Transferable Skills, Stories, and Sunk Costs

by | Dec 9, 2022 | Change |

sunk costs

This post builds on previous themes I’ve written about and is a reflection after reading CALP’s recent publication.

All of us, our teams, and organisations have skills and knowledge that are transferable to other roles, teams and organisations. But there are also some that are not. To state the obvious, transferable skills make transitions easier. One of the barriers to change is whne we have developed skills and knowledge that we need to ‘leave behind’ in a transition.

Sometimes what we need to ‘leave behind’ is significant. Imagine the changes Nokia needed to make throughout its history as it went from a paper mill to a world leader in mobile phones. Or imagine studying for a law degree, passing the bar, and then deciding to be a chocolatier. In economics terms, we call them ‘sunk costs‘ – costs incurred that we cannot recover.

Sunk costs are not just personal though. Organisations have them too. Humanitarian agencies built reputations and organisational infrastructure to deliver aid in a certain way – primiarily giving people physical items and providing in person services. These agencies became massive (and highly skilled) logistics companies bringing aid to some of hardest to reach places.

And then came cash, mobile money, and the digital era. Using cash in a response means literally giving people money to spend in a way that best helps their family. For food, education, health care, or a birthday present for their daughter – the choice is up to the person affected by the crisis. Bringing this back to skills and sunk costs, well sending cash to someone through a mobile money network does not require logistics departments. trucks, warehouses, and many other things.

The thing about sunk costs in organisations is that they can be viewed as costly. We can look for a return on investment. But also our organisational business models are connected to them. And they are connected to the stories we tell ourselves about who we are, our identity. But sunk costs can also be viewed as a gift from our past selves (H/T Seth) that we have a choice to accept or not. Part of the gift is that they helped to bring us to where we are now. And we can choose to set the skills and knowledge aside to embrace a different future.

This is the choice facing humanitarian agencies. Can we shift our organisational models to put people affected by crises at the centre or will we insist on remaining there?

Photo by Benjamin Dada


Submit a Comment

Your email address will not be published. Required fields are marked *