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.

Mini Episode 24 - Why do we love celebs with dad bods?

Emma from Canberra wants to know why we dread the shred and go jelly for the belly

Dan (00:17):
What's up? Welcome back to another episode of Bad Decisions. I'm your host, Dan Moneheit. Hi from Hardhat, and today we have a question coming to you live, well, not so live. Today we have a question coming to you from Emma in Canberra.

Emma (00:30):
I've seen it more and more in the tabloids, pap shots and social media. It seems that six packs are out. Why do we suddenly love dad bods?

Dan (00:39):

Look, Emma, does it really matter why for once? Can't we just enjoy the simple fact that it is? Cause look, I'm gonna be real with you here as a dad with a bod, I feel like trying to get to the bottom of this is like your kid's trying to get to the bottom of how the tooth fairy works. Like seriously, nothing good can come of this, but ala I have a professional responsibility that I take very, very seriously. And as a professional answerer of these questions, I guess me and my dad, Bo, are gonna be doing this whether we like it or not. So first little bit of background here, just for anybody not living at the bleeding edge of cool the dad, Bo Sported by a celebs like Leo DiCaprio and John Krasinski has become quite the thing. And who am I to complain?

(01:24)
I mean, these guys have got a point. Why hit the gym like you're some sort of freaking Hemsworth when you can achieve similar levels of appeal with some light, double bit of punch, and a smirk that expertly says, Yeah, I know, but also I don't really care. In the largely superficial world of fashion and influence, Dad, bods do seem like an unusual, if not ironic twist. So whether you've got one or you want one, grab your six pack or your six pack, and let's find out why dad bods are a thing. So sitting right in the guts of this question is something called the pratfall effect. Now, the Pratt fall effect is the idea that people who are considered to be highly competent, intelligent, or experts in some way actually become more likable after committing a blunder so long as the blunder is completely unrelated to what they're meant to be experts at.

(02:13)
In 1966, researcher Elliot Aronson in his crew asked groups of university students to listen to a tape recording of a fellow student who they were told was representing their school. In a quiz of academic prowess, the researchers played different recordings, one in which a brilliant student correctly answered 92% of questions, and another in which lousy student fumbled their way to a kind of pathetic 30%. Now, some of the recordings ended at the conclusion of the quiz, while others included a sudden splashing sound and the contestant exclaiming, Oh my God, I spilled coffee all over my suit. From here. The students needed to rate the contestants on a number of attributes. Interestingly, the researchers found that the highly intelligent contestant was considered much more likable when he'd spilled coffee all over himself. Yes, he was smart, but now he was also more relatable. Unfortunately, for Mr.

(03:09)
Mediocre, the opposite was true. Being daft and clumsy was a losing combination. The key to building likability through the Pratfall effect is to stay brilliant at what's important while flaunting imperfections around what's not. I think one of the best examples is things like discount airlines. If you consider Ryan Air, I mean these guys do not joke about the quality of their planes or their pilots, but they do make light of their lack of food service and pretty much any other basic amenities that you might expect from an airplane. It's for this reason. We often find actors more endearing when they're packing a poche midsection. Instead of being out of touch, Lamborghini, driving mega mansion, buying super humans, Dad bods, prove that even big name celebrities can be flawed and lacking motivation just like the rest of us. Q, empathy, relatability, and a whole lot of dad bond directed love in advertising.

(04:02)
Most brands are relentlessly trying to promote the very best versions of themselves, which makes highlighting imperfections a surefire way to stand out. Just remember, exposing your own weaknesses only works if you are already shining brightly in the areas customers expect you to. So there we have it, Emma. That is why we love celebs with dad bods, and you know, who am I to argue? If you are sitting out there listening to this and now remembering do you have a question about a weird or wonderful human behavior that you've observed, shoot it through to me. I'd love to hear it. I'll do my best to answer it. You can get me Dan Monheit or all over the internet. You can email me, ask dan@hardhat.com au. Catch you next time.

Mini Episode 23 - Why do I keep paying for insurance that I never use?

Francis from Carlton wants to know why she feels so unsure about staying insured.

Dan (00:17):
Hey, and welcome back for another episode of Bad Decisions. I'm Dan Moha, co-founder of Hardhat, and today we have a question submitted to us from Francis in Carlton Francis, What you got

Francis (00:29):
After years of paying for monthly car health, life, even pet insurance, I've never had to make a claim. So why do I keep paying for insurance that I never use?

