Mini Episode 25 - Why do good companies stay with bad software?

Liam from Albert Park wants to know why bad software is wearing us down.

Dan (00:17):

Hey, hey, hey. What's up? Welcome back to another episode of Bad Decisions, where we try to get to the bottom of your curly questions today. Got a great one. Love this question. Liam from Albert Park. Talk to me. What do you got, Liam?

Liam (00:31):
I just landed my dream job, but their old email system, it's a serious nightmare. Why do great companies stick with bad software?

Dan (00:41):
Uh, seriously, Liam, it's not just you. This absolutely kills me, right? You and I both know that in this day and age, there is no reason to be running old crappy software. Yet everywhere we look, there are businesses held together by a mash of Excel spreadsheets, entire organizations that they're still stuck on Internet Explorer eight and people using Lotus Notes for email. What the actual hell? Yes. Okay. True. There is a small degree of retro chic that comes with running a payroll or workflow management system from the Cold War era, but no amount of retro and no amount of chic can compensate for the daily pain and misery that these systems bring everybody who touches them. So why not change? I mean, after all, nothing's as progressive forward thinking business, more than pivoting, going agile and transforming preferably all at the same time. Change has been preached and praised throughout the ages to improve is the change.

(01:37)
That was Winston Churchill be the change you wish to see in the world? Mcg Gandy, a wise man changes his mind, a full never will. Icelandic proverb, everybody lies about change. That's from me. Cause everybody does. Everybody lies about change because of the status quo bias. So we are told we're meant to love change. We're told we're meant to relish it, to seek it out, to chase it down and roll around in the pure joy of it. But for the most part, having to change is just plain annoying, which is why our status quo bias does such a great job of helping us avoid it. You see, status quo bias refers to our preference to stick with whatever is known, whatever is familiar, whatever maintains the current state of affairs, even if that current state of affairs is not the best state that it could be.

(02:25)
When it comes to the research, it is tough to go past the 1988 experiment from Samuelson and Zack Houser, where participants were asked to imagine their well versed in the financial news and had just inherited a large sum of money from their great uncle, who I'm sure they were very sad to hear, had theoretically just passed away rest in pace. The participants were presented with two scenarios. In the first scenario, they were given the option to invest the money in any way. They liked to cross four different options, a high risk company, a moderate risk company, municipal bonds and treasury bills. In the second scenario, the participants were given the exact same investment options, but were also told that their dead great uncle again, rest in peace, already had a large portion of the portfolio invested in the moderate risk company. Lo and behold, researchers found that when presented with the second scenario, a much greater proportion of participants chose to stick with their late great uncle's strategy and therefore maintain the status quo.

(03:24)
From a rational perspective, this makes no sense at all, especially when we consider that the right investment strategy for an old and now dead uncle is unlikely to be the right investment strategy for our recent inheritance. Nevertheless, the status quo prevailed. Our desire to maintain the status quo is so strong that it overrides the logical possibility or even high likelihood of a better outcome. The status quo bias is in part the reason why many of us live with our parents way longer than we should have. Why we always take the same suboptimal route to work, or while we still own a vastly inferior iPhone seven crack screen and all. When we look at switching software in a commercial setting, it's easy to see why Windows 98 is still getting airplay. The potential upsides for the person driving the change are a little more productivity and nicer interface and some marginal cost savings for the business.

(04:17)
If it all goes well and they get lucky, they might even get a glowing performance review, a small promotion, maybe even a salary bump. However, if things go badly, they will forever be known as the person who brought the entire company to a grinding halt and blew millions of dollars on a catastrophic project that ran 18 months late. They'll be fired, then they'll be broke, then they'll be homeless, then their family will leave them, or because they try to give their colleagues a better browsing experience. So let's just stick with what we've got then. Hey, for brands trying to convince customers to make a big switch, reframe the situation to demonstrate how not changing is actually the biggest risk of all. When they do decide to come across, ensure you've got everything in place to make that switch as smooth and simple as possible. And if you want a really good example of this, check out the next time DocuSign case study on the hardhat website.

(05:10)
But that's just a special treat for you. Liam, I hope that answers your question of why good companies stay with bad software. If you have got a question or an observation about a weird or wonderful human behavior and you would like me to try and get to the bottom of it, please shoot it through. You can get me at askdan@hardhat.com au or hit me up at @danmonheit all over the internet. Believe it or not, ladies and gentlemen, that is it for 2022. Thank you so much for joining me. It has been wild, wonderful, interesting, and entertaining for me, and I hope it's been the same for you. Take care of yourself over the break if you're having one, and I cannot wait to catch you for some more weird and wonderful questions and answers in the new year. Take care.