Episode 17 - Sunk Costs
Jen: Hey Peter.
Peter: Hey Jen.
Jen: I want to ask you to step into your bravery, today because I think you should share the story of what went down last night.
Peter: I had a feeling you were going to say this.
Jen: We're going to talk about "sunk costs."
Peter: Yes, we are. This is The Long and The Short Of It.
So Jen, I was reminded just recently of one of our frequently talked about topics and ideas and concepts, and that is the "sunk cost fallacy."
Jen: Tell me more about this.
Peter: So the sunk cost fallacy is very much an economic term, but it's applicable in so many different aspects of life. So I'll give you the example first: I ran a workshop last week, and as part of that workshop, we got some footage that we were going to, you know, basically use for upcoming workshops and speaking engagements that I was gonna be doing. And when we look back at the footage, we realized that the room is actually a lot noisier than we had hoped, the lighting wasn't as good as we had hoped, and it was basically this realization that the video was not our best work, right, that the product that we produced was not as good as we were hoping. And so in that moment I was, I was torn, because my default was, "Well, we've recorded it, so we need to use it, because we went to the effort of doing it, and even though it's not perfect, I think we should still use it." And I actually shared this with you.
Jen: Yes you did, as I'm pretending, "Well, what are you talking about?" I know exactly what you're talking about.
Peter: Because you were the one that reminded me of the sunk cost fallacy. And so you said "Peter, it's a sunk cost." So if you think about sunk costs as a almost, like, a gift from your past self to your future self, and ignore the work and the effort and the time and the blood, sweat and tears or whatever that went into making it, if someone just gifted you this today, would you use it? You have to ignore that sunk cost. And in that moment I was like, "Oh shit, Jen's right. It is a sunk cost." It's not about the fact that we went to the effort of doing it. It's about, is this video as a gift to myself? Is that useful for me moving forward? And the answer, I think, is potentially, no.
Jen: I'm laughing, because the "potentially" is still there; you have not yet committed to ignoring these sunk costs. In fact, before we started recording, you justified every way to Sunday why you should still use it. And as your friend, I've given you no slack there. None.
Peter: And I appreciate that, because the thing about, the thing about emotional sunk costs is, it - they're really hard to let go of. And, and I think it's, it's also one of those things, a bit like empathy that's, that's a real practice. So I can put my hand up and say, while I understand the concept of sunk costs, and I get it, there are times like this when I also struggle with it, because yeah, it's, it can be hard to realize that you've put a lot of effort into something, and that potentially it's not going to be useful for you moving forward. And you're like, "Oh, does that mean I have to do it again? Does that mean we have to go run another workshop so I can record the footage again?" and, you know, all of those stories that you start to tell yourself is just emotional baggage, which makes it harder for you to let go of said sunk costs. So that's what I'm noodling on.
Jen: Okay, Pete. Well, we're going to do a little exercise right now.
Peter: Let's do it.
Jen: I got a pencil.
Jen: Peter Shepherd, you have ninety seconds to give me fifteen ways that you could get this footage that you need. Ready? I'm setting my timer.
Jen: On your mark. Get set. Go.
Peter: We could run another workshop. We could create - I could, I could just do the riff again and fill it with, you know, with people from my co-working space.
Jen: That's only two.
Peter: We could ignore the footage altogether and just drop the idea. Maybe it's not necessary. We could use written testimonials instead of video testimonials, because that was part of it. We could - this is hard.
Jen: Ten more to go.
Peter: Oh my gosh. I could think about other mediums that I've spoken in and use those, e.g. the podcast. I could record a message just using my phone or video camera using the same content, but in a slightly different form, to use one of your phrases. I am a little bit stressed out about this process.
Jen: Seven more. Thirty seconds. Go!
Peter: What? Seven?
Peter: I could, I could watch some footage and just pretend like I did it. You know, Photoshop my head on someone else's body. I could darken all of it and say it was the light, not me; the fact that I wasn't mocked up wasn't my fault, it was just the lighting. That would be very untruthful, but I could do that.
Jen: Get ridiculous now. Get audacious, Shepherd!
Peter: I feel like I could just, the Photoshop one is really resonating with me. I'm just going to stick my head on a bunch of famous Ted Talks and say that was me.
Jen: Okay. You are at a minute and thirty seconds, and you did not get to the prescribed fifteen, but you did get to about ten.
Peter: I know, I struggled.
Jen: So we're going to take a looksie here, we're going to take a look and see what we got. Okay, you got: run another workshop, do the riff and film it; ignore it all together; get some written testimonials; consider other mediums; you could Photoshop yourself onto someone else's head or intentionally darken the footage and say, "oops, it's unusable." Now let's eliminate the ones that make you look like anything other than a pro. So, we're going to cross out the "darkening it," and photoshopping you onto someone else's, ignore it and drop the idea - that's going to go away. So what we're left with is, run another workshop, do the riff and film it, use written testimonials, consider other mediums, or record a message. What do you think? Anything there?
