WHEN NUMBERS DECEIVE · TRAP 2

“We have always done it this way” is not an argument for continuing

The cost of change is visible. The cost of standing still is often hidden.

انحياز الوضع القائم · Status Quo Bias

“We have always done it this way.” It sounds reassuring, and it can keep an obsolete decision alive long after its logic has disappeared.

This is status quo bias: our tendency to prefer the current state simply because it already exists, even when better alternatives have emerged.

Continuing often feels safer than changing. But choosing not to change is still a decision, with its own risks and costs.

Familiarity gets an unfair advantage

A company has used the same supplier for years. Prices rise, service declines, better alternatives emerge, and the company’s needs change. Yet at renewal the answer is: “Let’s stay where we are. At least we know them.”

The current option now enjoys an advantage not because it is better, but because it is familiar.

Where does the bias appear?

  • A manual process that could be automated.
  • A weak product retained because it has “always been part of the business.”
  • An organizational structure that no longer fits the company’s scale.
  • A bank relationship, vendor, or system that no one has seriously reassessed.
  • A budget line carried forward each year simply because it was there before.

A visible cost and a hidden one

The cost of change is usually visible. The cost of not changing often stays hidden.

  • We see the implementation cost of a new system, but not the hours wasted every month on the old one.
  • We see the cost of switching suppliers, but not the cost of poor service we have learned to tolerate.
  • We see the risks of a new decision, but forget to ask about the risks of continuing the old one.

Three questions that remove the status quo’s advantage

  1. If the current option did not already exist, would we choose it today?
  2. If this vendor, process, or investment appeared for the first time with the same characteristics, would we approve it?
  3. What is the cost of continuing for three more years, not only the cost of changing today?

Old is not necessarily wrong. But being old is not evidence that it is right.

Sometimes the greatest risk is not changing something stable. It is leaving something unfit in place simply because changing it is inconvenient.

02
Trap 2 in the “When Numbers Deceive” series

Fallacies, biases, and decision traps finance professionals may face.