Don’t Double Down on a Bad Bet: Annie Duke on Why Business Leaders Must Know When to Quit

Whether it’s sunsetting a product, pulling out of an unprofitable market, or deciding whether to persist with a business strategy that’s no longer working, entrepreneurs face tough choices every day about when to pivot and redirect their resources, attention, and energy. 

The decision to quit can be even more complicated than the initial decision to start a business. Why? Perseverance and grit are usually praised. We celebrate determination and stick-to-it-iveness; we look askance at people who give up too soon. 

Renegade advisor Annie Duke has just released her latest book, “Quit: The Power of Knowing When to Walk Away” and in it she shares stories of entrepreneurs, entertainers and elite athletes who mastered the skill of quitting. 

We asked Annie to share a preview of her strategic framework for knowing when to quit, in order to help you make your best next move.

Establish “Kill Criteria” - Your Advance Plan for When to Quit 

A former champion poker player, Annie would use “kill criteria” to decide when to fold. When her opponent would hit a King, she knew at that moment that there wouldn’t be many good cards still out there; in those situations, she would decide to fold early. Sometimes folding early is a good strategy, instead of bluffing or doubling down on a bad hand. 

In business, kill criteria are especially important for early-stage startups. When a company is facing excessively long odds, it’s not going to get where it wants to go. Kill criteria are specific signals and feedback, identified in advance and assigned to precise timelines and benchmarks, that can help the founders see when it’s time to walk away.

A real-life example of kill criteria from mountain climbing: when climbers are nearing the summit of Mount Everest, they keep track of “turnaround time.” If the climbers have not made it to the summit by 1 pm, they must turn around – if they stay out on the mountain any later, they will run out of daylight and will be at high risk of death. 

Don’t stay too long on a failing route. There are huge opportunity costs to staying with a project, a product or a company that are not worth the effort. It will mean that other opportunities will be neglected.

Monkeys and Pedestals: Forget Low-Hanging Fruit, Are You Solving the Hardest Problem First?

Entrepreneurs face bottlenecks daily, and are always trying to solve for them. Annie Duke likens it to “monkeys and pedestals”, a mental model for approaching problems by Astro Teller, the CEO of X, Google’s innovation hub.

Imagine you have a goal: you want monkeys to stand on pedestals in the town square and juggle flaming torches. What should you do first? Train the monkeys to juggle, or build the pedestals? Both tasks are competing with your time, energy and attention. 

The bottleneck in this problem is training the monkeys to juggle. Why do it in this order? Because if the hardest part of your problem (teaching monkeys to juggle) cannot be solved, you need to know this as soon as possible. If you go after the low-hanging fruit first (building pedestals), you are spending time and resources and getting your team invested in the project, which can create organizational momentum that might make it harder to quit when you need to.

This is the opposite of the way many projects are managed. We’re usually advised to tackle the low hanging fruit first. 

“Low hanging fruit is, by definition, pedestal building, offering the illusion of progress rather than any real ground gained toward reaching a goal. You already know you can build a pedestal, or buy one on Amazon, or turn a milk crate upside down. Building pedestals means you are spending time, money, and other resources on things that get you no closer to figuring out whether you can achieve what it is you are striving for,” says Annie. 

Quitting is not a mark of bad character; it’s a necessary skill. By watching for signals from the market, by establishing “kill criteria” in advance, and by taking a deliberative approach to know when to turn back, your organization will be more likely to avoid doubling down on bad bets – and be better able to focus on the right activities to create lasting success. For the rest of Annie’s advice around knowing when to quit, check out her new book.