(Image credit: Wichy / Shutterstock) Most established businesses have a solid IT infrastructure in place. But while the infrastructure does the job, it relies on legacy systems that are outdated, clunky and unable to integrate with more recent innovations. Admitting when it’s time to change? That’s a common challenge, known as the sunk cost fallacy. Introducing the sunk cost fallacy The sunk cost fallacy is a natural tendency to continue implementing a strategy because an organization has invested in it, even when it’s clear that abandoning it and taking a different course would be more beneficial. Sunk costs — those that have already been incurred and can’t be recovered — are often to heavily taken into consideration when making business decisions. This commonly results in a block on investment into new technology or as the process and solutions that are currently in place and have been invested in. While not fit for future purpose, they adequately fulfil the immediate needs of the business. But it’s when organizations start considering their sunk costs when determining strategy that irrational decision-making — the sunk cost fallacy — comes into play. The sunk cost fallacy is something that is typically an issue for […]
Digital transformation strategy: A problem shared is a problem halved
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