Dan (00:38):
Francis? Francis, Francis, great name by the way. They do say that nothing in life is certain other than death and taxes, but you, my dear friends, seem to have added something else to the mix. All right? And we know it's kind of true. Month after month, the cash just disappears from our bank accounts. Health insurance, when a guy like you never get sick, car insurance went still thanks to Covid. We can't even remember what it's like to fill up the tank. Content insurance when working from home makes it pretty much impossible to get robbed life insurance when you haven't even come close to dying yet. Not even once and on and on and on. It goes without a claim, a benefit, or the need for a safety net anywhere to be seen. So Francis, cancel it. Go on. I dare you. Just live a little.

(01:23)
Why not self-insure? Save all those premiums and just buy a new car or guitar or kidney, if or when the need arises, right? Mm. Didn't think so, right? What if, What if is what we ask ourselves? What if I some crazy chance, a perfect bill of health or flawless driving record takes a magical turn for the worse. We know the likelihood is minuscule and that all those premiums can't possibly make rational financial sense. After all, insurers are pretty good at running profitably, but still we stay month after month payment after payment. The thing that I think is so interesting about this question is that so often in life we choose tangible short term benefits over hazy long term ones. In fact, for those of you paying attention, there is a whole other bias that speaks directly to this Hello temporal discounting. So what is it about insurance then that completely flips the script?

(02:16)
Well, I'm glad you asked because the thing that flips the script is something called zero risk bias. The zero risk bias describes how irrationally strong preference for situations that have absolute certainty. So by and large, we prefer options that eliminate one type of risk completely, even if that increases the total risk that we're exposed to. In other words, we love a sure thing, even if objectively speaking, the sure thing is not the best thing for us. Research conducted by Z Hower, cited by Cardman and Fisi 1979, asked participants to imagine they were playing a game of Russian roulette at good times, right, with the option of paying for individual bullets to be removed from the cylinder of the game. Now, what is irrational, but also entirely unsurprising is that participants who are willing to pay far more to have the final bullet removed to certain life than they were to have the third or fourth last bullet removed, even though the reduction in risk is identical for the removal of each bullet.

(03:12)
Now, one of the biggest benefits of succumb to the zero risk bias is the joy we get from having one less thing to worry about in a world of seemingly endless things to worry about. It is not surprising that we will pay a premium to have one such thing scratched entirely off our lists, which is exactly what happens when we pay our insurance premiums. Sure, we know in our heart of heart that we'll probably never make a claim, but the peace of mind is almost value enough when it comes to selling. Reducing risk is always a good strategy, but if we can remove it entirely, you know, make something zero risk, we will enjoy disproportionate returns. It's no wonder that risk eliminating sales techniques like the money back guarantee that free trial and the post-purchase price match have been around for as long as sales people have to make the most of zero risk bias.

(04:00)
Brands can look for ways to remove risk completely from the product itself. So guaranteed pesticide free to remove risk from the way the product is purchased. You know, cancel any time or remove risk from the outcome that customers are using the product to create. So perfect pancakes or cheaper phone bills, guaranteed. Cause let's be real. Nobody with Tom Cruise likes risky business except you, Francis. And hopefully now you are somebody that likes risky business and has had the question about insurance answered. If you are sitting there thinking about a weird and wonderful human behavior that you've observed, shoot it through to me and I will do my best to answer it. You can hear me up all over the internet at dad mon height, or get me by email and ask Dan Hard hat dot comu. See you next time.

Mini Episode 22 - Why did my pay rise buzz wear off so quickly?

Jenny from Sandringham wants to why her pay rise has left her feeling flat.

Dan: (00”17)
Welcome to The Bad Decisions Podcast. We are tackling life's big and beautiful questions. I'm your host, Dan Monheit, co-founder of Creative Agency Hardhat, and today we have a cracker of a question. This one comes to us courtesy of Jenny from the Block, also known as sandham.

Jenny: (00:34)
A few months ago, I was so excited to hear I was getting a raise, but now I'm already thinking about when I will get the next one. Why did my pay rise buzz wear off so quickly?

