Walking away is often the best option

First published in the Financial Times on 14th May 2013.

Deciding when and if to let go makes all the difference

Knowing when to quit separates winners from losers. Those who spend years pursuing lost causes can waste their lives. Others who leave gracefully and move on understand that the world is full of opportunities, and know that sheer stubbornness for its own sake is foolish.

A couple of years ago I backed a play called Onassis in London’s West End. As ever, it was launched with great optimism. But the reviews were mediocre and the box office takings poor. Soon the choice came: should we put in more money to fund additional marketing, or accept that the show wasn’t good enough and close? I’m relieved to say that we shut, took the pain – and learnt a few lessons from the experience.

Whether it’s selling or shutting a business, leaving a job or ending a relationship, deciding when and if to let go makes all the difference. As they say, timing is everything.

Occasionally massive persistence can pay off: Chester Carlson first patented his technique for a photocopier in 1938 but it wasn’t until 1949 that the Xerox Corporation first launched his product.

But for every epic invention like that there are many thousands of doomed ideas that will never achieve lift-off. I regularly receive business plans for schemes that appear entirely uneconomic: in lots of cases the passionate founder has spent years hawking their dream around financiers getting nowhere, ignoring the evidence and allowing emotions to overwhelm their judgment.

Veteran investors and gamblers often adhere to a well-known rule: run your winners and cut your losers (sometimes phrased as “hold on tightly and let go lightly”). I’m guilty of selling some of the best companies I’ve owned too early – but better that than holding on too long and ending up with even less. For the most part, disappointing projects require constant injections of cash to keep going: usually this represents good money after bad, and is best avoided.

Getting out of terminal situations decisively is equally important. If you are in a terrible job, or your company has no future, you should just leave. The best departures involve a clean break. If you linger there is a risk that doubts – or even worse, regrets – emerge.

The sense of relief starts almost the instant you bow out. There will be other victories to compensate for the surrenders. So often we hang around because of vanity and pride. I am not advocating that you should give up too easily, but you should develop a sense of when a situation is irrecoverable – and do the inevitable if it is.

Fixed-term appointments can actually be an excellent mechanism to ensure one doesn’t stay in a role too long. I loved being chairman of Channel Four Television for the full term of six years, but actually having to hand over the baton to new blood was probably good for me and the organisation. Too often leaders cling to an office well past their glory days, unwilling to relinquish status and power until death or dismissal.

Armand Hammer, chief executive of Occidental Petroleum, was a notorious example of a selfish boss who never knew when to resign, despite his faltering performance. By contrast, earlier this year Pope Benedict XVI realised he could not carry on and therefore retired, even though his last predecessor to step down did so in 1415.

Almost every week a reader of this column emails me to ask when they should leave their job and start a business. Of course I can’t possibly know the details of their circumstances, so I usually just say: “Seize the day.” The sooner you start, the sooner you are likely to achieve your goals.

I was studying medicine, but knew as soon as I discovered entrepreneurship that becoming a doctor was not where my future lay. And despite setbacks and failures, I’ve almost never met an entrepreneur who would have preferred to spend their career as an employee.

There can be a sort of masochistic faith among many entrepreneurs that you should never quit. I am with them if it means giving up altogether. But when it becomes apparent that the task is a dead-end, I am all for strategic and temporary withdrawal to regroup and prepare for the next assault. Sometimes quitting is not about shame, but simple pragmatism.