FEATURE
THE SUNK COST FALLACY IN RELATION TO DIGITAL TRANSFORMATION
It ’ s often quoted that 70 % of all Digital Transformations fail . But what about those organisations that know they are heading down the path to failure , but are reluctant to turn back due to the time and effort they ’ ve put in and an inability to recognise their shortcomings ? Here , Sam Dunscombe , Head of Growth at digital BSS provider , Mobilise , explores the sunk cost fallacy in relation to Digital Transformation .
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 But while the infrastructure does the job , it relies on legacy systems that are outdated , clunky and unable to integrate with more recent innovations .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 . organisation 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 heavily taken into consideration when making business decisions . This commonly results in a block on investment into new technology or Digital Transformation as the process and solutions that are currently in place and have been invested in . While not
Introducing the sunk cost fallacy
The sunk cost fallacy is a natural tendency to continue implementing a strategy because an
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