352
n
The success trap (and some ideas how to get out of it)
reasons as top executives go ahead with a big acquisition despite
due diligence suggesting it’s a bad idea, and why companies go
ahead with a planned product launch despite retailers and sales-
people warning the product isn’t ready yet: we call it “escalation
of commitment”. There is a lot riding on the project, both in
terms what is at stake (the future of the company; the war) and in
terms of the personal reputation of the person in charge. Pulling
the plug will make you look stupid and incompetent; succeeding
will make you a hero. And you have made a very public
commitment to seeing the project through, having championed
it from the start. There is no way of stopping it now.
And when you plan an operation of this size, whether it is
Operation Market Garden or a huge acquisition, nothing is ever
going to be perfect. If you pull the plug each time something
is amiss, you’re never going to achieve anything; you need a
high level of commitment and persistence in the presence of
setbacks.
However, at some point, your commitment
is going to escalate: it’s going to be too
much, and the warning signs are going to
be ubiquitous. The trick is knowing when to
pull the plug – and unfortunately it’s not like
you can put that in a spreadsheet, hit Enter
and see the answer. It’s a judgment call.
And being too late to make this call, realize it is has become too
much, and you’re going to have to bite the bullet and admit the
error of your ways is, I am afraid, only human. Yet the conse-
quences can be disastrous, and truly a bridge too far.
Mental models – let’s all think within the same box
What makes the related phenomena of the success trap, tunnel
vision, and escalation of commitment so tricky is that it is
the same things that lead to success that may also get you in
trouble. For example, one does often need some pigheadedness
to succeed, and carry on where others would have stopped. Yet,
‘‘
The trick is
knowing when to
pull the plug – It’s a
judgment call.
’’
Business Exposed36
obviously this can go too far, and lead to failure. It is largely a
mental thing, and one that applies to individuals and businesses
alike.
The illustrious former chairman of IBM, Thomas Watson,
once said, “Whenever an individual or a business decides that
success has been attained, progress stops.” What he meant
was that successful rms nd it very hard to change, for
instance in response to changes in their business environment.
(Unfortunately he is also the person who allegedly said, “I think
there is a world market for maybe ve computers” so I would say,
“Physician heal thyself” . . . but I guess that doesn’t make him
wrong about the rst bit!)
As said, this rigidity-due-to-success effect is partly a mental thing.
Once something has brought us success for a sustained period of
time, we sort of forget that there are other ways of doing things.
It may even be so bad that we don’t spot the changes in our
business environment at all anymore. However, let’s not make
the mistake of thinking that such strong mental models of how
we go about doing our business are all bad. They also bring some
pretty strong advantages. Consider the following:
Aoccdrnig to rscheearch at an Elingsh uinervtisy, it deosn’t mttaer in waht
oredr the ltteers in a wrod are, the olny iprmoetnt tihng is taht the frist
and the lsat ltteer are at the rghit pclae. The rset can be a toatl mses and
you can sitll raed it wouthit a porbelm. Tihs is bcuseae we do not raed
ervey lteter by itslef but the wrod as a wlohe.
All of the above is clearly nonsense; they’re not words at all, it
is just gibberish. But something makes us able to read it without
a problem; that’s because all the right pieces of information are
there (all the letters) and roughly in the right shape. Plus, the
context (the sentence) makes sense to us. Then, our brain does
the rest. We can understand it precisely because we have seen
the individual elements (the words) before and understand the
context.
It is the same in business situations; we can quickly grasp and
interpret a particular issue if we understand the context and have
seen similar problems and situations before. We don’t have to
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