Sunk costs and identity-locked legitimacy drive organizations deeper into failing strategies.

Evidence

The vigorous and unfortunate pursuit of nuclear energy by the TVA was not written in its legislative charters. It was driven by decisions made along the road of institutional development. The self-reinforcing spiral of supply and demand had increasingly defined its course. In addition, sunken costs of (nuclear) power facilities inhibited reversal of the organization’s plans and change of its policy. Finally, the TVA’s legitimacy and identity had come to rest on its ability to provide cheap electricity, which further drove the organization down its road to perdition. — Georg Schreyögg and Jörg Sydow, The Hidden Dynamics of Path Dependence, 312

Categorization

• XREF: Echoes the reader’s kept highlights on the TVA’s suicidal nuclear escalation and legitimacy-driven rigidity. — connects to: Organizations survive by abandoning goals that threaten their existence — Robert B. McCalla, NATO’s persistence after the cold war, 66
• SEED: Angle: how organizations that fuse identity with a single product lose the ability to abandon it, from the TVA to modern platform companies.