ESCALATI MITMENT Page 60 An escalating commitment is another common cognitive bias. It occurs when decision makers continue to support and invest in a project despite having received feedback that it is likely not going to succeed; typically, a significant amount of time and financial resources have already been committed to the project.70 Rather than ignoring the prior resources already spent, which are the sunk costs, and shut the project down, which would be the rational decision, the strategic decision makers commit more and more resources to a failing course of action ("doubling down"). In other words, past investments, like spilled milk or money spent on salaries, are sunk costs because you can't recover them. Thus, the most rational approach would be to ignore the past sunk costs and consider any future decisions with a clean-slate approach. Although this seems a bit counterintuitive, it is the most rational approach when making strategic decisions. Yet, such rational decisions are hard to implement because of loss aversion; strategic leaders feel that they need to "recover" the investments already made. An escalating commitment to a failing course of action is often observed in R&D projects. For example, Motorola spent billions of dollars and many years engineering its Iridium project in the hopes that it would eventually be successful.71 Iridium was an ill-fated, satellite-based telephone system that Motorola attempted to commercialize in the 1990s. Despite clear evidence that an earth-based cellular telephone network was going to be much more successful because it was less expensive to deploy and thus more affordable for the end consumer, Motorola continued investing billions of dollars in its Iridium project for more than a decade. For the project to work, several dozen satellites needed to be launched into space-an exorbitant expense. And even though executives at Motorola knew early on that satellite-based telephone systems would not work in either buildings or cars, something EXHIBIT 3.1 The Firm within Its External Environment, Industry, and Strategic Group, Subject to PESTEL Factors External Environment Political Industry Strategic Group Firm Legal Ecological External Environment Economic Technological Sociocultural