By: John S. Morlu II, CPA
In the bustling metropolis of Capitalopolis—where caffeine flows more freely than common sense and startup founders wear their sleepless nights like medals of entrepreneurial valor—there exists a curious species: the entrepreneur. These brave souls are dreamers, innovators, and, far too often, the unfortunate passengers on a runaway train of their own making. Welcome to the world of Escalation of Commitment, where logic takes a backseat and optimism drives full-speed into a brick wall.
Entrepreneurs, you see, have a peculiar gift. They can convince themselves (and often others) that success is just around the corner, no matter how many corners they’ve already turned. When a venture starts to wobble, rather than reevaluate, they double down—throwing more money, more time, and more resources into the abyss. And it’s all because of this sneaky little cognitive bias, pushing them ever deeper into failing projects, certain that just one more tweak will be the game changer.
It’s the kind of train wreck you can’t look away from—a beautiful disaster in slow motion. You know it’s coming, they know it’s coming, but somehow, they still have faith that the next bend in the track will save them. And nothing captures this delightful absurdity better than the cautionary tales of our two fictional yet oh-so-real protagonists: Dave and Janice. Their stories are a rollercoaster ride of humor, tragedy, and some good old-fashioned business madness, showing us the often ridiculous, yet entirely human, consequences of escalating commitment.
So buckle up and prepare for a hilarious, insightful, and downright eye-opening journey into the minds of entrepreneurs who just can’t let go.
Meet Dave: The Visionary Who Couldn’t See the Ground
Dave was the quintessential tech startup guy, with a cleanly shaven head and a wardrobe of black turtlenecks that screamed “I’m the next Steve Jobs.” His company, Dave’s Dynamic Data Drones, Inc., was going to revolutionize the world. Or so he thought.
His drones weren’t just any flying machines; they were designed to deliver packages using an AI system that could “think like a human, fly like a bird, and deliver like a pro.” The problem? They couldn’t think, they flew like bricks, and the only thing they delivered was chaos.
The Escalation Begins
Despite numerous failed test flights—where drones crashed into trees, walls, and once, memorably, a parked police car—Dave persisted. “All startups face challenges,” he would say as another prototype burst into flames mid-air. For Dave, each failure was just another bump on the road to greatness.
The truth, however, was that his drones were fundamentally flawed. The AI system he had outsourced to a team of developers in a country he could barely locate on a map was buggy, and the hardware was about as durable as a piñata. But the more the drones failed, the more Dave invested. He poured millions into the project, convinced that success was just around the corner. This, my friends, is the essence of Escalation of Commitment.
Fun Fact: The “Concorde Fallacy”
The term Escalation of Commitment isn’t exclusive to business—it’s been observed in government projects, personal relationships, and, famously, the development of the Concorde airplane. Despite massive cost overruns and clear evidence that the project was commercially unviable, the British and French governments continued to fund the supersonic aircraft because they had already invested too much to stop. Economists now refer to this as the “Concorde Fallacy,” a cautionary tale of what happens when sunk costs override common sense.
Back to Dave: The Costs Keep Rising
As Dave’s drones continued to malfunction, his investors grew anxious. They weren’t getting the expected returns, and competitors like WingyThingies™ were pulling ahead with superior technology and flawless deliveries. But instead of pivoting or cutting his losses, Dave doubled down. He hired more engineers, commissioned marketing campaigns, and even bought a swanky new office in the heart of the tech district—all in the name of pushing through the rough patch.
It was no longer about the drones. It was about saving face, about proving to everyone (and himself) that his vision was right, that the failures were temporary, and that success was inevitable. But it wasn’t. The writing was on the wall, and everyone could see it but Dave.
The Psychology Behind Dave’s Folly
At the heart of Dave’s behavior lies a powerful psychological principle: cognitive dissonance. Cognitive dissonance occurs when a person holds two conflicting beliefs or ideas, creating mental discomfort. Dave believed in the brilliance of his drones, but the evidence clearly showed otherwise. Rather than admitting that he had made a mistake, Dave’s mind worked overtime to rationalize the situation. “We just need more time and resources,” he told himself. And so, the investment continued.
There’s also a darker element to Dave’s commitment—ego. Entrepreneurs often view their businesses as extensions of themselves, and to admit failure feels like a personal defeat. Dave wasn’t just trying to save his drones; he was trying to save his own reputation. The result? He dug a deeper hole.
Enter Janice: The HR Queen Who Couldn’t Let Go
Now, let’s switch gears and meet Janice, CEO of Janice’s Gelatinous Juices—a health and wellness company that produced juice cleanses so thick, they bordered on being chewable. Her claim to fame? A detox juice so dense that it doubled as a meal and a weightlifting exercise.
