Letting Go of the Wrong Road: Understanding the Sunk Cost Fallacy in Business
In business, few things are harder than letting go of something you’ve invested deeply in. A product, a strategy, a partnership—sometimes we know it’s not working, but we continue. Why? Because we’ve already come so far.
“But we’ve always done it this way.”
“We spent years building this model.”
“We already invested too much to change course.”
These are classic symptoms of the sunk cost fallacy—the tendency to continue investing in something simply because of what we've already put into it, even when it’s clear that walking away would be the smarter decision.
And yet, clinging to what no longer serves us is one of the most costly mistakes entrepreneurs make.
What Is the Sunk Cost Fallacy?
The sunk cost fallacy is a cognitive bias that leads us to persist in a course of action because of past investments—time, money, effort—even if the current reality tells us it’s no longer viable.
In business, it shows up in statements like:
“We already paid for the packaging.”
“This has been our model from the beginning.”
“We committed to this strategy last quarter.”
This fallacy can keep teams locked into broken systems, unprofitable products, or outdated processes—all because change feels like admitting failure.
Why We Cling to Failing Strategies
There are three main reasons businesses fall into the sunk cost trap:
Comfort – Familiarity feels safe. Routines are easier to repeat than to reimagine.
Ego – Admitting an idea didn’t work can feel like admitting we didn’t work.
Fear of loss – Letting go of past investments feels like waste, even when continuing is more damaging.
But in reality, refusing to redirect doesn’t preserve value—it delays progress.
Business Is an Ongoing Experiment
One of the most important truths in entrepreneurship is this:
The world is too complex to assume certainty.
Markets shift. Customers evolve. What worked last year might not work now. That’s why successful businesses are built on continuous experimentation—not fixed plans.
Here’s what that means in practice:
1. Prototype before committing.
Introduce new products or strategies as experiments, not finished solutions.
Keep initial investments small, test early, and collect real-world feedback before scaling.
The most valuable insights don’t come from planning—they come from doing.
2. Stick with it—until the data speaks.
Not every idea will land instantly. Some need time to gain traction or customer understanding.
When testing something new, set a clear timeline and define success metrics up front.
Don’t pull the plug too early—but also don’t keep going indefinitely if results stay flat.
3. Redirect without shame.
Just because a road was costly doesn’t mean it leads where you need to go.
A failed strategy doesn’t make you a failure—it gives you feedback.
The best entrepreneurs aren’t the ones who get it right the first time. They’re the ones who adjust fast and move forward.
What I’ve Learned
There have been times I followed a path I believed in—deeply. I committed. I executed.
But the results didn’t come. And eventually, I had to admit: this isn’t working.
That realization didn’t invalidate the work. It simply reframed it.
That road showed me what doesn’t work—and that clarity helped me choose a better one.
The time, money, and energy were spent. But what I gained was insight.
And that’s what I took with me into the next decision.
Final Thought
Every day you continue investing in something that isn’t working, you’re not just holding on to the past—you’re missing the opportunity to build something better.
So if you find yourself in a situation where you’re staying the course simply because of what it already cost you, ask:
Would I choose this again today if I were starting from scratch?
Am I continuing because it’s working—or because I’m afraid to walk away?
The courage to pivot is often the thing that separates sustainable businesses from stuck ones.
Let go. Learn. Redirect. That’s not failure—it’s progress.
