“Winners never quit, and quitters never win.”
“Never give up.”
“When the going gets tough, the tough get going.”
Recognize these mantras? Our culture is awash in well-intentioned reminders to keep our heads down and our “noses to the grindstone” until the job is done. We excel at hustling. We’re good at giving it our all. But we fail miserably when it comes to recognizing one crucial factor: when we should quit.
What if the best decision is to simply give up?
There are times when it’s smart to cut our losses, a concept that’s widely executed in the business world. Businesses understand the law of diminishing returns; at some point, the investment of more time, money, or resources can’t be recouped. When this happens, the best strategy — in most cases — is to stop.
But how can you be sure this decision is a sound one? The answer is to focus on two specific costs, and to ignore a third.
Quitting becomes a viable strategy when the opportunity costs are greater than the benefits of staying on the current path. Opportunity costs aren’t trivial — they’re a big deal. But they’re difficult to quantify.
By definition, opportunity costs are the value of what you’d lose by not pursuing another, presumably better, alternative. These costs may be tangible and clearly defined, such as financial benefits or an increase in pay. Or they may be harder to pin down, such as gaining experience.
As I shared in my TED Talk, when I decided to quit my job as President of AT&T Global Services, the picture was clear: the benefits of staying weren’t as high as the benefits of doing something else. Leaving gave me the opportunity to run an internet startup. And this allowed me to gain a very different set of skills that are critical to my professional role today. Weighing the opportunity costs pointed me in the right direction.
Have you ever become so consumed with a project that it’s difficult to see anything else? Do you define your personal worth by your professional success? Sometimes, when we wrap too much of our ego into a project, we’re unable to step back and say with conviction, “It’s time to quit.” With our egos leading the charge, it’s all but impossible to gauge the personal costs.
But here’s something to consider: According to research from Northwestern University, giving up on unattainable goals is better for our health. Across three studies, a team of researchers found that people who are able to swap unattainable goals for alternative goals experience better self-reported physical health and lower, normalized stress levels.
To effectively calculate the personal costs you’ve already invested into a project, position, or company, you must separate failure from your sense of self-worth and view it as a needed stepping stone to success — or a better personal life.
While opportunity and personal costs can be challenging to measure, it’s a third set of costs — sunk costs — that are the easiest to assess and, as a result, often become one of our biggest problems.
Sunk costs come in many forms: financial investments, a career path, time, even loyalty to a company. As you get overly invested in the decisions you’ve made in the past, sunk costs will loom larger than they should as you look forward. The best advice I can offer? Ignore them. That’s right. The best solution is to write them off.
As Ralph Waldo Emerson wrote, “A foolish consistency is the hobgoblin of little minds.”
The translation: Know when to cut your losses and go on to build something better. By evaluating these costs, you can start now.
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Rick Miller is an unconventional turnaround specialist, sought-after speaker, servant leader, and expert in driving sustainable growth. For over 30 years, he served as a successful senior executive in roles including President and/or CEO in Fortune 10, Fortune 30, nonprofit, and startup companies, including AT&T Global Services and Lucent Technologies. Throughout his career, he has been recruited from the outside to turn around poor performance in difficult times. His new book, Be Chief: It’s A Choice, Not A Title, helps leaders at all levels achieve their true potential. To learn more, visit BeingChief.com.