Table of Contents
Is persisting always the best decision? How do we decide when to stick it out and when to quit?
Leaders must be rational, focus on the long term, and abandon initiatives that may not make sense any longer.
In this episode, former world poker champion turned leadership scientist Annie Duke helps us understand that the skill of knowing when to quit is just as important for leaders as having persistence, staying power and grit.
Actions You Can Take Right Now
- Biases are the main reason we sometimes persist when we should quit. The Sunk Cost Fallacy is the most common culprit. Decisions need to be made on the benefits and costs of going forward, and not dependant on what has already been spent.
- To help us quit when we should, we should establish kill criteria in advance and have a buddy to remind us of when we’ve reached that point. This is the technique used by climbers on Everest. If they don’t reach a certain point by 2:00PM, they must turn around or risk being stuck at the summit in the dark.
- Starting with the so called “low hanging fruit” is the wrong way to begin any project or strategy. It creates a false sense of progress. Instead, begin with the most difficult aspects because if these prove to be insurmountable then the time, effort and money spent on the easy aspects will not be wasted.
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Episode Highlights and Excerpts
- Quit is the counterpoint to grit. Both are important in the right context.
- Our mental accounting system makes quitting hard. Even if we’ve accrued losses, we haven’t crystallized our losses until we quit. That makes holding on longer than we should to a project, investment, or underperforming employee the tendency. “Maybe it/they will turn around,” we rationalize.
- “Quit while your ahead,” is also bad advice in the wrong context. If you are getting ahead, it may mean that conditions are favourable to continue to have success. This phenomenon was proved out in a research study with taxi drivers who kept driving until they hit a fixed target. If they persisted when there were many fares to be had, and quit early when things were slow, they would make more money in the long term.
- The Sunk Cost Fallacy, or as Daniel Kahneman calls it, Sure Loss Aversion, biases us to persist when we shouldn’t. A good example is the Vietnam War. American leaders argued that that if they pulled out the lives lost would be wasted. It’s not about the past! It’s about the next life to be put at risk to continue.
- To combat our biases in quit versus stick situations we should:
- Recognize that our decisions are often biased, especially under stress.
- Establish kill criteria on projects and strategies will in advance. In mountain climbing these are called turn around times. In investing it’s called a stop-loss.
- Have a quitting buddy to remind us of our decisions about when to quit or stick when we are in the moment.
- Beginning challenging projects with the “low hanging fruit” can put us on a dangerous path. We should start with the more difficult, complex, and uncertain aspects to ensure we don’t create attachment or feel a false sense of progress.
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Annie Duke is a two-time guest on Unleashed, first joining us to discuss Decision Making for Today's Leaders.
Annie is an author, corporate speaker, and consultant in the decision-making space, as well as Special Partner focused on Decision Science at First Round Capital Partners, a seed stage venture fund. Annie’s latest book, Quit: The Power of Knowing When to Walk Away, will be released October 4, 2022 from Portfolio, a Penguin Random House imprint.
Her previous book, Thinking in Bets, is a national bestseller. As a former professional poker player, she has won more than $4 million in tournament poker. During her career, Annie won a World Series of Poker bracelet and is the only woman to have won the World Series of Poker Tournament of Champions and the NBC National Poker Heads-Up Championship. She retired from the game in 2012.
Prior to becoming a professional poker player, Annie was awarded a National Science Foundation Fellowship to study Cognitive Psychology at the University of Pennsylvania.
Annie is the co-founder of The Alliance for Decision Education, a non-profit whose mission is to improve lives by empowering students through decision skills education. She is also a member of the National Board of After-School All-Stars and the Board of Directors of the Franklin Institute. She is serves on the board of the Renew Democracy Initiative.