As part of the introductory course in marketing at the Wharton School, MBA students often read a fictitious case about a beer brewing company called Mountain Man. It's a family-owned business that's making one beer, Mountain Man Lager, for over 80 years. They've a strong reputation for quality throughout the MIdwest and extremely loyal customer base of working-class males, guys that drink the beer at the bar on their home away from work or after a tough day. In the early 2000s though, the company leadership was struggling with how to respond to changing consumer preferences. Lite beer sales were growing and few people were drinking lager. So for the first time in their history, sales were declining not by a lot but around two percent a year. Management were considering introducing a lite beer but they were worried it might alienate current customers. If yuppies who like lite beers started drinking the brand, maybe those core customers, those coal miners and guys in camouflaged that came after a hard day's work, maybe they would want to move on to something else. The entire case rests on this idea, where introducing a lite beer will kill the core brand. The MBA students estimate potential new lite beer sales and they calculate how that might hurt existing lager sales and they come to a decision about how damaging the introduction might be. Everyone is worried that core issue about the risk of doing something new. Will introducing a lite beer lead to a five percent reduction sales or 20 percent drop in lager sales? How much will that Introduction erode brand equity? But while the student spent a lot of time thinking about the potential dangers of making a change, they tend to spend a lot less time about thinking something equally important, what I'll call the risks of doing nothing. Because while doing the same thing that company has done for over 80 years feel safe, feel safer than doing something new, it's not necessarily the case. Sales are declining. So doing nothing doesn't mean nothing bad happens. It means the company slowly but surely disappears into oblivion. A two percent loss every year for many years, eventually means that company is going out of business. You can think about the same thing when you think about injuries. What do you think causes more pain? A severe injury like breaking a finger or shattering a kneecap or a milder one like spraining a finger or your knee occasionally buckling? We think at its core that severe injury should cause more pain. If I shatter my kneecap or break a finger, an elbow, that seems like a big deal. That's going to be very painful for a long period of time. These minor things like a bent finger or a shoulder that acts up once in a while, they just don't seem as bad. A trick knee might be annoying but a shattered kneecap is horrible. It's invasive surgery and months and months of arduous rehab. But a closer look reveals something interesting. Milder injuries actually end up causing us more pain because of how people respond when those injuries occur. When a severe injury happens, people take active steps to speed recovery. We consult physicians, undergoes surgeries, and take medicines. We do a lot of work to get better and fast. But when lesser injuries happen, we tend not to exert the same amount of effort. Sure, we take a couple ibuprofen, put some ice on our sprained finger. We're much more likely to pull together treatment plans. We don't go to the doctor because it's not that bad. But think about the results of this. Sure, it takes time and money to consult doctors and see specialist and do these other things, but if we never end up doing those things for the small injuries, the small injuries never go away. That trick knee hurts longer than the shatter kneecap because the severe injury exceeds our pain tolerance. We respond to that severe injury but we never respond to the more minor one, which means we never get it fixed. If a project tanks, it completely fails, leadership cuts bait, they move on to something else. But when that project just repeatedly underperforms just a little bit, there's not as much impetus to change. If a supplier's always late, people find a replacement. But if once in a while they're a little bit late, there's less of incentive to work to find a substitute. When the status quo is terrible, we fix it. It's easier to get people to switch. They're more willing to change because inertia is not a viable option. If your apartment, for examples, is infested with cockroaches, you call an exterminator. The only question is which one to call. When things aren't terrible, when they're okay but just not great, it's harder to get people to budge. If the old thing wasn't that bad to begin with, why go through all that trouble to do something new? There's only a couple flies in your apartment, is it really worth the effort to call an exterminator? Maybe they'll just go away by themselves. Terrible things get replaced but mediocre things stick around. Horrible performance generates action but average performance generates complacency. So to overcome endowment then, we need to help people realize the costs of doing nothing. That rather than being safe or costless, sticking with that status quo, doing what you've always done, actually has some downsides. My cousin used to manually enter a sign off every time he wrote an e-mail, whether for work or personal use, he would type out, best Charles at the bottom. Now, when I heard this, I thought it was crazy. Why not create an e-mail signature, so that every time it just automatically add it. But he said, well, it's not that bad. It only takes a couple seconds each time, I don't know how to set up signatures and it'll take time to learn. So after trying again and again, I tried a different way to get him to switch. I asked him a question, how many e-mails do you write in a week? He said, I don't know, maybe around 400. I said okay. How long does it take to manually write each sign-off? A couple seconds at most, he answered. So then how much time each week do you spend writing e-mail signatures? He paused, thought about it for a couple minutes, did some calculations and then opened up the search bar computer and typed in "How to add an e-mail signature". Because whenever the status quo is okay but not stellar, mediocre but not terrible, change doesn't seem worth the effort. The current state isn't that bad., but surfacing those costs of an action help people realize that sticking with the status quo isn't as costless as it seems. It's only two or three seconds for an e-mail each time but add them up over the course of the week and it's 10 to 20 minutes, of more than a year, it's over 10 hours. Suddenly an e-mail signature seem less like a headache and more like something more severe. Business author, Jim Collins, once said that, "Good is the enemy of great. We don't have great schools principally because we have good schools. We don't have great government, principally because we have good government. Few people attain great lives in large part because it's so easy to settle for a good life." The same holds true for change. When things are good or not great but just good enough, it's easy to stick to the status quo. Change is costly, requires effort. So as long as things are good enough, the impetus to switch is muted. But while doing nothing seems costless, it's often not as costless as it seems. The status-quo may seem fine, decent even but compare to something better, it's worse. The difference may seem small, even inconsequential, add it up over time, it becomes quite large. So to change minds then, we need to surface those costs of an action. We need to make it easier for people to see the difference between what they're doing now and what they could be doing. Rather than just focusing on how much better the new thing is than the old, which we often do, that new thing and how great it is, we need to focus on the opposite. We need to highlight how much people are losing by doing nothing. Because as loss aversion shows, losses loom larger than gains. Losing $10 feels worse than gaining $10, and losing efficiency feels worse than gaining it. Seeing how much money or time you're losing by doing something old is going to be more motivating than seeing how much you could gain by doing the new thing, which will make people less likely to stick with that status quo. Frame the right way, even a headache is worth the attention.
