Article at a glance:

Learning to let go: Making better exit decisions

• Faced with a failing product or division, companies tend to hang on too long.
• Common psychological biases help explain why executives downplay evidence of failure and put off the tough decision to bail out.
• Executives can learn to identify those biases and to understand when they are likely to hinder an objective evaluation of the prospects of a product, a business unit, or even an entire industry.
• Companies can create mechanisms—some borrowed from private equity firms—to counteract their biases and help them move toward the exit at the right time.