Is the Sunk Cost Fallacy Holding Your Business Back?
February 12th, 2020 by William Wentowski
In the world of business, innovation is an essential key to staying successful. Any company or corporation that fails to keep up with changing technology or a fundamental shift in the industry is inevitably left in the dust by those that do. It's happened time and time again, and we could be seeing the relentless cycle repeat very soon. Just look at Cloud technology. It continues to bring modern innovations and industry-changing benefits, and yet there are still so many businesses refusing to migrate over. Why?
Part of why some companies refuse to switch over is because they believe they have to get the most out of previous investments. Causing them to fall into what is known as the sunk cost fallacy. For those who don't know the definition of the term, it is defined by Cambridge Dictionary as follows:
"The idea that a company or organization is more likely to continue with a project if they have already invested a lot of money, time, or effort in it, even when continuing is not the best thing to do".
Meaning that they place a subjective value on something based solely on how much they had invested into it instead of how much value it is generating. Leading to them refusing to move on to something newer that could do more for their business, simply because of their perceived value of what they have presently.
As stated at the start, those who willfully refuse to innovate and adapt to changing times are inevitably doomed to be left behind by those who do and nothing will hold you back more than the sunk cost fallacy. Don't let the future pass your business by just because you believe that you haven't got the most out of what you possess now. Get innovative technology that will generate more value than what you have in place now, contact BTS today and get started on a Cloud solution.
Posted in: Managed IT