Quit: The Power of Knowing When to Walk Away

by Annie Duke

If you haven’t made it to the summit by 1 p.m., you cannot safely descend to Camp 4 before dark, so you must abandon the climb.

Itamar Si...

We already know that asking the participants to do a fresh analysis of the pros and cons looking forward didn’t change behavior.

But another strategy that did work was having one group set benchmarks in the form of minimum targets for sales and profits in advance of the first decision.

it, gives you the peace of mind that you never have to give up on anything and wonder “What if?”

Imagine you were pursuing a lead that came through an RFP (request for proposal) or RFI (request for information). It’s six months from now, and you have lost the deal. Looking back, you realize there were early signals that the deal was not going to close. What were they?

In general, this idea of casting yourself into the future, imagining a failure, and then looking back to try to figure out why is called a premortem. Using a premortem is a great tool to help develop high-quality kill criteria.

We tend to associate the idea of funnel management with sellers or investors. But every one of us has a funnel we are managing: the interests we can pursue, the classes we can take, the projects we can do at work, the jobs we can apply for, the people we can date.

The good news about kill criteria is that you haven’t missed your chance to set them once you have already started an endeavor.

States and Dates The best quitting criteria combine two things: a state and a date.

You don’t have to look any further than X’s charter for an example of the interaction of states and dates. X’s projects must have the potential to be 10x world-changing (a state), capable of becoming commercially viable (a state), within five to ten years (a date).

Admiral McRaven offered a unique, high-stakes application of this concept of states and dates when describing the planning for Operation Neptune Spear, the raid on Osama bin Laden. The operation was broken down into 162 phases. Each phase told you what state you would have to achieve to continue, and what state you might be in that would cause you to quit during that phase. Because this was all planned out in advance, it left McRaven, as he told me, with only about five command decisions he might have to make on the fly once the mission had commenced and they were already in it.

He gave two examples of the criteria that would cause them to kill the mission. If at any point they fell an hour behind schedule, they would abort. Or, if they discovered that, at any time up to 50% of the way to bin Laden’s compound, they had bee...

turn around. If they were compromised beyond the 50% mark, that would be a command decision McRaven w...

The importance of thinking about states and dates in setting kill criteria in advance has been developed and tested in situations with the highest possible stakes, affecting large numbers of people and gigantic, world-changing decisions.

The second issue is that there are lots of pedestals that you can build within the humanities in the form of endless adjunct professor and postdoctoral positions you can secure. These jobs aren’t tenure-track positions but they offer the illusion of progress, that you are advancing in your career. It’s easy to move from one pedestal to another, from a postdoc to an adjunct and so forth, thinking that your big break is right around the corner.

Better, Not Perfect

One example was a stop-loss. If I lost a certain amount, I would quit.

Elite poker players are still going to be worse at making quitting decisions when they’re in it, especially if they’re in it and losing.

I also realized that I played better in sessions of six to eight hours or less, so I committed to quitting after I played that long.

The important thing is to be better, not perfect.

Strategic coach: progress not perfection.

Anytime you can make a decision about cutting your losses in advance, you’ll do better at closing those mental accounts.

Monkeys and pedestals is a mental model that helps you quit sooner.

Pedestals are the part of the problem you know you can already solve, like designing the perfect business card or logo. The hardest thing is training the monkey.

When faced with a complex, ambitious goal, (a) identify the hard thing first; (b) try to solve for that as quickly as possible; and (c) beware of false progress. Building pedestals creates the illusion that you are making progress toward your goal, but doing the e...

A common, simple way to develop kill criteria is with “states and dates:” “If by (date), I have/haven’t (reached a particular state), I’ll quit.”

In large part, we are what we do, and our identity is closely connected with whatever we’re focused on, including our careers, relationships, projects, and hobbies. When we quit any of those things, we have to deal with the prospect of quitting part of our identity. And that is painful.

In the midst of all this, he fielded an offer to acquire Flow for $6 million. He refused, because he had $11 million into it and he didn’t want to have to realize the sure loss of $5 million. Classic sunk cost fallacy.

When we own something, we value it more highly than an identical item that we do not own. Richard Thaler was the first to name this cognitive illusion, calling it the endowment effect. In fact, he introduced the endowment effect in that same 1980 paper where he coined the term “sunk cost.” He described the endowment effect as “the fact that people often demand more to give up an object than they would be willing to pay to acquire it.”

Thaler offered the example of a distinguished economist friend who bought a case of good wine in the late fifties for $5 a bottle. A few years later, the wine had greatly appreciated in value. His wine merchant offered to buy the wine for $100 a bottle. Despite having never paid more than $35 for a bottle of wine, he declined to sell any bottles for $100. Yet,

he also declined to buy any additional bottles at that price. This ...

If you got the mug, your minimum selling price was at least double the maximum price someone getting the cash would pay to buy it. The ratio has held up in decades of later experiments using visors, sweatshirts, boxes of pens, and seemingly just about anything an experimenter could scrounge from the university bookstore.

The original basis for the endowment effect was loss aversion. Simply put, if we weigh losses greater than gains of similar amounts, then we are more worried about losing something we already own than we are eager to acquire the identical thing we don’t own. Decades of research since have established

we can become endowed to much more than physical objects.

As the research on the endowment effect has expanded, it has become increasingly clear that we can also become endowed to our beliefs, our ideas, and our decisions.

As we carry around beliefs and ideas, they become our possessions. We own what we’ve boug...

The endowment effect is particularly strong if the thing you own you also built.

This is known as the IKEA effect, for obvious reasons.

Pro Sports Teams and Their Escalating Commitment to High Draft Picks

escalation of commitment

Staw and Ha Hoang explored whether there was an effect of a player’s draft order on their subsequent playing time and career length in the NBA, independent of their skill level.

Would sunk cost and endowment influence future decisions to play and retain those highly drafted players more than other equally productive players?

You might be surprised, given the strong incentives of NBA teams to field their best players, that the answer is yes.

expected-value bet or accepted a negative expected-value bet, it wasn’t because they didn’t know whether

Staw and Hoang wanted to know whether, when comparing two players of equal skill, the player chosen higher in the draft would get more playing time, have a longer career, and be less likely to be traded.

It turned out that draft order did have an independent effect on future playing time and roster decisions. “Results showed that teams granted more playing time to their most highly drafted players and retained them longer, even after controlling for players’ on-court performance, injuries, trade status, and position played.”

During the first five years of the players’ careers, draft order was a significant predictor of

playing...

After teams had one year of playing data, first-round picks played 552 minutes more in their second NBA season than did second-round picks of equal skill. Each additional downward spot in a player’s ...

Once a team picked a player in the first round, that player stayed in the league an average of 3.3 years longer than second-round picks with similar on-court performance.