. Nowhere in the mission of the SheHive is any mention of fighting tooth and nail with failed computer systems.

I slept straight through that night and have slept every night since. The money we lost hasn’t given me a second of grief. I wish it hadn’t happened, but I’m more relieved we aren’t fighting the wrong battles anymore.

How much of our precious time is wasted on jobs, or relationships, or projects that aren’t producing the results we want just because we so desperately want to recoup the energy and effort we put into them? Maybe it’s time to let ourselves off the hook and move on - finally realizing that the time we have left is so much more valuable than the time that was put in.

What sunk costs are you trying to recoup? What battles are you taking up your precious time and resources - keeping you from your real work? I’d love to hear about it! Leave a comment below or email me at hello@theshehive.com.

​With much love and gratitude,

Ursula Adams, MSPOD
​SheHive Founder