Janice was riding high on a wave of success when she decided to expand her team. That’s when she hired Brian, a man with a résumé that read like a dream: Harvard MBA, ten years of experience in corporate strategy, and the kind of LinkedIn profile that would make a recruiter weep tears of joy.
There was just one problem—Brian was useless.
The Making of a Bad Hire
Brian’s work performance was nothing short of abysmal. He missed deadlines, failed to contribute meaningfully in meetings, and seemed to spend most of his time perfecting his golf swing rather than his strategic reports. The team knew it. Janice knew it. But instead of admitting her mistake and cutting Brian loose, she did the unthinkable—she promoted him.
Why? Because admitting that she had made a bad hire felt like an attack on her judgment. Janice had spent a small fortune recruiting Brian, and the idea of starting over was too painful to consider. So, she kept him on, escalating her commitment to a lost cause.
The “Sunken Employee” Syndrome
Janice’s dilemma wasn’t unique. Many business owners and managers fall into the trap of escalating commitment when it comes to hiring. Once you’ve invested time, money, and resources into training an employee, it’s difficult to admit that they aren’t working out, even when the evidence is overwhelming.
In Janice’s case, the more Brian failed, the more effort she put into trying to “turn him around.” She gave him more responsibilities (which he ignored), sent him to expensive leadership training seminars (where he napped), and even assigned him an assistant (who, ironically, ended up doing most of Brian’s work). All the while, the rest of the team looked on in disbelief.
Fun Fact: The IKEA Effect
There’s a psychological phenomenon known as the IKEA Effect, which describes how people tend to place a higher value on things they’ve put effort into, even if those things are inherently flawed. Just as we become attached to the lopsided bookshelf we spent six hours assembling, business owners like Janice become attached to employees like Brian because they’ve invested so much into them. The result? They hold on longer than they should, hoping for a return on investment that never comes.
Meet Frank: The Fail-Fast Pioneer
While Dave and Janice were busy sinking deeper into their commitments, Frank, CEO of Frank’s Fail-Fast Fiasco Emporium, was taking a very different approach. Frank believed in the fail fast philosophy—if something isn’t working, ditch it and move on. For him, failure wasn’t a setback; it was a stepping stone to success.
Frank’s company, ironically named Fail-Bot 3000, was built on the idea that rapid experimentation and quick decisions were the key to growth. He wasn’t afraid to fire underperforming employees after a week, scrap failing products after a month, or change course entirely if something wasn’t working. And guess what? It worked.
By embracing failure and cutting his losses early, Frank was able to focus on the things that did work. While Dave’s drones were crashing and Janice was sinking money into Brian’s golf lessons, Frank was raking in profits by pivoting his business at the first sign of trouble.
The Lesson: Cut Your Losses, Don’t Ride Them
The stories of Dave, Janice, and Frank highlight the dangers of Escalation of Commitment. Dave’s drones were doomed from the start, but he couldn’t let go because of his ego and the sunk costs he had already incurred. Janice clung to Brian because she didn’t want to admit that she had made a bad hire, even though it was clear to everyone else. In contrast, Frank’s ability to quickly abandon bad ideas allowed him to succeed where others failed.
The moral of the story? Don’t fall into the trap of thinking that just a little more time, money, or effort will magically turn things around. More often than not, it won’t. If something isn’t working, cut your losses, pivot, and move on.
Fun Fact: The “Abilene Paradox”
Interestingly, Escalation of Commitment is closely related to the Abilene Paradox, a psychological phenomenon in which a group of people collectively decide on a course of action that none of them individually believe in, simply because they think it’s what the group wants. It’s the business equivalent of continuing a failing project because “everyone else is onboard,” even though, deep down, no one is.
Conclusion: Don’t Be Dave or Janice—Be Frank
In the end, Dave’s drones never left the ground, and Janice’s company went belly-up after Brian single-handedly lost her biggest client. Meanwhile, Frank? He was onto his third startup and well on his way to becoming the next big thing in Capitalopolis.
The next time you find yourself doubling down on a failing idea, ask yourself: Am I being Dave, Janice, or Frank? If the answer isn’t Frank, it might be time to reconsider your commitment and cut your losses. Because sometimes, the best way to win is to walk away.
Author: John S. Morlu II, CPA is the CEO and Chief Strategist of JS Morlu, leads a globally recognized public accounting and management consultancy firm. Under his visionary leadership, JS Morlu has become a pioneer in developing cutting-edge technologies across B2B, B2C, P2P, and B2G verticals. The firm’s groundbreaking innovations include AI-powered reconciliation software (ReckSoft.com), Uber for handymen (Fixaars.com) and advanced cloud accounting solutions (FinovatePro.com), setting new industry standards for efficiency, accuracy, and technological excellence.