Peter: I think, yeah, I think a few of them, I mean we are running another workshop in a month time, so running another workshop is an option because it will happen. So there's that. I also think recording a video of the riff is really easy to do, and it could be done in my co-working space in the next couple of days.
Jen: Next couple of days! I mean come on, this is a no-brainer. Just do it.
Peter: Yeah. Well I could, I could do it, and I will do it, Jen. So you know what, what's interesting about that exercise, just to reflect on this, is I love that exercise; however, I'm so much better at that exercise when I have a whiteboard or a pen in front of me, and I've found it difficult having to talk my ideas out loud without being able to see them. So that is an interesting observation.
Jen: That is so interesting. So next time I'll have you bust out the piece of paper and the pen -
Jen: - when we do that.
Jen: So because y'all clearly did not do a premortem on the video situation for your last workshop, think y'all need to do a premortem on the video situation for the workshop in a month, so that you come out on the other end having already been great troubleshooters.
Peter: I like that idea, because the lighting and the sound could have been things that we could've avoided with a premortem.
Peter: So where did this, where did this genius little brainstorming idea come from that you just run me through? Is this a wacky, is it the thing that you use to get unstuck often when you're trying to ignore sunk costs - to bring it back to sunk costs? Is that a little exercise? Because I know we've talked a lot about, like, brainstorming, and just getting ideas out there.
Jen: This is something that I used literally this morning with a group of my clients in a class; so we had a fellow artists from the studio run up against a challenging situation in an audition room, and what I wanted to do was generate many ideas about how this person could pursue this particular opportunity in a more innovative, creative, meaningful and effective ways. So we did a ninety second timer, and the group called out fifteen possible solutions, and what we came up with was so much better than what the reality was that I'm intending to pitch our collective idea to this actor tonight in the hopes that they will pursue this opportunity in a new way.
Peter: That's really cool. Is it - was he or she having trouble with sunk costs as well?
Jen: It was more like accepting mediocrity, or accepting being placed in situations that expected mediocrity when this person is so much more talented and unique and special than mediocre. So what I wanted is for this person to use all of the creative genius that they possess to carve a path of opportunity that they would feel proud walking down.
Peter: Well, I love this, this idea of "accepting mediocrity" in relation to sunk costs, which reminds me of a, a little story that someone told me once - might've been Seth Godin - and the specifics of the story, I'm sure I might butcher, but the premise remains the same. So for those familiar with the story, and Seth, please forgive me, but essentially the story goes something like, there is a painter in his hometown that was getting a bunch of signs made up about his painting services that he was going to stick all around the town. So, "Joe's Painting Services: Call 0-4-3-9 blah blah, blah, blah, blah, phone number". And then what happened is, he got a hundred of them made, and Seth walked passed and noticed that one of them had a, like, a typo on it. Instead of "call" it said "c-i-l-l," or something like that. Like there was a small typo on it, and he said to the guy, "You know there's a, there's a typo on your, on your sign," and the guy said, "Yeah, but I printed a hundred of them so I'm just going to use them, and then when these hundred are worn out and old and I need to get new ones, then I'll fix the typo and get new ones." And Seth was kind of like, in that moment, if that's like, that's the perfect example of not being able to ignore a sunk cost. It's like, you pay for the signs, you've got the signs, that's a sunk cost. Are you just going to accept mediocrity, you know, to use the old verbiage, you're going accept mediocrity and just have a sign with a typo? Like, that's ridiculous. You need to be able to ignore that, and get some new signs.
Jen: That is ridiculous, because also, think about the kind of person who would call the phone number. Is that really who you want to work with? "Loved your creative spelling."
Peter: "I would be thrilled if you were to come to my house and paint it for me." So Jen, do you have a time or a moment that you can think about where you were faced with the proposition of having to ignore sunk costs?
Jen: Why, yes, I do.
Peter: I thought you might.
Jen: My whole damn life, because I look at the trajectory of my "career path" - I'm putting that in quotes - my career path and every turn has had to ignore sunk costs. Like I look at - I spent my entire life, from ages, from when I got serious about dance, let's say, so when I was seven, to the time I graduated from college training to be a performing artist, to be the person on stage. And then when I got to New York, I continued that training with, you know, at various places with fancy professional people. And then one day I was like, "I have to ignore the sunk costs of this. I've put in my whole life, but I don't want to do it anymore. I want to do something else. Something else is calling me." And it was literally a split second decision, but now that I look, when I look back on it, I'm like, "Oh my gosh, how in that moment did I know to ignore sunk costs and just leap?" And there have been plenty of other examples of times where I was training so hard for something or working so hard toward a goal, and then I see something else that is exciting or that feels like it brings me closer to the language I have now for my "why" - It brings me closer to my "why." It makes perfect sense to ignore sunk costs and pursue that thing.
