Understanding escalation of commitment in product decisions

When we make product decisions, we like to think that we’re being completely rational, but product decisions are usually deeply personal and subject to bias. We’ll search for quantitative and qualitative data to support our decisions, and when the data doesn’t exist, or we’ll reason our way to commitment. This attachment to product decisions is what leads to escalation of commitment, where teams double down on decisions that were made in the past even though that same decision is taking them down the wrong path.

In the best case scenario, escalation of commitment results in wasted resources and poor investments. In the worst case scenario, companies can take the wrong path, lose to competitors, and ultimately get stuck working on the wrong things for so long that they go out of business.

But fear not, we’ll cover what escalation of commitment is and how to keep an eye out for it so that hopefully, you’ll be able to spot biases that sway your product decisions before you become trapped by your own decision making.

What is escalation of commitment?

Escalation of commitment is a pattern of behavior where we choose to continue committing or following the same strategy despite seeing evidence that the strategy isn’t working. In the context of making product decisions, this is when you made a product decision in the past and continue to invest in the area even though you aren’t seeing significant traction. Even worse, you might be seeing signs of negative outcomes, but continue down the path you’re on anyway.

It’s important to understand and recognize escalation of commitment because committing to the wrong product decisions is incredibly costly. If you’re not careful, you’ll end up investing a lot of resources with nothing to show for it.

Why do we fall prey to the escalation of commitment bias?

It’s incredibly easy to fall prey to escalation of commitment bias, despite our best efforts. First of all, when we’re responsible for making decisions, there’s a certain inertia behind that decision. You have to defend and explain your decisions to the team, and you have to stand by those decisions when things get tough.

No one wants to look like they flip flop all the time. So rather than quickly changing your decision if you think something might be wrong, you continue down the same path hoping that it’s really just a matter of time before things pan out.

Second, product managers often feel a sense of strong ownership over their products, for good reason! Their products become their babies, and as people like to say, no one likes to hear that their baby is ugly. Rather than admitting that the product is on the wrong path, product managers often commit more resources to further polish the wrong product in an effort to improve their product to the point that people will use it.

This is often referred to as the burnt pizza problem — sometimes people want pizza, but the pizza you provided them was burnt, so you decide to fix the pizza rather than making someone pasta.

Third, there truly are legitimate reasons to double down on commitments, and it’s hard to figure out when to double down and when to give up. The burnt pizza problem I just explained is a good example of when doubling down on pizza if customers want pizza is actually a good idea.

It’s pretty common for an MVP to simply not be good enough or to lack important features, and in these cases, it’s actually a good idea to keep polishing your MVP. Continuously polishing something you have allows you to turn a lean product into a product that users love. However, this mindset can also encourage you to double down on the wrong thing.

Where does escalation of commitment occur?

If you’re worried about submitting to the escalation of commitment bias, don’t worry. Many highly successful businesses have made the same mistake, and it’s truly not the end of the world if you fall into that trap, as long as you get out of it in time.

Let’s start with an example of escalation of commitment from one of my favorite consumer products, the Peloton. I know the Peloton is a bit polarizing, but I used it to exercise during COVID, and it was a game-changer. The company has certainly made a lot of public mistakes — that’s why the CEO stepped down! And you’ll notice that many of the decisions he made involved doubling down on product decisions that haven’t panned out.

For example, Peloton has had to face significant challenges related to manufacturing the Peloton, dealing with returns, and handling recalls. This is the cost of doing business in the connected device world. But, it benefits from economies of scale via its subscription because one recorded class can be delivered to thousands of members.

This was the original beauty of its business model, but don’t take my word for it. Based on its 2023 Annual Report, subscription revenue was actually slightly more than connected fitness product revenue, and the gross margin on its connected fitness products was negative!

However, despite these metrics, Peloton chose to continue expanding its hardware business with the Peloton Tread and Row. These products do not account for a significant portion of revenue, but definitely cost a lot to develop, manufacture, and sell. In fact, Peloton recently announced that they would no longer be manufacturing its own bikes anymore.

It’s interesting to observe how Peloton double-downed on what they knew best: connected devices, despite losing on them. I’m sure there were many people within the organization with ideas on where to grow the business, but for all the reasons we outlined earlier, escalation of commitment prevailed.

For the sake of not being thought of as too tough on Peloton, let me share a personal example of when I was unable to shake off the bias of escalation of commitment. During my first job as a product manager, I was tasked with a really cool project that would have expanded the abilities of the product. It was a net new area that would have required a pretty significant build and we weren’t entirely sure what the requirements were yet.

