Exit Strategy

A pre-planned method for ending an engagement—selling a business, leaving a relationship, withdrawing from a market, or terminating a project—designed before or during the engagement rather than after things go wrong. Exit strategies matter because psychological biases (sunk cost, loss aversion, identity attachment, status quo bias) make it extremely difficult to exit once you're committed. Planning the exit in advance, when thinking is clear, creates the decision framework that biased in-the-moment thinking would distort or prevent.

When to use it

Before making any significant commitment (investment, hire, project, partnership); when a current engagement may need to end but emotional attachment is preventing clear evaluation; when designing decision frameworks that need to overcome sunk cost bias; when evaluating whether continuing a commitment is rational or merely habitual.

How it can help

For every significant commitment—investment, project, partnership, hire—define the exit criteria before entering. What conditions would trigger an exit? What's the exit process? What's the cost of exiting at different stages? Having pre-committed exit criteria prevents the sunk cost trap of continuing failing ventures because you've already invested. The most valuable exit strategy: define what failure looks like in specific, measurable terms so that when those conditions are met, the decision to exit is already made—you just need to execute it.