The Why #27: Why do good companies stay with bad software?

By Dan Monheit, 3.9.21

Question submitted from Liam, Albert Park

This kills me Liam. You and I both know that in 2021, there’s no reason to be running old, crappy software. Yet everywhere we look, there are businesses held together by a mash of Excel spreadsheets, entire organisations that are stuck on Internet Explorer 8 and people still using Lotus notes for email.

Sure, there’s a small degree of retro chic that comes with running a payroll or workflow management system from the Cold War era, but no amount of retro or chic can compensate for the daily pain and misery that these systems bring.

So why not change? After all, nothing says ‘progressive, forward thinking business’ more than pivoting, going agile and transforming, preferably all at the same time.

Change has been preached and praised throughout the ages.

“To improve is to change.” (Winston Churchill)

“Be the change you wish to see in the world.” (Mahatma Gandhi)

“A wise man changes his mind, a fool never will.” (Icelandic proverb)

“Everybody lies about change.” (Dan from Hardhat)

Status Quo Bias

Of course we lie about change. We’re told we’re meant to love it, to relish it, to seek it out, chase it down and roll around in the pure joy of it. But for the most part, having to change is just plain annoying, which is why our Status Quo Bias does such a great job of helping us avoid it.

Status Quo Bias refers to our preference to stick with whatever is known, familiar and maintains the current state of affairs — even if that current state isn’t the best state it could be.

In 1988, Samuelson and Zeckhauser conducted an experiment where participants were asked to imagine that they’re well versed in the financial news, and had just inherited a large sum of money from their great uncle, who I’m sure they were sad to hear had theoretically passed (RIP).

The participants were presented with two scenarios. In the first scenario, they were given the option to invest the money in any way they liked across four different options: a high risk company, a moderate risk company, municipal bonds and treasury bills.

In the second scenario, the participants were given the exact same investment options, but were also told that their dead great uncle (again, RIP) already had a large portion of the portfolio invested in the moderate risk company.

Lo and behold, researchers found that when presented with the second scenario, a much greater proportion of participants chose to stick with their late, great uncle’s strategy (i.e. maintain the status quo). From a rational perspective this makes no sense at all, especially when you consider that the right investment strategy for an old (now dead) uncle was unlikely to be the right investment strategy for them. Nevertheless, the status quo prevailed.

Our desire to maintain the status quo is so strong that it overrides the logical possibility (or even high likelihood) of a better outcome. The Status Quo Bias is in part the reason why many of us lived with our parents waaaaay longer than we should have, why we always take the same (sub-optimal) route into work, or why we still own a vastly inferior iPhone 6, cracked screen and all.

When we look at switching software in a commercial setting, it’s easy to see why Windows 98 is still getting airplay. The potential upsides for the person driving the change are a little more productivity, a nicer interface and some marginal cost savings for the business. If they’re lucky, they might even get a glowing performance review, a small promotion or a salary bump.

If things go badly, however, they’ll forever be known as the person who brought the company to a grinding halt and blew millions of dollars on a catastrophic project that ran 18 months late. They’ll be fired. Then broke. Then homeless. All because they tried to give their colleagues ‘a better browsing experience’.

Let’s just stick with what we’ve got then hey?

For brands trying to convince customers to make a big switch, reframe the situation to demonstrate how not changing is actually the biggest risk of all. When they do decide to come across, ensure you’ve got everything in place to make that switch as smooth and simple as possible.

Behaviourally Yours,

Dan Monheit

PS If you missed the last edition, you can still check out why we love celebs with dad bods here.

Bad Decisions Podcast
Learn more about the Status Quo Bias on episode 23 of the Bad Decisions podcast.

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Want more?
Check out Dan’s piece in explaining how biases impact hesitancy towards vaccines.

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