I was deeply committed to making sure we would work on this project. Selfishly, I thought it would be a great project to put my name on. I backed up my bias by doing customer interviews and research that “validated” the importance of this feature. And of course, when you emotionally invest in a project for personal gain, you’re a prime target for escalation of commitment bias.

Right before we started working on this project, my boss told me that we were going to delay the project in favor of another project that was more important. Obviously, I was very disappointed, but deep down I knew that the timing wasn’t right.

This was years ago now, and the company has since built this feature! But I think back on this experience as an example of when I let my personal feelings get in the way of making the best product decisions. I was so wrapped up in building this specific feature that I would only look for information that would reinforce my own opinion.

Strategies to recognize and avoid escalation of commitment bias

It’s difficult to recognize and avoid escalation of commitment bias because sometimes committing to a project is actually a good thing. The best products come from continuous iteration, and if you give up too soon, you risk not capitalizing on a great business opportunity simply because you didn’t commit for long enough. However, there are a couple tips to keep in mind that you can use to think through whether or not you’re escalating commitment for the wrong reasons:

• Leverage data to confirm or disprove your biases
• Marinate, marinate, marinate
• Seek to reduce risk by collecting more information
• Time block your investments
• Ask for advice from co-workers

Leverage data to confirm or disprove your biases

Data can be really useful when used to resolve biases around escalation of commitment. For example, let’s say you’re trying to decide whether or not to ship a treadmill at Peloton. You believe that the treadmill market is worthwhile to go after because customers who are on the Peloton Bike mention on social media that they would rather run than bike.

However, looking into the subscription data of Peloton classes, you notice that very few users who don’t have a bike take the treadmill running classes compared to the cycling classes. That might be an indication that even if the market is there, you might need to find innovative ways to tap into that market.

That being said, we all know that data is a bit like clay — you’ll likely find what you’re looking for if you know where to look, especially if the answer isn’t obviously black or white.

Using the same Peloton example, you could argue that less people take the treadmill running classes because Peloton doesn’t offer a treadmill! Hence, Peloton should offer a treadmill. You see what I mean.

Marinate, marinate, marinate

Very few product decisions need to be made in a day or even a week! A good way to avoid falling prey to biases is to simply avoid knee-jerk reactions and give yourself time to think things through.

Perhaps all you do is think about it, but you can also use this time to collect more data. The goal is to start recognizing true patterns and trends, not just analyze data once and call it a day. The practice of recognizing true patterns and trends provides a great segue into the next tip.

Seek to reduce risk by collecting more information

A good strategy to avoid escalation of commitment is to not make decisions too quickly. While you’re marinating, a good thing to do is to think of ways to collect more data to answer important questions. My favorite way to gather more data is to conduct small, contained experiments.

Let’s say you want to figure out if you can manufacture a Peloton Treadmill with better gross margins. Your small experiment could be to reach out to different manufacturing companies and learn more about the possibilities! Although you might not have all the data you need at the get go, you can de-risk decisions by continuously collecting information along the way.

Time block your investments

Let’s say you did all the first three tips and you feel good about committing, what next? Well, you’re still at risk for escalating commitment as projects span long periods of time and you’re at risk for bias over the entire lifetime of your project. I like to time block investments and revisit decisions once that time block is up.

For example, we’re thinking of further committing to a feature area we recently built by doing a UX revamp. Rather than simply diving in, we’re going to time box it at three weeks and re-assess. This minimizes the cost of your investment, even if you make the wrong choice in the beginning.

Ask for advice from co-workers

If you think you’re in too deep, a good idea is to ask for honest feedback from other members of your team. In fact, I’ll literally go to my co-founder and say, “I’m not sure if this is the right investment for XYZ reasons. What do you think?” I’ll be honest, I don’t always listen, but having someone else tell you what they think can help you calibrate your decision making.

Conclusion

One of the reasons why we escalate commitment in the first place is because not committing to a path is extremely detrimental to team dynamics. As product managers, we are very careful not to “whiplash” the team. As we all know, there is a serious cost to context switching, and it’s our jobs as product managers to protect the team’s time and attention.

However, continuing to escalate commitment despite being on the wrong path is perhaps even worse than context switching. Ultimately, teams who work on projects that simply aren’t working out will burn out and suffer from issues with team morale. Everyone likes to work on a winning team.

I think the secret is to follow the tips above and truly vet decisions before you make them. Your decision could ultimately be to commit further, or it could be to change directions. As long as you truly go through the steps of validating your decision making, don’t be afraid of people calling you a flip-flopper. Ultimately, you want to make the best decisions you can to drive the company forward.

Featured image source: IconScout