The idea that success stems from never giving up is a core part of our culture. It is embedded in the wisdom of those we revere as heroes and role models.
“Never give in, never give in, never, never, never, never—in nothing, great or small, large or petty—never give in…”— Winston Churchill
“Winners never quit and quitters never win.” — Vince Lombardi
“Don’t give up, don’t ever give up.” — Jim Valvano
These words were spoken in the context of war, cancer, and sports. Nonetheless, their spirit embodies how much of the business world thinks about the trade-off between perseverance and quitting.
My Twitter feed — I follow founders, entrepreneurs, business pundits, and investors — has a lot of content that reminds me of this tenet: success requires patience and is earned by those who persevere. Sticking in the game long enough will, by itself, create good fortune leading to success.
Quitting or giving up is viewed as tantamount to losing. No one likes ‘losers.’
Grit, always an important trait, has become even more revered as a value to instill in children and young people following Angela Duckworth’s engaging book on the topic.
Questioning Whether to Continue
My work — which involves several simultaneous fractional and coaching assignments coupled with building a community business — has not reached the level of ‘numerical’ success I had hoped for when I started down this path in late 2019.
With each of my varied endeavors, I often ask myself whether I should keep going or quit. I next ask myself, would quitting display personal weakness? I suspect many who start new business ventures and encounter difficulties in scaling efficiently (in terms of time and money) are asking themselves similar questions.
We are often afraid to ask this question aloud fearing it signals something negative about our level of commitment, drive, seriousness, intellectual capacity, or worth.
What Holds Trapped to the Status Quo?
Emotional baggage is one answer. Many times, thinking about quitting brings to light emotions such as grief and shame. Beyond emotional baggage, two other factors play a role. Specifically, we place extra weight on the past (sunk costs) and undervalue future alternatives (opportunity costs).
The Sunk Cost Fallacy
The sunk cost fallacy deals with how we think about the past. About decisions already taken. Where we have invested time, money and effort.
The weight we put on sunk costs makes it harder to quit. We think if we’ve come this far, we ought to continue rather than start again another day or on another path. Sunk costs are easiest to overcome in situations where there are multiple chances to ‘play the game’ again. Poker is one great example, another being summiting a mountain, whether it be a 14,000 foot peak in the US or Mt. Everest.
From a purely rational economic perspective, sunk costs should be irrelevant. We cannot change past decisions and they ought not to overly influence how we think about the next decision.
Opportunity Cost and the Return on the Marginal Investment
Opportunity cost is about valuing potential future alternatives. Opportunity cost requires us to ask ‘What is my next best alternative to the current use of this time or money?’ Because the opportunity cost is hidden (something that has not yet come to pass) and the sunk cost is highly obvious, we tend to overvalue sunk costs and underappreciate opportunity costs.
All capital allocators — experienced institutional investors (VC and PE firms), less experienced retail investors and CFOs in a business — need to consider marginal returns and the opportunity cost of committing additional funds or time to a project.
This dilemma is often phrased as, “Are we throwing good money after bad?” Getting at whether the incremental investment is a fruitful or fruitless effort to recoup losses incurred to date.
When Walking Away is the Better Decision
I recently came across the new book by Annie Duke called Quit: The Power of Knowing When to Walk Away (released in October 2022). Listening to some interviews with her, I realized that there are a number of situations when quitting makes the most sense.
As I have reflected on this topic for some months now, I realize I would counsel others to quit in a number of different situations. I also remember business situations when I actually recommended ‘quitting.’
Here are some thought exercises to utilize when considering whether to quit or continue forward.
Knowing What We Know Now or Unattainable Goals
Sometimes we are simply faced with a decision of whether to take our lumps and walk away or to stick with it. Annie Duke reminds us when facing this situation we should consider all the evidence we currently have. And then ask ourselves, “Knowing what we know now, would we still have made the same initial decision?”
If the answer is yes, then we should do nothing. If the answer is no, we should take the loss, whether that involves selling a security, quitting a job, or leaving a bad relationship. The next step (once we have completed the requisite grieving process) is to invest our time in finding a better alternative for our funds or our time.
Another way of thinking about this is to consider whether a goal which previously seemed attainable is no longer so. Once we realize a goal is truly unattainable, it is better to quit. The Freakonomics episode on The Upside of Quitting delves into this principle in some detail.
The Outside Perspective
When we get too close to anything, our identity becomes entangled with the topic in question. Whether it is a business situation or a personal relationship, decision-making gets tainted with biases.
An outsider brings a perspective unencumbered by sunk costs. In business, new CEOs find it much easier to make hard decisions to shut down entire business units, cut costs dramatically (the Twitter experience shows this playing out recently), and restructure leadership teams by jettisoning people who were hired as high-priced, highly valued talent.
So it pays to ask oneself, “What would I tell a good friend to do in a similar situation?”
Become Smaller as a Precursor to Growing Again
Unfortunately, businesses acquire some customers that have a negative value. Or have legacy business units that no longer fit with the core thesis of the organization. The right answer in these cases is often to ‘fire’ the low value customer or sell the business unit, which is no longer strategic.
A McKinsey study on corporate growth reveals that it is ok to shrink to grow. And that companies that prune parts of their portfolio proactively create better long-term returns for shareholders.
Another way to phrase this approach is “What can we do to live to fight another day?”
Are There Other Alternatives?
In most situations, when you first realize that things are not going well, there are usually more than two alternatives. Before quitting or simply accepting things as they are, you should ask yourself the these four questions:
- What thing(s) would I like to change? Am I willing to articulate that to others (e.g. boss, partner, friend) even though it might be scary?
- Is the goal I started towards still worth pursuing? Or am I willing to redefine success? (Perhaps incorporate new things I have learned along the way that I find valuable.)
- Is there a third party resource that can help resolve conflict or the feeling of being stuck? (Such as coaches or therapists.)
- Should I redefine the time horizon over which I evaluate success? (Sometimes, we have set too ambitious a timeframe for achieving our goals.)
The End is Actually the Start of a New Beginning
The research from the Freakonomics team reveals that most people are happier once they have made a decision to quit. Quitting is not always the right answer. And every time we encounter disappointment or unhappiness does not mean we should quit.
But if we are repeatedly finding that our investment in work, relationships, or hobbies no longer fits with our purpose, then my advice is to consider quitting.
As Stoic philosopher Seneca has said, “Every new beginning comes from some other beginning’s end.”