In the September 2004 issue of Entrepreneur Magazine, Mark Henricks’ article (Flaw and Order) referenced behavioral economics studies that identified the eight hidden strategy flaws frequently championed by corporate decision-makers.
While all eight provide a most interesting read, the two that seem to relate specifically to the challenges associated with the majority of e-procurement initiatives are the sunk-cost effect and the herding instinct.
The definition of the sunk-cost effect is based on the premise of throwing good money after bad. The proposed remedy to the continued investment in “incomplete projects despite changed conditions that make it unwise to pursue completion,” is to evaluate incremental investments as separate projects. Supported by the findings of these frequent assessments the suggestion is to “kill” unproductive experiments that fail to make the grade, and do so in an expeditious manner.
Advert
