What Target Did Right in Canada
By Jim BlasingameGrowing Your BusinessPublished January 23, 2015FOXBusiness
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This story isn’t to call attention to the many things Target did wrong, but rather to highlight the one thing they did right: They did not become victims of the Concorde Fallacy.
In 1956, the British and French governments, along with aircraft and engine manufacturers, began the process of building a supersonic airliner. From the start the Concorde was plagued by prohibitive budget overruns. In fact, long before the wheels came up on the first commercial flight in 1976, the partnership knew the venture would never sustain itself financially. And yet they couldn’t bring themselves to shut it down.
By the last Concorde flight in 2003, the Anglo/French misadventure had become so legendary that evolutionary biologists coined the term, “Concorde Fallacy,” as a metaphor for when sticking with a troubled project costs more than starting over with a new alternative.
Ego and sovereign pride by the Concorde partnership caused the willing suspension of economic reason. Plus they failed to apply the lesson of sunk costs, which is that, “Any decision to continue a financially unviable project shouldn’t be based on what has already been spent.” In a small business, it might sound like this, “We’ve got too much invested to stop,” or “We just need to work harder.”
Pride can be productive or it can be a problem. Consider this handy admonition a mentor once gave me that I have named the Concorde Question: “Do you have a fighting chance or just a chance to fight?”
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This is the best formulation of the problem of “sunken costs”.
Unfortunately, everyone, EVERYONE, thinks about the sunken cost, the lost opportunity, and looking bad.
Argh!
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Reinke Faces Life 