You have to know when to quit.

Photographer: David Ryder/Getty Images

Sweet Briar College Quits the Right Way

Megan McArdle is a Bloomberg View columnist. She wrote for the Daily Beast, Newsweek, the Atlantic and the Economist and founded the blog Asymmetrical Information. She is the author of "“The Up Side of Down: Why Failing Well Is the Key to Success.”
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Sweet Briar College, a women's college in Virginia, announced Tuesday that it would be shutting itself down. The school is not entirely out of money. But the trends are going the wrong way for women's colleges as well as small, expensive liberal arts colleges that aren't named "Amherst," "Williams" or "Swarthmore." Having seen the writing on the wall and concluded that it'll eventually run out of money, it is closing this summer so that it can use the money to pay severance to employees and help current students find new academic homes.

In the annals of institutional behavior, this is exceedingly rare: an organization that tidily arranges its own demise rather than running down its reserves fighting the inevitable. Offhand, the only examples I can think of are some funds that returned investors' money at the height of the stock market bubble rather than buying more overpriced stocks, and that bookstore in San Francisco that shut down after concluding that it could not afford to operate under the city's new minimum-wage laws. It's very sad when this happens, but still, it would be nice if it happened more often.

When I sat down to write a book about how to fail well, I naturally came across a lot of cases of incredible comebacks. There's a lot less out there on companies that sensibly decided it was time to pack it in. And yet, sometimes -- maybe often -- this is the right answer. "If at first you don't succeed, try, try again" is a splendid motto. But there is a necessary codicil: "Eventually, if it's still not working, you should quit." In my book talks, I often tell the story of my burning childhood ambition to become a jockey. Since I am 6'2" and was noticeably oversized even as an infant, this was not a solid dream. No amount of grit was going to overcome the fact that I'm just about a foot too tall for the profession.

Of course, that naturally raises a question: How do you know when it's time to quit? I discussed that in the case of Mitt Romney's tentative flirtation with a 2016 presidential run, and the answer comes down to whether you can actually describe the problem that's causing you to fail, then name a plausible way to fix it. In Romney's case, I don't think you can, since his core problem is that he's just not that engaging on the campaign trail, however splendid he might have been in donor meetings and the governor's office.

Having looked at the enrollment and tuition figures for Sweet Briar College, I think the trustees are right to believe that their beloved institution is in a similar position. The school is having to discount tuition too much to attract students to a remote women's college in the hills, and going co-ed would actually make that problem worse, because men are getting scarce in higher education. Going co-ed would also require it to spend money it doesn't have on new facilities, as would any attempt to expand the college's mission to include more career-focused programs.

So instead, it has opted to shut down before the money runs out, enabling it to set up an orderly transition for employees and students. We should mourn the passing of a century-old educational institution. But we should applaud the way it decided to go. America could learn one last important lesson from Sweet Briar before it closes the doors for the last time.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Megan McArdle at mmcardle3@bloomberg.net

To contact the editor on this story:
Brooke Sample at bsample1@bloomberg.net