Perseverance doesn’t always pay off for companies – sometimes it’s better to ‘fail fast’

Across the business world, companies often double down on struggling ideas, retreating only after clear evidence shows they won’t work.

A recent spectacular example was Meta’s metaverse push. After the organization invested US$80 billion over several years, it announced changes in March 2026 that all but abandoned its grand strategy.

But many companies are following the opposite approach of quickly walking away from failure instead of blindly sticking to a vision. Google ended its cloud gaming service Stadia when it failed to take off, choosing instead to reuse the technology elsewhere. Mercedes abandoned its zero-sidepod F1 concept once it clearly hit a competitive dead end. And Slack transitioned from a failed gaming app to a ubiquitous intra-office messaging platform.

What drove all these decisions wasn’t a tolerance for failure. Instead, executives read signals of weakness early, confronted inconvenient evidence and changed course before greater losses accumulated. In other words, they embraced “failing fast.”

As business professors who study sales performance and sales failure, we argue that this concept is one of the most important yet most misunderstood ideas in our field. It’s not about celebrating mistakes or lowering standards, nor does it give leaders permission to abandon rigor or give up easily.

At its core, it’s about creating the conditions for faster learning: building the managerial discipline to recognize when an opportunity is unlikely to pay off, stopping before sunk costs deepen, and redirecting scarce resources to more promising bets. And this is a strategy that can work for any company, at any level, no matter how high or low the stakes.

The Slack model

Slack is everywhere these days. But few recall that it was actually founded in 2011 as a multiplayer online game called Glitch that failed to take off. The company, then known as Tiny Speck, shut it down in 2012, but in the process its leaders identified hidden value in an internal communication tool they had built simply to coordinate their own work.

This practical side project looked like a tool that could do well in the burgeoning market for team-collaboration software. So the company pivoted by deploying its remaining capital and talent to launch Slack in 2013. Since that time, Slack has become one of the fastest-growing enterprise software platforms in history, eventually leading to a
$27.7 billion acquisition by the business platform Salesforce in 2021.

Stories like these are often told as tales of persistence, but they’re actually examples of disciplined quitting. Similar cases include 3M’s accidental invention of Post-it Notes (first used as ad hoc bookmarks for hymnals); Shopify’s pivot from selling snowboards to enabling e-commerce infrastructure; and Instagram’s shift from a cluttered check-in app to a focused photo-sharing platform.

Together, these stories suggest that success depends not only on staying the course but also on recognizing early when the course is no longer worth pursuing and changing to a better one.

Know when (and how) to fold ‘em

Despite this history, much of business culture still promotes a simpler message that grit drives success.

This mindset, however, can also foster a sunk cost fallacy. Myriad examples of this trap linger across business lore to this day: Blockbuster failing to accept an offer to purchase Netflix and instead expanding its physical footprint model; Kodak inventing digital cameras but opting to prioritize its dominant film business; and the persistent joint venture funding of the Concord supersonic airliner despite strong evidence that the project wouldn’t become commercially viable. All three businesses eventually went bankrupt after once dominating their respective industry.

Sunk costs, in short, come into direct tension with notions of failing fast. But our research underscores the latter’s benefits, showing that associated payoffs extend beyond high-profile corporate pivots and even apply to everyday decision-making. Studies in business-to-business sales, for example, find that walking away early from low-potential opportunities can improve motivation and performance.

That said, there’s an important condition: This approach only works when executives and customer-facing personnel have a grounded understanding of what the company can do and what customers want – rather than treating early exit as a suboptimal default.

Across these varied cases, our research has pointed to another clear pattern that emerges: Failing fast is typically structured in a way to make decisions under uncertainty, with three distinct stages. Again, the origin story of Slack is a good example.

The first step is to gather information that suggests whether any given project will succeed. These signals can come from direct observation or data. The goal is to build an early, evidence-based picture of whether an effort is gaining traction. In the case of Slack, CEO Stewart Butterfield and his team recognized through direct user experience that Glitch, the game, just wasn’t fun. But they also saw other signals that showed structural limitations preventing a viable path to succeed on mobile devices.

The next step is to interpret the collected data – combining experience, contextual awareness and analytical tools to distinguish between ideas that warrant investment and those that don’t. Structured approaches, like comparing goals to historical benchmarks, can make sure that assessments are consistent and grounded in evidence rather than intuition alone. In Slack’s case with Glitch, Butterfield synthesized the early signals and concluded that, despite significant sunk costs, the game didn’t justify further resources.

The final and most difficult step is execution. When signals and analysis point to early exit as the most effective course, acting on that conclusion is hard. Withdrawing, even when continuing no longer makes strategic sense, feels counterintuitive in an environment that rewards persistence. That’s why executives need to make the case that there’s a smarter way to allocate time, capital and attention. With Slack, Butterfield followed through on his analytical convictions by shutting down the game and repurposing internal technology to create Slack – reframing this “failure” as a strategic reallocation.

A lesson for everyone

These lessons extend far beyond the world of sales, startup culture and Big Tech. Managers face similar choices in product development, partnerships and hiring – situations where the real risk is not failure, but failing late. This way, strong organizations understand how to fail by design. That is, defining success and failure criteria early, testing assumptions quickly and containing any downside before commitment becomes wasteful. These are, in fact, universal lessons that apply across industries, up and down the chain.

As a more poetic analogy, we turn to the sea. No skilled sailor tries to cross every channel. Some waters will test their endurance, while others will open up new routes. The best sailors prove sound judgment by reading the winds early and changing course before a storm takes hold.

Business leaders face the same choice. Growth comes from neither persistence alone nor reflexive retreat, but from knowing when the effort no longer creates value.