Cultivating leadership by letting sunk costs sink

I’m still digesting an amazing podcast I just listened to on Shane Parrish’s Farnam Street.  The guest, Jennifer Garvey, is a leading thinker and writer on adult development, leadership, and the intersection of these concepts in a world of increasing complexity.  Can’t wait to read her books now!

Anyway, one of the ideas that stood out to me was an idea of leadership being a kind of stage of maturation — which doesn’t mean that it can’t be cultivated by effort.  It just means that we aren’t all equally mature at any given point in our lives.  So, there is a natural limitation to the utility of leadership programs that ask folks to “write a personal mission statement,” for instance.  That may be a valuable exercise, but it’s only useful for people who are at a point where something like that comes naturally.

One concept that she didn’t mention explicitly but that I think was implicit in her perspective was the concept of the sunk cost fallacy.   In case you’re not familiar with it, I think it’s one of the most useful ideas to come out of the field of economics.  A sunk cost is one that is already spent, already done – a ship that has passed.

An example would be how a manufacturer might address the issue of a piece of now-outdated equipment.  It’s not going to allow him to be as profitable as a piece of newer equipment, but he might be tempted to keep using it (even though it’s costing you money NOW AND IN THE FUTURE) because he spent money on it THEN.

Mentally, we do the same thing when we say, well, I got a major in education, so I guess I have to be a teacher.  You can’t get those years (or dollars) back.  Being a teacher may not be the way that you can be as productive and fulfilled as possible, but you’re doing it because you feel like if you don’t, you’ve wasted that investment of time and treasure.

As I’ve been trying to grow personally by gaining new perspectives and developing new habits, one of the hardest parts is overcoming my own propensity to fall for the sunk cost fallacy.  I think growing into new identities is really only possible once you realize that old identities, especially those that cling to external validation or certainty, are the sunk costs of the mind.

Cultivation of better habits, better relationships, and better modes of life can only occur through some kind of death.  You know this if you really unpack the agricultural metaphor of the word “cultivation.”  Plants grow best in soil that is rich in decay.  If we don’t let our old ideas and identities die, we can’t get new growth.

So I’m going to try to let go of as many of the pointless sunk costs in my own mind as possible.  It’s something that I hope the people in my life will help hold me accountable for as a goal.  It’s tough to remember and tougher to implement.   But it’s the only way forward.



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