Spider-man & Overcommitment

May 25, 2011 BY danariely

The Irrationality of Organizational Escalation: The Danger of Spider-man & Overcommitment 

By Henry Han-yu Shen

Spider-man: Turn Off the Dark is an upcoming rock musical featuring music and lyrics from U2’s Bono and The Edge and originally directed by Julie Taymor, best known for the hit musical The Lion King.

This musical is also the most expensive Broadway production in history, with a record-setting initial project budget of $52 million. The show’s opening has been repeatedly delayed while the production cost continues to accrue, currently totaling a whopping 70 million dollars. The final estimated budget approaches 100 million dollars, with no guarantee of profit return and below-average reviews.

Spider-man’s situation exemplifies a classic case of organizational failure.  Marked by producers’ continuously irrational contributions of monetary support to a seemingly hopeless project. In many ways this case is similar to the failed Shoreham Nuclear Power Plant program as analyzed by Ross and Staw (1993). The Shoreham project also experienced an escalation of project cost – from an initial $75 million to the final cost of $5 billion – and it a classical example of how organizations become increasingly committed to losing courses of action over time.

We can draw several parallels by comparing the Spider-man Broadway production to organizational escalation. We can see that economic data alone cannot easily deter organizational leaders from withdrawing from a full-scale course of action, especially in cases involving something that is highly subjective in its value (such as a Broadway production). When we consider that the cost of production for Spider-man continues to rise, the initial psychological over-commitment of the producers can become even stronger. Such forces appear to have come into play, trapping the producers into a losing situation while they continue to throw money into the project.  It is important for future producers, or any organizational leaders, to keep in mind the existence and properties of these different types of escalating determinants in order to avoid clouded judgment and behavior when making decisions.