September 2026 – Sunk Costs Might Sink Ships – and Captains of Industry Sometimes Need to Abandon Ship
Sorry Abe – sometimes you need to dump the original plan and change horses mid-stream. But let’s not beat a dead horse with the following examples of companies that missed their chance to jump streams. Besides, there’s only one firm left making buggy whips to do that with…
Once a company commits to the “perfect plan”, it can be nearly impossible to change direction, especially when the plan is in execution, costs are sunk, people are engaged in it, and the ship has sailed. But markets, customers, and Donald Trump might just throw unexpected challenges that can force mid-course corrections.
Staying the course too long can sink a company, but such examples are always a lot of fun to remember:
- Xerox developed the GUI, the windows idea, the mouse, networking, an early personal computer, and laser printing. Yet they stuck to their original mission of selling copiers that…made copies of pieces of paper. Steve Jobs later said Xerox, “could have owned the entire computer industry.” But for a mid-stream shift to computing, Xerox might have owned Steve Jobs.
- MySpace once upon a time was a leading social media network and bigger than Google at the time. Amid intense competition, they doubled down on embedded advertising, endless personalization options, and nickel and diming its users. The bet didn’t pay off, and MySpace is now some sort of music platform or something.
- Yahoo was a leading internet portal with search, email, news, and finance. But Yahoo was left at the gate in the race for social media and mobile; then left in the dust by Google and Facebook.
Sometimes a mid-course correction is the lifesaver thrown to a company being swept downstream while on horseback:
- Netflix started as a DVD-by-mail subscription company – round plastic discs that people who wanted to see movies put into a tray where lasers read them in these machines that took up too much room and had too many cables…never mind. Then they switched to streaming. This caused mega-defections of subscribers along with a huge stock price drop. Any normal company would have climbed back onto their old, familiar horse and ridden out of the streaming stream, but Netflix stayed the course. A horse-shift to a stream less traveled.
- Instagram was a disorganized social-discovery app. But people were mainly using the photo part of the app, so Instagram reconfigured and relaunched as just a photo-sharing app. A swap from rocking horse to racehorse.
- Slack evolved from a boring internal messaging tool that the development team at Tiny Speck used while they built the game Glitch because email was too cumbersome and annoying. The eccentric, imaginative, but stupid game was not very popular, and just before Tiny Speck went out of business, they decided to change focus and productize the internal messaging tool itself. Slack wound up as a leading corporate messaging app, and was later sold to Salesforce. A switch from a showhorse to a less glamorous but hardworking donkey.
We often see course-correction tragedies play out in PriSim’s business simulation competitions: a team starts with a great plan in Year 1, but then gets buggy-whipped by competitors or market disruptions. They then freeze or double-down on their losing strategy before it all ends in tears in Year 4. Such teams are often heroically committed to a strategy – but maybe they should be committed for their strategy.
Adapt – or die like the buggy whip industry, as goes the reference from the 1960 HBR article Marketing Myopia. And if a strategy just isn’t working, business leaders and managers might consider W.C. Fields’ advice, “If at first you don’t succeed, try, try again. Then quit. No use being a damn fool about it.”