Status Quo Bias and Organizational Decision-Making

Do we have to?

Two sayings, accepted as conventional wisdom, combine to do a nice job of capturing one of the inherent challenges of being human. The first, "The only constant is change." The second, "People fear change." If both these statements are true (and I'm not arguing either), the following must be as well. People are constantly in fear.

Maslow's hierarchy of needs approximates that the need for safety comes immediately after the need to breathe, eat and drink. So, just as safety is fundamental to our sense of well-being, we live in a world that fundamentally denies it. To quote Coldplay, "Nobody said it was easy."

But this is not a character flaw. If we weren't wired this way, we never would have survived as a species. But this wiring also creates a perpetual supply of challenging obstacles over the course of our lives.

And perhaps no instinct is as deeply-rooted as status-quo bias, the powerful internal drive to keep things the same. Despite the logical paradox – why keep things the same if they are bad? – human reasoning is to prefer "the devil that you know."

Imagine, over the millennia, just how often our ancestors saw people try something stupid and end up dead. "If they had just left well enough alone." That perspective is baked into our DNA, which is why we prefer the devil we know over even the possibility that things can get better.

Of course there are many notable exceptions, visionaries who yearn for change. But they are exceptions, which is why they are notable. And why status quo bias remains one of the most powerful forces in the human experience.

Like any bias or heuristic, status quo bias exists at a groupthink level as well. It affects organizational decisions every bit as much as individual ones. (Just ask Blockbuster, Kodak or Radio Shack.) Change becomes increasingly difficult in organizations as they grow.

If that weren't enough, a related bias makes the desire for the status quo even stronger. Omission bias describes the human preference to make mistakes from inaction as opposed to making mistakes from action.

Understanding omission bias is crucial to effective salespeople, who instinctively know when to take their feet off the gas. But there is no way to know how omission bias affects group decision-making – the context is infinite.

But when organizations decide to be proactive in addressing status quo bias, they may find it surprisingly easy to overcome. The challenge is getting people to do it. Why is that, especially for important decisions?

As with all cases of systemic irrationality, the answer lies in biases, heuristics and behavioral science.

The Brain's Limitations

The human brain has enough mental energy to process only a tiny fraction of the information available to it. Were people to try to think through every decision, they would become mentally depleted, and effectively paralyzed, by breakfast.

To compensate, human beings have adopted what Daniel Kahneman calls The Dual Systems Theory. Kahneman suggests that people engage in two very different types of thinking: System 1, which is fast, easy and unconscious, and System 2, which is slow, difficult and effortful.

By necessity, we spend the overwhelming amount of our time engaging in System 1 thinking (estimates typically reach 90% and above), reserving System 2 thinking for the relatively rare moments in the day in which we really need it.

If people are spending 90% of their time in unconscious autopilot, it begs another question: who's flying the plane? The answer to that is, "Biases and heuristics," the foundations of behavioral science.

Biases and Heuristics

Biases are mental tendencies, and heuristics are mental shortcuts that help us make decisions without expending mental energy. They fly the plane while we are on autopilot.

Fittingly, people have a bias against the word "bias," because they conflate it with racism, sexism, ageism, and all of the other isms that are worthy of our scorn.

Biases, however, are neither good nor bad. I have a positive bias for people who wear Canvas Chuck Taylor sneakers. As soon as I see them, I feel as though we have shared values and feel a kinship. It's just a mental tendency that helps me avoid spending any of my precious System 2 thinking.

Of course, bias can lead to all sorts of awful problems, especially when we perceive threats where there are none. But the answer is not to eliminate bias, because that is impossible. We could not survive without relying on biases. The challenge is learning how to recognize and mitigate the biases that our rational minds can understand are dangerous.

Heuristics face no such stigma, but play just as big a role in flying the plane in autopilot. Heuristics are mental shortcuts on which we rely when pressed to make decisions we can't "afford" to think through. The affect heuristic describes how we rely on emotions, or "our gut," to make decisions, rather than an extended thought process. Anchoring describes how we hold onto the first piece of information as our reference point in negotiations, without re-evaluating for accuracy or relevance. And the availability heuristic describes how ease of recall affects our perception of probability.

So, what is the cognitive purpose of the status quo bias? The same as every other bias or heuristic: to save mental energy. On the plus side, it's probably kept us from doing a lot of very stupid things over the course of our lives.

The Emotional Purpose of Status Quo Bias

Depression describes feelings about the present, while anxiety describes feelings about the future. Which makes anxiety the biggest driver of status quo bias. We will resist change because we're anxious about what might happen, and prefer the perceived certainty of our current situation.

