The idea that winners never quit is false. Most winners have quit many times. They do it in an organized and disciplined way though.
I suppose somewhere between the Bart Simpson approach of, “No Simpson ever quits before he tries something easy” and never give up is where most things fall. Like a Bell curve. How much effort and money is worth it to make a success? We never know ahead of time where the new project fits.
People who succeed quit for reasons other than than it is too hard. Here are some of the reasons that make sense:
- What I started out to do is no longer required. When your goals change, or the circumstances within which your goal existed change, you should change too. Electric refrigerators replaced ice supply companies and no amount of persistence would have allowed the ice companies to flourish.
- When I have learned by doing that my goal cannot be achieved with existing resources. Every project should have a time and money budget. It is wrong to continue on after reasonable preliminary guidelines have been breached. It is okay to objectively set new and realistic ones. RCA went into the computer business in the mid 60s with a $20 million budget and no discipline. They wrote off $453 million soon after.
- When I learn that the risk reward ratio no longer works. Bulova was one of the first into the electric watch business. $500 for a routine offering. Texas Instruments brought the cost of the technology down to less than 10% of that and Timex used the innovations to flourish. The market changed and Bulova quit.
The biggest reason for people to refuse to quit is the inability to admit they were wrong. They just see it poorly. Wrong is good. You learn something. Not many people learn much being right. Chasing an impossible task is debilitating emotionally, physically and financially.
Strong managers are undeterred by the need to quit. Quitting weak projects frees resources for potentially better ones. For them it is a comparative advantage thing. The one they quit is not necessarily bad, just not good enough. Ideally sell the partly finished project to someone else with a lower value on time and money capital.
Resources are limited so you must always choose. Quitting things you should not be doing frees you for better things. Quit as soon as there is something better to do with the resources. It is like the investment hold question. Knowing what you know now, would you start. If no, you should not continue either.
Most big losses happen by nurturing. Try to be objective.
Don Shaughnessy arranges life insurance for people who understand the value of a life insured estate. He can be reached at The Protectors Group, a large insurance, employee benefits, and investment agency in Peterborough, Ontario. In previous careers, he has been a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.
Please be in touch if I can help you. email@example.com 866-285-7772