Peter: Wow. And not just not just financial sunk costs in that example, but like, emotional relationship sunk costs, physical sunk costs in terms of where you were living, breathing and performing, although you stayed in New York. But that's quite an example.
Jen: Well, there's a whole other nuanced conversation we can get into here around how money ultimately represents something emotional, so losing money is emotional, earning money is emotional, having spent it on something that you no longer need or want is emotional.
Jen: But maybe that's a whole other episode.
Peter: Sounds like it might be.
Jen: There's one other point, I think, that's worth bringing up, and it is the idea that something might be good enough to be sent out into the world - it's imperfect in all of its imperfect glory and it is still worthy of being seen and shared. And then there are other things which do not meet the minimum standard of excellence and must be held back. And I think that's a really challenging line to dance on, because when you're dancing on that line, imposter syndrome can sometimes cause you to make an erroneous assessment of the worth of something, where you're like, "Well it's not good enough so I'm just going to hold it back." But then there are other times where you know what the bar is that you set for yourself, and if this does not meet the minimum clearance for the bar, you must be held back and improved.
Peter: Yeah, I think it's a, it's a really good point, cause it can be hard to draw that balance, or draw that line between, "Am I hiding by not sharing this? Am I just making an excuse for myself? Or is this actually something that hasn't hit my, my bar, my minimum requirement for sharing? Because I've, I've shared this with you offline, Jen, is one of my, one of the things that is central to the work that I do and how I approach it is that I often share early in the interests of gathering feedback, and acknowledging that this is not at all finished, but I want to share an idea or an assertion or a thing with you, see what you think of it, and then either together or based on your feedback, I'll go away and make it better and I'll improve on it. And so I have, I have almost the opposite, it's almost the opposite of perfectionism, I think, where some people sit on things and perfect and perfect and perfect and perfect, and never release them into the world. Sometimes I feel like I go too far the opposite, which is, I just release, release, release, and if the wrong person sees it, or sometimes, sometimes I can use that as a crutch to be like, of the example I used earlier of the video of, "Oh yeah, but this is just who I am. I share things that aren't quite perfect." But like you said, I think there's almost this, there's this fine line of when you know it's something that is actually something that you could improve upon and is worth improving upon, I guess, before you share it. So that's the, it's that fine balance that yeah, I still clearly struggle with.
Jen: And I have to point out to you, that's exactly what you did. I mean, the thing that you know that you do when you're operating at your best, which is share early, is what you did to get feedback. And the feedback was, you shared it too early.
Peter: That's so true. I did. I did exactly that. I shared it with you.
Jen: Yeah, and this is why, I know we talk about this in many episodes, but I'm just going to double down on it and say that when you are trying to generate creative work, new ideas, things that are meaningful, things that might stir the pot or shake things up, it's so vital that you have a trusted source for generous and generative feedback.
Jen: Because I would have felt concerned if you had just sent it out into the world without vetting it, cause that would have felt very un-Pete.
Peter: And that was, that was almost what I did. And then I was like, and I didn't feel right about it, and I was like, "I know exactly who I need to send this to. I need to send it to Jen. What am I - like, why haven't I sent this to her already?" Even though it had only been thirty minutes.
Jen: Well, I'll tell ya, the most important and meaningful friendships I have are with people who will tell the truth even when the truth sucks. My music director at my studio, Drew, there was a time where he gave me feedback that was so harsh that we literally went to a waterfall and prayed about it.
Jen: Like I asked him to pray for me because the feedback was so harsh, but it was the best, it was the best thing he could have said, because I knew that it was true. And the hearing it from someone who I admire so much and care so much about was the kick in the pants I needed to find the solution. And within twenty-four hours, it was solved.
Jen: Totally solved. But that was because he was willing to look me in the eye - he, this was, he came to see the preview of a show I had directed, he looked me in the eye and he said, "No one you know can see this." And I was like, "Oh my God, it's that, it's that problematic." And he was like, "Yeah, it really is, like, you have to fix this." So I did, thanks to him. Drew, by the way, wrote the the music for The Long and The Short of It.
Peter: Yes he did. And what an outstanding job he did.
Jen: Drew Wutke, which is a great last name for a musician. "What key?" "What key would you like that played in?" But it's W-U-T-K-E.
Peter: That is the best, and feels like a very appropriate way for us to bring in the Drew Wutke music, because that is The Long and The Short of It.