How to reduce the lingering power of the status quo
Why does a new product have to be 10X better than an incumbent to displace it? Why can’t it be just a little better?
Why do you simply renew the contract with an existing vendor without exploring competing vendors who might be a better fit?
Why do you order the same chilli chicken and fries every time you go out?
The answer is in the status quo bias. It is in the deep, almost gravitational, pull of letting things stay the same.
What is the status quo bias? Why is it so compelling? How can we ~~break free ~~loosen the grip of this bias over our decision-making? All in less than 5 minutes. Catch this week’s issue.
Highlights:
- We feel losses and gains asymmetrically. Losses sting twice as much as gains make us happy.
- A love for how things blinds us to foregone opportunities. A sin of omission (doing nothing) feels safer than a sin of commission (doing something that turns out bad).
- In a negotiation or a sale, one party’s gain is another party’s loss. So, one party is a lot more averse to change than the other. This is what results in stand-offs.
- To avoid such stand-offs, the status quo can be shifted by shifting the reference point. This is a trick of the best salespeople.
- Other ways to reduce the effect of the status quo bias include asking ‘what would my successor do?’ and repeatedly exposing the new alternative to your audience.
- Status quo bias doesn’t mean we should always look to change things up. It only means we shouldn’t stick with it just because it feels comfortable and we feel lethargic.
We were about to clock ten years with our cook. She knew how much bite we liked in our pasta, how much sugar we took in our coffee. Maintaining this arrangement was easy. There was no reason to rock the kitchen. Except that our cook was forgetful, wasteful, and sloppy. She had been like this for a couple of years at least. Why did we put up with her?
**Neutral is safe **
‘Many decision problems take the form of a choice between retaining the status quo and accepting an alternative to it, which is advantageous in some respects and disadvantageous in others…. The advantages of alternative options will then be evaluated as gains and their disadvantages as losses. Because losses loom larger than gains, the decision maker will be biased in favor of retaining the status quo.’
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What are our friends Kahneman and Tversky talking about here?
You see their proposed value function suggested the pleasure or pain (y-axis) linked to each potential decision outcome. This function is defined in terms of gains or losses (x-axis) relative to a neutral reference point, or status quo. So a gain makes you happy and a loss makes you grumpy. The only hitch is that the graph is doubly steeper for losses than for gains.
Look again and you’ll notice what it means: Losses sting twice as much as gains excite us.
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No wonder we had cold feet firing our cook. What if we didn’t get another for weeks? What if we got someone worse, or someone we couldn’t afford? Such fears loomed larger than the possibility of finding someone who was better.
Blind to foregone opportunities
Because we feel losses and gains asymmetrically, the status quo makes for such a strong reference point. The asymmetricity blinds us to foregone opportunities. We’re okay with losing them as long as we get to keep the present situation going.
Opportunity cost for an action is the cost of what you give up by doing it.
On any day your opportunity cost isn’t printed on your vision board in front of you. Nor does it appear in your inbox, marked urgent. You have to go looking for it.
In fact, it is so hard to grasp that even when someone you’ve paid to offer you counsel sits you down and shows you the ballooning opportunity cost of your current life choices—sticking to your cook, your job, your house—you find it hazy and distant.
A sin of omission (doing nothing) generally is more excusable than a sin of commission (doing something that turns out bad). In fact, doing nothing seems worth the (lack of) effort.
What are negotiations hard?
By now you know that we feel pain and pleasure unevenly. You feel one much more than the other. When it’s just you living with the consequences, you can choose to play safe or take a risk.
But what if you’re pitted against another? What if your gains are your opponent’s losses? This is what happens in negotiations. Parties are unwilling to make concessions because the losing side feels the pain a lot more than the gaining side feels pleasure.
If that puts you off the negotiating table, there’s more from where that came from. Negotiating a sale for your house in a tanking market feels much worse doing so in a booming market. Why? Because a poor market means the pie itself is shrinking. There’s loss in store for both parties, no matter the outcome of the deal. Hammering out a deal in a booming market, on the other hand, feels good but not nearly as bad as a deal in a tanking market.
When tomorrow, not today, is the reference point
I once had a boss who sold me a single-digit-percentage pay hike (when I was expecting double digits) by telling me that the org-wide pay hike was only half of mine. With that information, he suggested that my reference point should no longer stay the same. It should move down.
Some of you may point out that my reference point was my pre-hike pay and so I only stood to gain, both in compensation and in pleasure, with any kind of pay jump. Not quite.
