Friday, February 11, 2011

Discipline to Cut Losses

The one thing that large organizations do better than quick nimble entrepreneurs is they cut losses in a discipline fashion. When a unit has not made it's numbers for (X) consecutive quarters, then the unit is shuttered, period. The metric is (X), the action is closure, end it, cut the loss.

Individuals on the other hand consider sunk costs. Sunk costs is what you have invested in the project already, be it financial or emotional. Those sunk costs cloud your decision making process. "I have too much invested in this now to give up", is the mantra that leads to success occasionally, however in most cases it leads to further loss.

There is a time to reap and a time to sow. There is also a time to cut the loss.