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Sunk costs and opportunity costs

Sunk costs, opportunity costsWell, it’s a wrap…. almost. We’re shipping boxes of binders, exhibits, books, and hundreds and hundreds of pages of documents tomorrow to the accrediting commission, and now it’s a waiting game. It’s been a grueling year – the first application last spring, and now this past fall, responding to their comments and concerns, we had to significantly revise and re-submit.

We hit some real stumbling blocks, some moments when we were all tempted, seriously tempted, to just throw up our hands and walk away. The project was a total meditation on power and effort, of digging deep and pushing forward. Yet at each obstacle, the question came up, is it worth it?

It’s extremely hard to know, because of the psychology (and economics) of sunk cost and opportunity cost. Sunk cost is an economic term for the money or sweat equity you’ve put into something. And opportunity cost is about the future: for every minute or dollar you spend on something, there’s something else you’re not spending it on. And it’s extremely hard to tell which is the better route. Knowing when to push and when it’s not worth it is extremely hard, psychologically. We get attached all the time, to our detriment, because of sunk costs: relationships, jobs, habits, military campaigns, etc.

With this project we had to consider each time we hit an obstacle (and sometimes it seemed to happen daily), what is the future benefit? Can we imagine it? Can we weigh this level of effort against the future cost? How do we know we’re not just hanging on because of sunk cost?

Working with change of any kind, whether with people or systems, understanding the psychology of investment and loss, is critical. Just as I was cooking on this all, my friend Carol Zahner, sent me this link, The Upside of Quitting.

Double loop learning and the value of threat

I can’t say for sure, but I’ve either developed a competitive spirit as I have gotten older, or, I’ve just become less self-conscious about it. It’s become most evident when I cycle in large group events. While some riders have to tune out the others and focus on their own pedaling speed, I do the opposite. I quickly notice the more competitive riders and pace myself according to their speed.

In some areas, competitiveness is seen as a good thing. But where I come from – the peace and love era of the 70s, a progressive liberal college, the experiential psychotherapy culture – competition was a bit of a no-no. So noticing my burgeoning competitive spirit made me curious. What is it? What does it do for me? (more…)

Homage to teamwork

On Friday we shipped off the binders – must have been at least 10 – to the Distance Education  and Training Council offices with our application for accreditation for the Process Work Institute. It’s been a grueling couple of months. Those close to me know the gory details, as does anyone who has worked on an immense project with inhuman workloads and impossible deadlines.   It’s madness, and it brings out the best and worst of people.

So this morning, for the first time in months, I have a clear desk (sort of) and time to look ahead at my next projects, and pick up some things that have been neglected in the process (eg, my blog!). In a few weeks I’ll be in Toronto again, invited by my friends Annahid and Shakil at the Anima Leadership Institute to offer a workshop, “From Conflict to Collaboration.” And following that, I’m lucky to be the guest presenter at the Summer Leadership Institute at the University of Toronto school of Applied Science and Engineering. I’ll be presenting a workshop called “Tools and Techniques for High Performance, Cross-Disciplinary Teams.” (more…)

Single, available hero seeking big messy problem

What’s the solution for solving the health care mess? Global warming? The economy? OK, these are bad examples, obviously if we knew, and if it were that easy, they’d be solved. But the question I want to ask is, why do we wait to tackle our problems until they are so complicated, so messy, so escalated that they require Herculean efforts? (more…)

Leading under Fire

I don’t believe leadership is best served by the parallels drawn to war and sports. It doesn’t capture the sense of service and eldership at the heart of leadership. But I do see one reason why military and sports metaphors are so often used to describe leadership challenges. War and sport have in common the need to develop mental toughness, so what you learn can be done under terrific psychological and physical stress. For an athlete, learning what to do is only part of the preparation; learning to do it on game day is another. That’s the difference between just being athletic, and being a top competitor. The professional athlete’s training includes psychological toughness by simulating game day conditions: high stakes, bad calls, mean crowds, horrible weather, and ruthless opponents. Because every athlete and coach knows that once you cross a threshold of stress, learning and thinking goes out the window. If you get triggered by stress, choking is inevitable. (more…)

Leadership Development, Emotional Intelligence and Surviving the Fog of War

Photos taken of U.S. Presidents before and after their terms in office show what a huge toll that job takes on the body. In the four years between inauguration day and the end of term, Presidents often look like they’ve aged 10, not just 4 years.

It’s a grueling job, with a lot of pressure. What we see on the outside is only the tip of the iceberg. Many of us, while not quite as high profile, are in leadership positions that put a terrible strain on mind and body. What happens to the body and mind under the weight of public pressure and tensions of leadership? What toll does public attack and humiliation take on the mind and emotions? What about our energy and drive, after plans and ambitions are torpedoed by opposition, sunk by the weight of inaction, or stalled by endless rounds of skeptical questioning? (more…)