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Overcome Status Quo Bias by Discovering the Best Plausible Alternative

Best Plausible Alternative

Overcoming status quo bias can be a daunting task for leaders.  According to the National Academy of Sciences, people tend to accept the status quo when faced with a complicated decision.  One factor driving this status quo bias is the difficulty of the decision process.  The brain mechanisms involved in making difficult decisions involving a status quo are significant. They operationally define a status quo bias as suboptimal acceptance of a default choice.  This thinking is a narrow framing of the definition, in my opinion. Over time, I believe leaders tend to accept the status quo as optimal more so than suboptimal.  In other words, you adopt the status quo as appropriate.  This logic is the inherent problem for leaders in many organizations.

 [Status quo bias is a cognitive bias that causes us to resist change and adhere to what is familiar. According to the academic literature, most people "prefer to keep the current state of affairs…" and "are reluctant to take action that will change this state." Status quo bias is related to risk aversion. People tend to view the potential for loss by making the change more heavily than the potential for gain. There's also evidence that, when given a choice, we have a bias toward inaction (failing to act) rather than taking decisive action (making a change).]~Dan Solin

I want to introduce you to a process that aids in overcoming status quo bias for your business.  According to Investopedia, a value chain is a business model that describes the full range of activities needed to create and sell a product or service. For companies that produce goods, a value chain comprises the steps that involve bringing a product from conception to distribution and everything in between—such as procuring raw materials, manufacturing functions, and marketing activities.  Michael E. Porter of Harvard Business School introduced a value chain concept in his book, Competitive Advantage: Creating and Sustaining Superior Performance. He wrote: "Competitive advantage cannot be understood by looking at a firm as a whole. It stems from the many discrete activities a firm performs in designing, producing, marketing, delivering, and supporting its product." Understanding your value chain is the first step in overcoming status quo bias.

You must know what you do and how you do it to consider your best plausible alternative (BPA) at every point on the value chain.   When combined with a value chain analysis, the PBA methodology confronts the status quo bias in your organization. Let's take a look at how this occurs.

Think about your own business for a moment.  How often do you reconsider a BPA for its current structure?  If you are going to redesign your business, what is the BPA for how it should be structured?  Like most people, this is a difficult question because status quo bias assumes that your business is structured optimally.  But is it?  What if parts of your value chain are not optimal?

BPA Analysis (as I have coined it) can reassure you or provide enough information to overcome status quo bias.  In a BPA Analysis, leaders intentionally dissect the business into different parts of their value chain. To keep this simple, let's say you identify ten components of your value chain.  You force your team to consider a BPA for each of the ten parts of the chain.  Once complete, you compare the current reality with the alternate BPA.  You are shocked to find out that a different approach has never been presented for many parts of your business.  People are only doing things because that is how they have been doing things.  BPA can be at the macro-business level organizationally or done at the micro-business level for any sub-function.  Here is an example.  You are currently using Microsoft Office for your business.  You pay a licensing fee each year.  Have you considered using Google Docs as a BPA?  Google is free, and it now works seamlessly between platforms.  Why are you paying Microsoft?

Organizationally, how many BPAs are available, and how much value are you wasting because you haven't looked for or considered a different choice? Let's say your team has worked on an acquisition strategy for a couple of months.  The longer they work on the acquisition, the less likely they are to consider a BPA.  The leader's job is to make sure your team sees the possible investment as "A" strategy instead of "THE" strategy.  What if the market has changed?  What if another company is a better acquisition target? 

In my experience, helping people consider alternatives is an influential role of the leader.  People naturally become single-focused over time.  The argument is that it takes too much effort (time and work) to develop a BPA for everything.  But, does it?  Is having a BPA for each part of your value chain twice the work?  I think not.  For most of any discretionary process, the result is the same.  At what point does divergence between two alternatives occur?

The presumption is that divergence occurs early in any process.  However, a deviation may not happen until a final decision.  Which color white select for your kitchen cabinets?  A considerable amount of work has occurred before the paint color decision.  In the end, is it Greek Villa or Alabaster?  You like them both and select Alabaster with Greek Villa as your BPA.  Make sense?  Your choice between alternatives may occur at the beginning, middle, or end.

As a leader, you can develop your team to perform a BPA Analysis by asking questions.  Your sales team is looking for a CRM platform.  They approach you as the CEO for permission to make the purchase.  They pitch a platform by presenting information such as features, performance, and pricing.  You ask, what is the best plausible alternative to this CRM platform?  Resist the urge to overvalue the amount of work invested at this point and approve the expenditure.  Instead, start conditioning your team to consider alternatives. 

When they tell you this is indeed the best choice, ask them to go back and look for the next best alternative.  If we don't buy this platform, what is the alternate solution?  This action forces them to go back to the point of selection (choice divergence).  If they never considered an alternative, that may be the problem.  However, over time they will learn to have a BPA thoroughly evaluated before they approach you for a decision in the future.

What may seem like redundancy to your team is building discretionary analytical skills.  A team capable of thoughtful analysis minimizes status quo bias and groupthink.  You are leading them (by developing them) to become more competent and more analytical.  Alternative thinking is a skill to learn and master over time.  Please do not allow them to become comfortable with one approach or concept too often.