Sunk Cost, and Other Barriers to Change

Clients hire coaches to help them change the way they do things. Then those same clients often turn around and fight their coaches, seemingly at every step of the way. What gives?

Experienced coaches, especially those who were once therapists, know that such resistance is simply part of the change process. While you may be frustrated at times by a client’s seeming stubbornness, it helps to know that resistance to change is normal, and that working through that resistance will be necessary for eventual change to last.

Why is resistance normal? Think about it. If the asked-for changes are to occur, your clients will have to give up something that has worked for them. Initially it had value, or seemed to, or they would not have adopted it. So, there will be some grieving to be done, and some disentanglement. Be patient. It isn’t a reflection on you.

Resistance takes many forms. In the past we’ve talked about adhering to outdated assumptions about what works. Today we’ll talk about the concept of sunk cost, the sunk cost fallacy, and the anxiety that comes from even thinking about change.

A sunk cost is money or effort that has been spent and can’t be recovered. It is in the past. The sunk cost fallacy is the notion that because you have already invested a fair amount in something, you should continue doing so, even if it turns out to be a bad idea. Finishing a boring book because you’ve already invested a lot of time in it, or sticking out a ball game when it starts to rain because you spent good money on a ticket, are examples of times when the sunk cost fallacy comes in to play. Based on a sunk cost, you make a bad decision that does nothing to get your time or money back, and which will cost you more time, and maybe a bad cold. The sunk cost (the time already spent or the money spent on the ticket) can’t be recovered, no matter whether you stick it out or quit. Your decisions going forward will not change the fact that you spent that time or that money. It is not rational to make poor decisions based on a sunk cost. But people do it anyway, for emotional reasons, not rational ones.

Both individuals and entire organizations struggle with sunk cost, resisting needed change because they don’t want to lose what they have already invested. (Plus, they don’t want to have to admit a mistake, because that might mean that they’ve made bad judgements.) They’ve committed to a direction, so they keep going, throwing good money, time, and effort after bad. How can you, their coach, help? They’ve asked you to, after all.

Some things to consider:

First, regarding judgment, it may be helpful to remind your clients that they are in the judgment business. People in the judgment business get paid more than people who don’t have to make tough decisions. When you are in the judgment business, you WILL make mistakes! That’s just part of what leaders have to live with. Once they understand that they don’t have to stick with something just to make it look like it was not a mistake, it will be easier for them not to make more bad decisions based on their sunk costs.

Help them know that making bad judgments is just part of being a leader, but making irrational decisions based on sunk costs, i.e., allowing the sunk cost fallacy to dictate their decisions, is not OK. It is not, well, rational!

Second, it may be that the investment or initiative was actually the right thing to do, initially. Quite often, leaders have sunk effort and money into strategies that, at the time, were wise. But conditions change, these days rapidly, making what was once smart now ill-advised. Helping them reframe what they may be afraid will be seen as a mistake will help them be able to move on.

Third, because they have invested time, effort, and money in a course of action, they have come to understand what they are doing, and feel comfortable with it. It has become familiar. Now they face giving up the comfort of familiarity for a course of action that is unfamiliar, unproven, and therefore scary. They become anxious.

People’s instant response to anxiety is to avoid it, in this case, by staying the old course. How do you get them to change? Answer: You have to help them become more afraid of staying the course than of changing. As a coach, you have license to ask them hard questions, questions that others around them may not be brave enough to ask. Your asking such questions is a gift to your client. It is a form of telling truth to power without having to say it out loud yourself. If you ask the right questions, your client will say it out loud. Once your client is more afraid NOT to change, the old ways can be left behind.

Now it is time to deal with anxiety. In these situations, clients must have sufficient emotional self-awareness to recognize that they are experiencing anxiety. If they don’t, you may have to help them see that. Otherwise, they may interpret their feelings as a “gut reaction” telling them that they should not change. You may have to point out that while a human’s first response to anxiety is retreat, it is not always the most helpful response, and doesn’t need to stand in the way of what needs to get done. In fact, it can’t be allowed to do so.

Now your task is to help your clients build anxiety tolerance. Then they can look at the change they need to make in a more rational fashion. Leaders always lead into an uncertain future. Therefore, anxiety is a part of their life. If they simply avoid anxiety, they can’t lead.

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