Of course, the "certainty" of the present is an illusion, but one on which people naturally grasp to find the emotional resources to live in the present. That is the foundation upon which status quo bias is built. The constant uncertainty and danger in life is often too much to take, so we seek to counteract those feelings with anything that provides a semblance of permanence. Enter routines.

Imagine if someone proposed something tomorrow that would result in your having to change every routine you have. That feeling of dread is status quo bias.

And while there are many distinct biases and heuristics, there is also a great deal of correlation and overlap. For example, loss aversion describes that people are far more motivated to avoid losses than to secure wins, because the prospect of a loss is more painful than the prospect of a gain is pleasing. This tendency certainly contributes to a lack of action, offering wind at the back of status quo bias.

The same can be said for Omission Bias, in which people prefer to make mistakes from inaction than mistakes from action. This is likely because mistakes of inaction are far easier to defend. There are many factors at play in creating the general human aversion to change, and status quo bias does the best job of capturing them all.

Common Examples and Effects

Perhaps nothing is as celebrated from the world of behavioral science as identifying the power of the default option. Whether transforming participation retirement savings or organ donation, default options are renowned for their effectiveness. It doesn't matter what the default settings are, as long as people don't have to check the box.

This explains why every product designer is on the perpetual hunt to create a productive default setting during onboarding. And it works precisely because of status quo bias.

Status quo bias shows up everywhere in our lives:

Status Quo Bias and Organizational Decision-Making

Some of the more recent notable business failures can be attributed in part to status quo bias:

Granted, hindsight is always 20/20. But within each story are multiple moments in which the forces that were stepped in to block progress. The desire to keep things the same made these companies ignore what they were seeing because they didn't like what they would have to do to adjust to it.

Complicating matters are the sheer number of variables at play affecting status quo bias. In addition to the strong underlying psychological preferences for it, there are multiple practical considerations that drive people to attempt to protect the status quo.

People in positions of power are almost always invested in maintaining the status quo, because changes are perceived to be more likely to threaten their positions than to protect them. But even as we go down the power hierarchy in an organization, the desire to maintain the status quo is almost as strong. The less powerful they are, the more vulnerable they are to change. And even if their jobs are safe, change requires hard work and the abandonment of routines. It's very hard to find people who enjoy that.

Despite our preference for it, the status quo is ironically the root of much of our discontent at work. The only thing worse than an over-reliance on legacy systems is upgrading to a new one. With the exception of startups, the status quo usually delays innovation, incurs massive opportunity costs, and keeps ineffective talent in key positions.

For both individuals and organizations, there comes a point where you stop reaching for your aspirations and you start holding on to the position you have secured. In the moment that happens, status quo bias grabs the wheel.

The Existing "Solutions" for Status Quo Bias

The solutions most commonly offered to combat status quo bias are very much aligned with most biases. Maintaining awareness during decision-making, using tools and processes to counter bias and heuristics, and relying on data to do so are among them.

And these solutions, when attempted, tend to produce great results. The problem is that these solutions are so infrequently attempted.

That is understandable for a number of reasons. For starters, that degree of evaluation is far too much work given the sheer number of decisions we have to make, and we have far too little mental energy to do so.

For individuals, better decision-making requires intention and discipline, while groups require coordination and facilitation. But even those are not enough to overcome status quo bias, because they still fail to address the most powerful obstacle of all: emotional resistance.

The New Solution for Status Quo Bias

If following a structured decision-making process might make someone's past or current decisions seem foolish, it eliminates their motivation to do it. No one wants to appear stupid, to themselves or especially to a group. If forced into a group structured decision-making exercise, they will be concerned exclusively with impression management, muddying the waters for an honest and objective evaluation.

The point must be made forcefully and effectively upfront: errors in judgment from biases and heuristics are as universal as breathing. Every single human has and will make countless of them, both consciously and unconsciously. And hindsight is always 20/20. To feel foolish for making errors in judgment is, quite literally, foolish. And it is a huge blocker to growth and improvement.

This mindset is a requirement for better decision-making, and facilitators must be skilled in making the point. But even that is not enough.

People's status and positions are often tied to certain decisions and/or supportive of the status quo. As such, they are strongly motivated to avoid or muddy any exercise that might threaten that order. This resistance must be eliminated as well. Fortunately, there's a framing to get us there.

Stories of agility success, like Play-Doh, Frisbee and Netflix, and of agility failure, like Kodak and Blockbuster, help to drive the point home.

What makes this the "new" solution for status quo bias is that it addresses the emotional blockers before proceeding to the cognitive exercises. Solutions are meaningless for people not motivated to use them.