One of the most prevalent, and common everyday biases in decision-making is the adherence to the “Status Quo”!
This can be easily categorised as “inertia”, which determines that people will prefer to have the same things, the same outcomes and therefore the same position.
The issue is that when the anticipated value of change is not clear, easily understood, qualified, planned or seen as attainable it is often seen as an insufficient value to risk a change!
This is particularly true when considering a business decision especially when the benefit of making a change is not seen or valued as considerable in terms of outcome or benefit to the business or business owner.
Understanding why the Status Quo is so prevalent is key in evaluating change or proposing change.
When considering why people in the main are inherently programmed to be “loss averse” – by explanation people tend to migrate to placing a higher value on retaining what they have as opposed to what they might have by acquiring a gain. The majority would prefer to retain the £50.00 in their pocket by sticking to the Status Quo as opposed to winning £100.00 and not having to make a change to acquire the £100.00 win, even if the opportunity to win £100.00 is, in reality, a qualified and worthwhile risk.
The concept of “Spent Cost” is a cost that has already been spent and therefore cannot be recovered. The outcome of this spent cost will be the same as it is i.e. it has been spent and therefore not recoverable! Therefore looking at the suggested spend against the expected increased benefit in terms of a new ROI will require a change of direction and a change in previous thought processes including attitude to risk. A better-expected outcome with a change of risk profile.
Changing from previous commitments, strategies and tactics to achieve a new level of success will usually place pressure on previous decision-making processes and commitments given.
However, this very situation happens frequently in all sizes of organisations - for example, in the car industry where manufacturers change models, improving on design, features, benefits and performance of previous models.
Benefits include the ability to increase product pricing, product margin, market share, consumer perception, brand loyalty, and environmental credentials. The heartbeat of a successful business.
If you would like to speak to a business consultant at ACT Business Consultants then - www.actbusinessconsultants.co.uk - info@actbusinessconsultants.co.uk - 01235 886222