Steve Jobs' sunk cost
Poker reminds me of the sunk cost fallacy.
It can be a tough decision to fold your cards after making a big bet. On the one hand, you don't want to lose the money you already put into the pot. On the other, you want to save your resources to continue playing the game.
Like a poker bet, a sunk cost is a price that has already been paid and should not control future actions.
Experienced leaders stay aware of the sunk cost fallacy.
When Steve Jobs returned to Apple, he focused the company's resources on reimagining the iMac. It was a bet that saved the business from going bankrupt. Next they designed the iPod, the revolutionary device capable of storing "1,000 songs in your pocket."
Apple was on a roll.
They began developing their next device, a tablet, and invested a lot of resources in it. But then, one day, AT&T told Steve Jobs they wanted to partner with him on marketing a mobile phone—something that Jobs was always interested in building but didn't think the telco companies would embrace.
He had a tough decision to make.
Despite all the time and effort spent on developing the tablet, Apple made a strategic decision to deprioritize the iPad and shift the company's focus to the iPhone.
Imagine suddenly pausing a huge project to focus on something different.
I could see myself thinking, "we've spent a ton of money on this idea, so we should keep going." But Jobs knew that building the iPhone and partnering with AT&T was the better move in the bigger picture. And, of course, he was right.
How can awareness of the sunk cost fallacy benefit you as a leader?
I hope you're dealt a good hand of cards this week,
Anthony
Work Smart, Lead Better
Ideas on strategy, collaboration, mental fitness.
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