In 1988, William Samuelson (Boston University) and Richard Zeckhauser (Harvard University) published a seminal paper called, Status Quo Bias in Decision Making.

In one of the experiments cited in the paper, two groups of people are given a hypothetical task that involves picking from a selection of different investment opportunities.

In both cases, the groups are told that they are someone who regularly reads the “financial pages”, but that up until recently hasn’t had much money to invest.

Both groups are then told that they have just inherited “a large sum of money” from their great-uncle. This is now where the groups diverge in terms of the information given.

The first group is given a neutral version. They are told they can invest in any of the following portfolios: a moderate-risk company, a high-risk company, treasury bills, or municipal bonds.

The second group is given the same selection of portfolios, but is also given a “status quo selection.” They are told that a significant portion of their great-uncle’s portfolio is currently invested in a moderate risk company. 

(They are also told that the fees associated with an investment change are insignificant and should not be a consideration for this decision.)

What do you think happened?

A number of different scenarios were tested, but as soon as one of the options was presented as the status quo, it became “significantly more popular”.

This status quo advantage also tended to increase as the number of investment options increased. Perhaps people just got overwhelmed by the options and went with the “safe bet”.

This phenomenon has become known as the status quo bias. 

It is one of the reasons why some political offices have term limits. The incumbent bias can make for an uneven playing field. People vote for the name they recognize on the ballot.

And it is one of the reasons why change, in general, can be so unsettling. The countless studies suggest we have an inherent bias towards the status quo irrespective of its objective merits.

P.S. This is what came to mind as soon as I heard people calling the King Street Transit Pilot a “disaster” before the first weekday of its run was even over.

I would like to do a follow-up to yesterday’s post about innovators and creators, because I recently stumbled up the following quote:

“We think of creative people in a heroic manner, and we celebrate them, but the thing we celebrate is the after-effect,” says Barry Staw, a researcher at the University of California–Berkeley business school who specializes in creativity.

It is taken from a Slate article called: Inside the Box – People don’t actually like creativity. And it’s supported by a bunch of research, including a 2010 study conducted by professors at Cornell University, the University of Pennsylvania, and the University of North Carolina.

The key finding was that people generally hold a bias against creativity, and it’s activated when we become motivated to reduce uncertainty. This might be because we fear rejection or because we’ve come to learn that reducing uncertainty and promoting the status quo is often better for career advancement. 

There’s less perceived risk.

But here’s the thing: celebrating creativity after the fact is meaningless. There’s no genius in that. Everyone now knows this truth. The heroics come into play when you’re both willing to be misunderstood and willing to be dead wrong.

Of course, talk is cheap. 

Here are 5 suggestions for promoting greater creativity at your company taken from Tom Tunguz’s blog, who himself is borrowing from Barry Staw (author quoted above):

1. Hire people who’s skills aren’t precise matches for the needs of the company.
2. Encourage employees not to listen blindly to corporate policy and conventional wisdom; not all to speak with the same voice.
3. Those in power should go as far as possible to encourage active opposition to ideas. (Similar to Drucker’s obligation to dissent).
4. Optimize for adaptiveness. Have extra labor capacity and explore side projects. (How many creative companies started or were reinvigorated by side projects? Twitter and Slack are two that immediately come to mind).
5. Lead rather than follow. Take risks.

In 1988, William Samuelson (Boston University) and Richard Zeckhauser (Harvard University) published a seminal paper called, Status Quo Bias in Decision Making.

In one of the experiments cited in the paper, two groups of people are given a hypothetical task that involves picking from a selection of different investment opportunities.

In both cases, the groups are told that they are someone who regularly reads the “financial pages”, but that up until recently hasn’t had much money to invest.

Both groups are then told that they have just inherited “a large sum of money” from their great-uncle. This is now where the groups diverge in terms of the information given.

The first group is given a neutral version. They are told they can invest in any of the following portfolios: a moderate-risk company, a high-risk company, treasury bills, or municipal bonds.

The second group is given the same selection of portfolios, but is also given a “status quo selection.” They are told that a significant portion of their great-uncle’s portfolio is currently invested in a moderate risk company. 

(They are also told that the fees associated with an investment change are insignificant and should not be a consideration for this decision.)

What do you think happened?

A number of different scenarios were tested, but as soon as one of the options was presented as the status quo, it became “significantly more popular”.

This status quo advantage also tended to increase as the number of investment options increased. Perhaps people just got overwhelmed by the options and went with the “safe bet”.

This phenomenon has become known as the status quo bias. 

It is one of the reasons why some political offices have term limits. The incumbent bias can make for an uneven playing field. People vote for the name they recognize on the ballot.

And it is one of the reasons why change, in general, can be so unsettling. The countless studies suggest we have an inherent bias towards the status quo irrespective of its objective merits.

P.S. This is what came to mind as soon as I heard people calling the King Street Transit Pilot a “disaster” before the first weekday of its run was even over.

I would like to do a follow-up to yesterday’s post about innovators and creators, because I recently stumbled up the following quote:

“We think of creative people in a heroic manner, and we celebrate them, but the thing we celebrate is the after-effect,” says Barry Staw, a researcher at the University of California–Berkeley business school who specializes in creativity.

It is taken from a Slate article called: Inside the Box – People don’t actually like creativity. And it’s supported by a bunch of research, including a 2010 study conducted by professors at Cornell University, the University of Pennsylvania, and the University of North Carolina.

The key finding was that people generally hold a bias against creativity, and it’s activated when we become motivated to reduce uncertainty. This might be because we fear rejection or because we’ve come to learn that reducing uncertainty and promoting the status quo is often better for career advancement. 

There’s less perceived risk.

But here’s the thing: celebrating creativity after the fact is meaningless. There’s no genius in that. Everyone now knows this truth. The heroics come into play when you’re both willing to be misunderstood and willing to be dead wrong.

Of course, talk is cheap. 

Here are 5 suggestions for promoting greater creativity at your company taken from Tom Tunguz’s blog, who himself is borrowing from Barry Staw (author quoted above):

1. Hire people who’s skills aren’t precise matches for the needs of the company.
2. Encourage employees not to listen blindly to corporate policy and conventional wisdom; not all to speak with the same voice.
3. Those in power should go as far as possible to encourage active opposition to ideas. (Similar to Drucker’s obligation to dissent).
4. Optimize for adaptiveness. Have extra labor capacity and explore side projects. (How many creative companies started or were reinvigorated by side projects? Twitter and Slack are two that immediately come to mind).
5. Lead rather than follow. Take risks.