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THE DIP BLOG by Seth Godin




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« Change your clocks | Main | That noise inside my head »

Sunk costs, quitting and the value of your brand

One of the most important lessons they teach in business school is to 'ignore sunk costs'. It doesn't matter how much time or money or effort you've invested in something, if that project no longer makes economic sense, you should stop.

And in The Dip, I talk about the powerful benefits of quitting.

Which leads to an interesting marketing question that doesn't have a lot to do with your political views and a lot to do with your take on sunk costs and brand quality: Should Hillary Clinton quit?

Certainly, there are a lot of sunk costs. Years of effort, dues paid, heartaches endured. This might be her best window of opportunity, after all. And yet, all of these sunk costs should be completely irrelevant to the decision. For every brand and for every person, yesterday is irretrievably gone and tomorrow is worth a great deal.

Last week, my company switched providers of an expensive commodity. The company we had been with realized we were moving on and moved into high gear to keep the account. At one point, it was clear that they could have gone into war room-mode, denigrating our decision, criticizing the new company and scorching the earth. I watched the gears turn, though, and saw them take a different path.

Here's the math as I see it for brand Hillary: The only chance she has to win is to burn down other brands, violate protocol, push harder than many think appropriate. She has to change her brand to achieve her goal. Not only that, but she has to risk the entire Party at the same time. If she does manage to win the nomination, she will be pilloried by the right (the very same Rush that endorsed her in Texas). They're just waiting for the chance.

The new brand, the one that it would take to succeed at this stage, almost guarantees she doesn't succeed at the next.

And the alternative?

The alternative is to quit. To become a statesman. A respected power broker.

The alternative is to be the trusted advisor, the person who gave up one dream to realize a bigger one, and to build a brand and a lifestyle with long-term leverage.

That company we switched from last week? Instead of ruining our relationship and criticizing our judgment, they kept the door open. They congratulated us on our growth and earned the right to work with us again one day.

For a long time, we've created a myth in our culture that it's worth any price to reach your goal, especially if your ego tells you that you're the best solution. We've created legends of people and organizations that pursued transformative long shots to achieve great results.

I need to be really clear: pushing through the Dip and becoming the best in the world at what you do is in fact the key to success. But (and it's a big but), if you're required to become someone you're not, or required to mutate your brand into one that's ultimately a failure in order to do so, you're way better off quitting instead.

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