The McKinsey Quarterly has an interesting article on the challenge of exiting an unsuccessful initiative, or closing down a ineffective business. Even in the for-profit world, the assessment of success and the decision to discontinue are fraught with bias and emotional baggage. Says the article:
Why is it so difficult to divest a business at the right time or to exit a failing project and redirect corporate resources? Many factors play a role, from the fact that managers who shepherd an exit often must eliminate their own jobs to the costs that companies incur for layoffs, worker buyouts, and accelerated depreciation. Yet a primary reason is the psychological biases that affect human decision making and lead executives astray when they confront an unsuccessful enterprise or initiative. Such biases routinely cause companies to ignore danger signs, to refrain from adjusting goals in the face of new information, and to throw good money after bad.
Since ”letting go” is a challenge among for-profits, you can just imagine (and have probably experienced) how difficult downsizing is in the nonprofit arts. Our projects and organizations are constructed with passion and personal commitment. Our measures of success or failure are hazy at best. And our nonprofit corporate structure is uniquely designed to be difficult to dissolve (an endowment, for example, is essentially permanently captured cash). Worse yet, the idea is in our bones that the primary indicator of health is year-to-year growth (bigger budget, more audiences, more productions, more staff). So any attempt to close down an initiative or organization is a public admission of failure.
The article identifies four primary decision biases that come into play as managers evaluate initiatives for possible dissolution: the confirmation bias, the sunk-cost fallacy, escalation of commitment, and anchoring and adjustment (groovy chart included). The authors also offer ideas on how to blunt the impact of these biases in your analysis and action.
But beyond the biases, the deeper irony is that creativity and creation require destruction and reconfiguration. Often, by holding onto projects and organizations that have lived beyond their impact, we are starving the next project or organization of the resources and attention it needs to blossom. It’s an unpleasant reality, but sometimes we serve the larger cultural ecology — and the art form we love — by letting our projects die.
I’m always amazed that non-profits think that they must survive forever (for the good of the artform). Thomas Wolf has an interesting chapter in his book on Managing Non-Profit Organizations where he talks about organizational abandonment. The ideal, as I see it, is to work so one’s mission is fulfilled and then either find a new need, or fold.