Here's a question worth examining: Why does killing a failing initiative feel like losing, even when the numbers clearly support the exit?

The answer isn't that operators are irrational. It's that they're measuring against a rigged scorecard. The metrics that generate shame around strategic exits are often the wrong metrics for the decision at hand.

Leon Festinger, the psychologist who developed cognitive dissonance theory, conducted one of the most revealing studies of human decision-making in the 1950s. He infiltrated a doomsday cult that predicted the world would end on a specific date. When the date passed and the world remained intact, you might expect the believers to abandon their beliefs.

The opposite happened. The most committed members became more fervent, not less. They had sacrificed too much, told too many people, structured their lives too completely around the prediction. Admitting error would require rewriting too much of their self-story. Instead, they doubled down.

The issue isn't the decision. It's the scorecard. When your identity is tied to a particular outcome, the discomfort of changing course can exceed the actual cost of continuing. You're not optimizing for results. You're optimizing for narrative consistency.

The Rigged Scale Problem

Imagine a scale that looks balanced but has hidden weights. The game looks fair, but the odds are tilted invisibly. That's what's happening with most strategic exit decisions.

Most operators are playing with rigged scorecards. The metrics they use to evaluate strategic exits aren't calibrated to expected value. They're calibrated to ego protection, social signaling, and narrative maintenance.

Consider how a founder evaluates whether to kill a product line:

The second set of questions will reliably produce different answers than the first. And they'll feel more urgent, more emotionally weighted. That's the rigging.

Where This Shows Up for Operators

The Sunk Cost Boardroom

A CEO has spent eighteen months and $4M developing a product that isn't gaining traction. The data is clear: market fit isn't there. Pivoting now would preserve runway for better bets.

But she championed this initiative. She convinced the board. She hired a team specifically for this. Killing it means admitting the original thesis was wrong.

The actual question—"given what we know now, is this the best use of capital?"—gets replaced by "what does it mean about me if I was wrong for eighteen months?"

The second question isn't about the business. It's about identity maintenance.

The M&A Escalation

An executive has been pursuing an acquisition for six months. The target company's numbers keep getting worse. Integration complexity is higher than projected. The strategic rationale that made sense initially has shifted.

Walking away would be the rational choice. But he's invested time, social capital, reputation. The board knows he's been working on this. Walking away feels like visible failure.

So he continues pursuing a deal that no longer makes sense, because the cost of admitting the pursuit was misguided exceeds his discomfort tolerance.

The Dissonance Mechanism

Festinger's insight was that humans have a deep need for cognitive consistency. When your actions conflict with your self-image, something has to give. You either change the behavior, change the belief, or rationalize the gap.

For most operators, changing the behavior (admitting error, killing the initiative) is the highest-cost option psychologically. So they rationalize: "We're close to a breakthrough." "The market will turn." "We just need more time."

These rationalizations aren't lies exactly. They're motivated reasoning—the mind constructing plausible narratives to avoid dissonance.

"The discomfort of changing course isn't about the business case. It's about the self-story you'd have to rewrite."

Recalibrating the Scorecard

The goal isn't to eliminate the emotional weight of strategic exits. That's neither possible nor desirable—the weight exists for reasons. The goal is to ensure you're measuring against the right metrics.

Scorecard Audit Protocol

  1. List the metrics you're actually using. Not the ones you'd claim in a board meeting. The real ones. What are you actually worried about?
  2. For each metric, ask: Is this about expected value or identity? "Our customers will be disappointed" might be a real consideration. "What will investors think of me" is identity maintenance.
  3. Calculate the decision as if no one would ever know. If this initiative existed in a vacuum—no reputation effects, no board, no narrative consequences—what would the rational call be?
  4. Notice the gap. The difference between the "vacuum calculation" and your actual inclination is the identity tax you're paying on this decision.

The Fresh-Eyes Test

Ask yourself: If a new CEO came in tomorrow with no history with this initiative, what would they do?

This thought experiment works because it removes the identity component. The new CEO has no ego invested in the original decision. They're just looking at the numbers, the opportunity cost, the probability-weighted outcomes.

If the answer is clearly "they'd kill this," you're paying an identity tax to continue. That tax might be worth paying sometimes. But you should be explicit about it.

The Portfolio Frame

One way to reduce identity attachment to individual initiatives is to frame yourself as a portfolio manager rather than a project champion.

A portfolio manager expects some bets to fail. That's not a bug—it's built into the model. The goal isn't to make every investment work. It's to allocate capital such that the portfolio generates returns over time.

This frame changes the scorecard. Success isn't "every initiative I backed succeeded." Success is "I allocated resources well across a portfolio of bets, killing losers early and doubling down on winners."

A strategic exit isn't failure. It's portfolio rebalancing. The shame you feel is the old scorecard talking. On the new scorecard, killing a low-EV initiative is a win, not a loss.

Practical Application

For one initiative you're currently uncertain about:

  1. Write down the honest reason you haven't killed it yet
  2. Ask: Is this reason about expected value, or about what killing it would mean about me?
  3. Calculate what you'd do if you had no history with this decision
  4. If there's a gap, name it explicitly: "I'm paying an identity tax of X to continue this"

The goal isn't to eliminate the identity component. Sometimes it's worth paying. But you should be explicit about the cost.

In the next piece, we'll examine a specific failure mode: the tendency to work on the comfortable problems first while avoiding the hard ones. Astro Teller calls it "pedestals over monkeys." It's one of the most expensive mistakes in strategic execution.

The Strategic Exit Series

Decision Architecture for Operators

This is Part 2 of a series on strategic decision-making under uncertainty.

← Previous: The Persistence Trap
Next: Monkeys and Pedestals →

This content is educational and does not constitute business, financial, or medical advice.