The psychology of inertia
People are overly attached to status quo. A rule of thumb to get them to change is to make an offer that is 10X better.
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I’m switching to Mac. I love the Apple brand (who doesn’t). Also, while Windows has served me well, users swear the Mac experience will be far superior.
Yet, the decision to change from the status quo was not easy. I watched hours of YouTube videos that confused me even more - some evangelized for Windows and others for Mac.
Once I decided to change, I tortured myself for days (and still am) over which Mac - Air or Pro?
Why is this decision so difficult?
This got me thinking about inertia. As I researched and read, I realized why I felt this way (and why it was also completely normal).
Psychological Law of Inertia:
Our brains are wired for laziness = status quo. We tend to maintain the status quo unless we have a better choice.
We overvalue what we own and undervalue the new. This keeps us committed to the status quo.
As a rule of thumb, marketers can break this status quo bias by offering an alternate that’s at least 10x better (!)
Our brains are wired for laziness = status quo
“A general ‘law of least effort’ (LLE) applies to cognitive as well as physical exertion. The law asserts that if there are several ways of achieving the same goal, people will eventually gravitate to the least demanding course of action. In the economy of action, effort is a cost, and the acquisition of skill is driven by the balance of benefits and costs. Laziness is built deep into our nature.”
-Daniel Kahneman
Our brain is hard-coded to save energy = we are hard-coded to be lazy. And this leads to brand inertia.
Here’s a quick recap of evolutionary biology that explains this.
The human brain processes a humongous amount of data every second. According to Timothy Wilson’s excellent book Strangers to Ourselves, the unconscious part of our brain processes about 11 million pieces of information each second, while the conscious brain only processes 40 pieces.
So, our unconscious brains evolved to balance speed with efficiency so our species could survive - a lightning-fast flight or flight response consumed calories, and calories depended on the luck of that day’s hunt.
Think about how we learned to drive. We had to concentrate hard each time we hit the brakes, turned a corner, or accelerated. But once we get enough practice, the act of driving becomes effortless and goes unnoticed. We arrive at the office without remembering how often we shift gears or press the brakes.
Once we learn any activity, even one as complex as driving, our brain files it in the automatic box - it becomes status quo. In the same way, our unconscious brain hardcodes brand decisions, too.
Our brains value the status quo more than change
Changing to a Mac will require transaction costs, obsolescence cost of my old laptop, and significant learning costs.
But these pale in front of the psychological cost of behavior change - people do not evaluate choices objectively.
This plays out in the form of two main biases.
The “status quo bias”
In a 1989 paper, economist Jack Knetsch described an experiment in which he divided his students into three groups.
Group A got to choose between an attractive coffee mug and a large bar of Swiss chocolate.
He gave Group B coffee mugs but, a short time later, allowed them to exchange their mug for a Swiss chocolate.
He did the reverse with Group C. He gave them the Swiss chocolate and, after some time, gave them an option to switch to a mug.
The results showed that 90% of Group B and C chose to stay with what they were given originally (i.e., they fell in love with the status quo). Group A ( the control group) had almost equal preferences - 56% chose the mug, and 44% chose the chocolate.
The “endowment effect”
Not only do we refuse to part with what we already own, but we also put a much higher value on it than it might command in an open market. That’s the “endowment effect,” coined by Behavioral economist Richard Thaler.
In a 1990 paper, Thaler conducted a series of experiments to prove this.
They gave coffee mugs to a group of people - the Sellers - and asked them to name a price at which they would be happy to sell.
They asked another group—the Choosers- at what price they would be happy to buy said mugs from the Sellers.
While objectively, this was a fair and rational exchange of value - a cup for money. But in reality, the Sellers always demanded at least twice as much for the mugs (e.g., $7.00) as the Choosers were willing to pay (e.g., $3.50).
This gets interesting when we apply the same biases to companies instead of consumers.
Just as consumers overvalue what they already own and do, companies that spend years developing a new product also overvalue it greatly.
As per John T. Gourville in an HBR article, consumers overvalue the benefits of a habitual product by a factor of three, while companies overvalue the benefits of their innovation by a factor of three. This leads to a mismatch of nine to one!
That’s why Intel’s Andy Grove believed an innovation had to be 10x better than the status quo to succeed.
Rule of thumb - 10x better
The best examples of 10x better than changed behavior en masse are from the tech world. Tesla, Space X, and AI are recent examples. Even technologies we now take for granted were, at their time, 10x, maybe even 100x better - MRIs over X-rays, angioplasties over bypass surgeries, laparoscopy over invasive surgery, antibiotics over leeches. The list is endless.
Whether you agree that a Mac is 10x better than a PC or not, the “Mac vs. PC” campaign from 2006 -09 was one of the most successful campaigns of the century and gave Mac a competitive edge without coming across as unpleasant or obnoxious. It also helped position the Mac for every person instead of being a niche laptop for creators and coders.
But what should consumer products, where technology doesn’t offer 10x better benefits, do? I share a framework that might help us unpack this in the next edition.
Until then, let me watch some more videos to understand how Mac is 10x better!
Thanks for reading.
Wonderful. Waiting for the second part. Thanks.