Looking forward, not backward
I don't care who you are or what you do, you simply must read Seth Godin's blog. He is the pied piper of a new age of communication and business building. I was inspired by him to write this post.
Isn't it strange how the promise of future glory tends to be overcome by the reality of past failures?
When we have a lot invested in something, we will pull out all stops to try to make it work. Continually throwing good money after bad instead of pausing. Reflecting on all our options, and taking the best decision for the funds and resources we have at hand.
The example Seth gives is two blocks of land. One worth $10,000 and one worth $1 million. The cheaper one is near a booming shopping mall, and the more expensive one is in a dilapidated and dying neighborhood. Which one do you spend money on developing further?
Easy question, regardless of how much we have already sunk ito the original purchase, the higher-value option is blindingly obvious. Yet in our professional lives, this often goes the wrong way.
We continue to fund IT projects because we have already sunk $10 million into it. We have a lot at stake and we need to get a return. Yet we could turn around and plough a vastly smaller figure into setting up a defect-elimination program with huge, almost immediate results.
We continue to plough cash into a failed or failing RCM program (say) when we could get greater bang for our buck by investing in a laser alignment program. Or the classic business process approach instead of buiting the bullet and spending a smaller amount implementing proven mobile working solutions.
When deciding where your funds need to go try to focus on the value achievable rather than the price already spent. Instead of focusing on trying to salvage sunk costs, instead try to draw value from future spending.