Sometimes, the reference point is the status quo. At other times, when pursuing a goal, it is a desired future outcome. In my head I had settled on a double-digit-percentage hike. Falling short of that desired number was a loss, surpassing it was a gain, meeting it was neutral.
Ever ran the length of a marathon and stopped because of cramps in the last mile? How did you feel about the outcome? Did you tell yourself, Look, I’ve run 25 miles from the starting line. What a fantastic achievement! OR did you gripe, What a bummer! I fell short by a mile, just a mile?
By suggesting that my performance should be assessed relative to that of my peers and that my reference point ought to be the org-wide pay hike, my boss implied I had a deal I should be thankful for.
No wonder smart negotiators like to play with the reference point when the news is grim.
Of course, you need the status quo too
Status quo bias doesn’t mean we should always look to change things up. It only means we shouldn’t stick with it just because it feels comfortable and we feel lethargic.
Changing things up without carefully appraising the consequences can lead to dire outcomes. Like changing a beloved 99-year-old formula. Let’s hear it from the folks who landed on the wrong side of the status quo. Here’s what the Coke website says:
To hear some tell it, April 23, 1985, was a day that will live in marketing infamy.
The Coca-Cola company took arguably the biggest risk in consumer goods history, announcing that it was changing the formula for the world’s most popular soft drink, and spawning consumer angst the likes of which no business has ever seen.
If you ask Coke executives, they’ll probably list down the lessons from Coke’s guffaw as don’t base decisions on biased research and know what makes your product special. Or reframed in the context of this piece, that lesson is: sometimes sticking to the status quo is the best option.
The status quo grounds us to something reliable and saves us constant decision-making effort.
How to loosen the grip of the status quo bias
The status quo bias is a cognitive bias. That means we’re wired to think in favor of the prevailing state of affairs. Tackling this bias is not simply a matter of gathering more or better information or having more time. It is in acknowledging that we can at best reduce the effects of this thinking pattern.
Here are three ways to tackle the status quo bias:
Ask: what would my successor do?
Prior commitment can make us emotionally attached to our position. It can make it painful to give up what we have built. Because ‘loss aversion is a powerful conservative force that favors minimal changes from the status quo’ we need to take the counsel of someone who’s outside the power of this force. That someone is often an outsider. It may not be easy or possible to find that outsider. If so, you can role-play that outsider.
_Try the exposure effect _
When I was incubating a business unit that made videos and infographics of published research papers so that science could be accessible to more, it would take us a few meetings to get scientific publishers (our target customers) to listen to us. It was not that they thought little of our products. It just took us that much time to warm them up to our new idea.
Switch the reference point
If you want to break the inertia of the status quo, switch your reference point from what your current state _is _to what your future state _would be _if you seized the right opportunities, and you see the loss much clearer.
Losses sting a lot more than missed opportunities.‘By not doing this, you are losing…’ is a lot more convincing than ‘If you did this, you would save…’
Later is usually never
‘Maybe I’ll think about it later’ is a common response to decision-making situations, like the domestic one . But later is usually never.
And not making a decision is making a decision. Circumstances change and the opportunity no longer exists.
Taking action means taking responsibility. That means exposing ourselves to criticism and to regret. Not surprisingly, we look for reasons to do nothing. That’s where ‘maybe I’ll think about it later’ comes in.
But in sticking to the status quo we sow the seeds for another kind of regret to grow. The regret at eighty that we didn’t take enough shots.
The question is, what kind of regret do you welcome? The potential one now OR the certain one at eighty?
Memories are maps of reality, not reality. Memories don’t have a one-to-one correspondence with reality, and thank heavens for that. Or our heads would explode with irrelevant details and our movies would be the most mundane reality shows ever.
Our memories don’t follow any kind of a consistent scale either. Our brains record emotional peaks and troughs much more than emotional flatland. They also recall the end more deeply.
A patchy scale makes for a dubious map. It makes us unreliable narrators of our own story.
None of this should matter if it were not for the fact that our experiencing self that does the living and our remembering self that does the decision-making.
Our experiencing self enjoys the honeymoon; our remembering self recalls the food poisoning at the end.
Our experiencing self enjoys years of happiness with a beloved pet; our remembering self gets hung up on the painful last months.
Given that we mis-remember, what should we optimize for—our lived experiences or the memories of those experiences?
In this week’s essay, I explore the nature of memory and experience, and share how my wife and I used this human tendency to mis-remember to say a memorable goodbye.