Gavrilo Princip of Serbia shot Archduke Franz Ferdinand – the crown prince of Austria – and assassinated him in June of 1914. War was imminent. But it would have been a short war between two small nations of Austria and Serbia.
Except that Kaiser Wilhelm II – the emperor of Germany – turned it into the Great War! Duty and opportunity drove him. Duty because Germany had an alliance treaty with Austria-Hungary. And opportunity because Wilhelm always wanted Germany to be as powerful as other European empires!
When Germany joined Austria, Russia joined Serbia. German generals predicted that France would see an opportunity and attack Germany when it was fighting against the Russians. They wanted to avoid war on two fronts at all costs.
So they decided to implement a surprise attack on a much weaker France and subdue them quickly before they faced the Russians. And the plan nearly succeeded! But France survived and dug itself into trench warfare.
Germany found itself embroiled in a war on two fronts that it wanted to avoid. And Great Britain decided to help the French out as well!
A few months later, in November of 1914, Kaiser Wilhelm II sat down with his war cabinet. And they concluded without any doubt that their war could not be won!
Even though they knew this fact so well, they just could not quit. They fought the world war for 4 more years. Thousands of lives were lost. Germany was ruined. And Kaiser Wilhelm II had to abdicate and run away to save his life!
Why could Kaiser Wilhelm II just not quit a doomed war?
It’s the same reason smokers can’t quit smoking. They know it’s harmful in the long term. But they want to avoid the short term discomfort that quitting brings with it.
Kaiser Wilhelm II and the German war generals knew that continuing with the war was not wise. But they knew that quitting it would bring a lot more discomfort. Immediate discomfort. They would have to give up some territory and money to their opponents in a peace treaty. The public would not understand. It would lead to calls for revolution. Because leaders are overthrown when they don’t win wars!
And so, Wilhelm and Germany continued on the path of sure destruction. There are two blocks in their minds that prevent quitting.
1. The short term pain of quitting
Muhammad Ali was the worlds greatest boxer. And had won bouts after bouts. But in 1975, his doctors told him to quit boxing. The hard hitting matches had taken its toll on his body. His physical as well as mental state was deteriorating. Kidneys were failing. Speech had become slower. But yet, Ali could not quit. How could the world’s greatest give up?
Ali continued to box for the next 7 years. His doctors would quit because he wouldn’t. In 1980, Larry Holmes fought against Ali. And after the match, Holmes started crying. Because Muhammad Ali had become so slow. The world’s greatest was easily defeated.
Because of his failure to quit when he had to, Ali got Parkinson’s disease at the young age of 42!
Victims of domestic abuse continue being a victim for a very long time. Why? Because leaving means they have failed with their relationship. There is shame and regret. Bearing physical pain is often more tolerable than dealing with the mental anguish of your identity failing.
Kaiser Wilhelm himself didn’t go and fight the wars. But how could he quit and declare Germany was weak and he was a loser? The mental anguish makes you resist.
2. Why people die while climbing Everest
8 times more people die while climbing down Everest vs climbing up! Why? Because people don’t quit when they should – if they have not managed to reach the peak on time. How can they? They have spent a considerable amount of money, as well as days climbing. How can they give up just because they are a couple of hours short?
This sunk cost fallacy is what kills them. The inability to give up because of the considerable investments they’ve already made. This is the biggest difference between amateur traders and profitable traders on Wall Street. Amateur traders can’t cut a bad trade and take a loss. They don’t quit. And so their small losses become huge.
For Kaiser Wilhelm II, accepting that their war plan against France had failed was just too difficult. So instead of calling it quits, Germany put in more good resources after bad and continued the long lasting trench warfare!
So what can you do? How can you quit when you are supposed to?
Planning to quit
Annie Duke, the professional poker player turned best selling author tells us a conversation she had with Ken Kamler. Kamler has been a doctor on various Everest expeditions. Kamler pointed out: “people forget that the goal of Everest is not to reach the summit. The goal is to get back to the base of the mountain.”
Not planning for the long term makes you falter. Not knowing your real goal means you don’t know if you are making the right decisions or not.
Annie Duke also teaches us that the most important word in goal planning is “unless”. Because “unless” allows you to set your quitting criteria.
I will keep on climbing Everest unless there is bad weather. I will continue the great war unless I manage to not defeat France quickly. I will continue with my trade unless the price falls by more than 5%.
What if you’ve not planned the quitting criteria from before?
Traders are taught a lesson very early on: don’t trade your P&L (profit and loss) statement. Most traders are emotionally affected by their P&L and either quit too early or don’t quit at the right time. And so, they are told to hide their P&L columns. And make the decision as if it were a fresh new trade.
That’s what you’ve got to do. Forget the past and the resources invested. Forget the future and shame and regret losing brings. Think of the situation as if it were anew. Be in the present.
In November of 1914, Kaiser Wilhelm II should have asked himself: with my current resources and Russia on the Eastern front, would I go on the warpath with France in the West today?
This is a difficult thing to do because you’re always clouded by the past or the future. But it is essential to make better decisions.
- Sometimes, quitting is smarter than being gritty and persevering. Ideally, you want to plan when you would quit before you begin the task.