I am the Chief Custodial Technician at Rent Application, a former options trader & passionate QBASIC developer. I like country music, bourbon, Words With Friends, ice cream, Crossfit, Louis CK, and Zooey Deschanel.

Sunk Costs & Making Decisions

I work in a small company.  I have worked for bigger companies.

Decision making processes at our small company often seem very different from decision making in larger organizations.

A colleague recently asked me:

How difficult it is to change now that [someone] has done so much work? I’d love to [change feature X] but am worried about how much “undoing” of work would that be.

My answer was:

 Who cares?

Sunk Costs

It doesn’t matter to me if someone has already done a lot of work. What I *do* think about is:

  1. We exist in a particular state of the world

  2. If we want to be in another state of the world, what will it take?

  3. Given the costs (time, dollars, sanity) to get to the desired state, do the benefits (profits, growth, users, accolades) justify the change?

Many people and many companies worry about “undoing” things that have been done.  I don’t believe in this.

If something isn’t done the way we want it, we should consider redoing it.  That certainly isn’t a license to “redo all the things all the time!!!” — It simply means to consider what it takes to get from where we are to where want to be, then evaluate whether it’s sensible to we want to pursue that course.

I imagine that workplace behavior concerned with “undoing” another person’s work is usually an expression of fear of hurting someone’s feelings by implying that person’s work was “bad”.  So instead, we accept undesired results because we don’t want to negatively signal the creator.

Rightness isn’t Absolute

Undoing or changing prior work doesn’t necessarily mean that what we did the first time was “wrong”.  Sometimes we make decisions, then later, with new information, our objectives change.

A particular state of the product or decision is rarely right or wrong in an absolute sense.  It can just be “what we want now”.  Sometimes “what we want now” changes.

This confuses some people because we’re led to believe that changing your mind is a sign of weakness or that “truth” or “correctness” is a always a fixed, static thing (John Kerry probably lost the presidency in no small part because Americans thought he was a “flip-flopper” [1]).

However, in our business, we are often forced to make decisions with incomplete, imperfect information. We make satisficing approximations to the “best” behavior, so we often *knowingly* choose suboptimal paths. We also just make plain, dumb mistakes.

With more time and more information though, we can continually improve our view what the “best decision” is for the company.

Sunk Costs

Whatever it is, however we got to a state of the world that isn’t the state we want to be in though, we’re already there. It doesn’t matter to me how we got there, how much time and effort it took to get there, or whose work we have to undo.  That’s already done.

I just want to know what we have to do to get to where we want to be.


[1] Steven Colbert in the White House Correspondents Dinner has a lovely bit where he makes fun of this and says “[The President] believes the same thing Wednesday that he believed on Monday… no matter what happened on Tuesday.“