On cutting your losses

If you’ve ever played a game at the casino, then you know the feeling.

The “Ah well just one more round.. I’m sure I’ll win this time” feeling.

The “Let’s wait and see what happens next, it’s too early to give up..” feeling

Turns out that this feeling is so popular it’s been given a name. It’s called loss aversion. Truth is: we hate to lose. In anything. You hate to lose your old sweater even though you haven’t worn in it in 5 years. You hate to have to fire a teammate that you hired even if they weren’t performing. You feel gutted and there’s tremendous pressure to stick with the initial decision to save face.

You: Nooo I can handle it whenever I lose.. (as long as I don’t lose, and I never lose anyway)

Righttt.

Clearly, this can be a problem when you’re leading your team. If you make a decision and it doesn’t work out, then it’s your responsibility as a leader to acknowledge it. And quickly. You can let ill will fester if you don’t accept that you made a bad call. And that can ruin the smooth functioning of your unit.

Loss aversion is sneaky. And potentially fatal to team chemistry. So here’s my advice:

If you’ve made a bad decision: Cut your losses. Now.

If you are making a decision that could flop, then set a future time when you’ll revisit your decision. And then move on. Communicate this timeline openly to the team so they don’t question your leadership.

You can win by learning how to lose.