A project has failed, so why continue to invest in a failed project?
This is a pertinent question for large organisations, like the UK National Health Service, which has a history of investing vast amounts of taxpayer's money into unrealistic and ultimately unsuccessful projects. According to business experts, organisations develop blind spots due to a perfect storm of unworkable policies and defensive behaviour. In fact, organisations and individuals have a few things in common, psychologically speaking, when it comes to throwing good money after bad, the experts say.
The National IT Programme for the NHS, Individualised Patient Choices and Mental Health Services Reform are three costly examples of the NHS failing to quit while it was ahead, according to Marianna Fotaki, Professor of Business Ethics at the University of Warwick, and Paula Hyde, Professor of Organisation studies at Durham University. Using these case studies along with a novel, social-psychological approach, they delve into the underlying, institutional reasons for escalating commitment in the face of failure in their paper, "Organizational blind spots: Splitting, blame and idealization in the National Health Service," recently published in the journal Human Relations, published by SAGE.
The authors demonstrate that there are certain groups within the organisations (e.g. clinicians or patients) who are often painfully aware of the difficulties. However, when their voices are cut off through splitting and blame, their input may not be heard or acted upon. Splitting in the system (mostly between policy and its implementation) enables idealization of the task. This becomes an aspirational grand project, causing organisations to abandon the very task they have been created to fulfil.
"An important implication of our contribution concerns the inability of power holders and/or policy makers to recognize the origins of blind spots in overly ambitious policies, as well as their own emotional investment in these policies," according to Fotaki. "There is enormous pressure to demonstrate success, often fed by public scrutiny. Such intensification of commitment to a chosen course of action, driven by a desire to avoid humiliation associated with failure, may lead to greater and greater material losses."