Dan: (00:45)
Ah, Jenny, Jenny, Jenny. Look, we have, we have all been there, right? We know what it's like four months. You have pined over what that little bit of extra dosh will do for your happiness. You've imagined that lax restaurant you'll be able to dine at how that magnificent new watch will look on your wrist and how much sweeter that red wine will taste when you're not paying it off in four equal installments. Yet here you are, right post payday 8% richer, but certainly not feeling 8% happier,

Dan: (01:24)
So first thoughts. I mean, I go to the great philosopher, notorious BIG, and he had a lot to say on this know mo money, mo problems and all of that stuff, but maybe there's more to it. I mean, maybe you just don't have the pallet for that fancy Shiraz that you thought you did, or maybe that's sour taste that the back of your mouth is actually just a behavioral bias trying to get your attention . Well, what do you know? There it is behind door number three. It is a behavioral bias and it is something called the focusing illusion. Now, the focusing illusion, this is a super powerful bias. It refers to our tendency to concentrate on a single aspect of our lives or a particular decision to the exclusion of all others. Danny Kahneman, who I'm sure you know by now, the Nobel laureate and unofficial godfather of all things behavioral economics, explains it simply as follows.

Dan: (02:11)
Nothing in life is as important as you think it is while you are thinking about it. I think that's what's repeating, right? Nothing in life is as important as you think it is while you are thinking about it. In other words, whatever you happen to be focusing on has a funny way of becoming the most important thing to consider. So let's cut to the research. In 1978, Brickman Coats and Janov Borman compared the happiness of lottery winners with the happiness of paraplegics and quadriplegics caused by accidents. Both groups were asked to write how happy they are now, how happy they were before winning the lottery or before the accident, and how happy they expected to be in a couple of years from now. Now, it's fair to assume that those who won the lottery would end up far happier than those who'd suffered debilitating injuries, but my friend, you'd assume wrong, millions, richer or physically poorer.

Dan: (03:01)
The researchers found that both groups had a similar outlook on current and future happiness. While focusing on money or one's physical condition makes them feel critically important in the moment, the impact from a major change in either actually dissipates over time as we adapt to our new reality. See, it's worth remembering that paraplegics aren't paraplegics full time. Sometimes they're just people enjoying a meal or reading the newspaper or basking in the sunshine or catching up with friends, and it's exactly the same for millionaires too commercially. We see the focusing illusion at play everywhere. It explains to how the constant talk about airfare prices has got us all feeling travel obsessed. Why a yogurt that suddenly claims to be high in protein magically finds its way into our shopping trolleys and why singles can long to be coupled and vice versa. It is so tempting and so very, very human to believe that there's just one little thing between us and total happiness when in reality it's what we choose to focus on that makes all the difference.

Dan: (04:00)
Whoa, Jenny, sorry to just go all Dr. Phil, Life coach on you, let's bring this back to the Benjamins. Of course, it was a great day when you received that pay rise and from the way you asked questions, Jenny, I bet you really deserved it, but let's be real. We know our attention spans are short and once get that damn pay rise got crossed off your list, it was onto the next thing, wasn't it? And there's no doubt that whatever that next thing is will absolutely, positively, definitely make you happy from here until the end of time. So you go get it, girl. For brands, the focusing illusion provides an opportunity to align what we're selling with what's top of mind for consumers in any product, there are hundreds, if not thousands of details. A customer could focus on identifying what's most important or better yet helping customers decide.

Dan: (04:45)
What's most important will put you in the box seat when it comes time to buy. So there you have it, Jenny. I hope that helps you understand why that pay rise buzz wore off so quickly. But just remember, even if the buzz has gone down, the actual bank balance has gone up. So you should still be very happy and very proud of yourself. Go buy yourself, something nice. If you are listening to this thinking about a weird or wonderful question about human behavior, please shoot it through to me and I would love to try and give you an answer. The best way to find me is all over the internet at Dan Monheit or on all the email you can get me askdan@hardhat.com.au catch you next time.

Mini Episode 21 - Why have I stopped (compulsively) checking my investments?

Jonathan from Lightsview wants to know why he's suddenly less invested in investing

Dan: (00:18)
And welcome to another episode of bad decisions. We're still rolling through this mini episode format, trying to get to the bottom of your weird and wonderful questions about interesting human behaviours. Today's question comes to us from Jonathan in Lightsview.

Jonathan: (00:32)
I used to look at my stocks every day, but now I only check them once a week. I've even hidden the app on my phone. Why have I stopped checking my investments?

Dan: (00:40)
Oh, this one, this one feels real Jonathan, especially this week. Uh, but Hey, let's, let's talk about it. Right? So the day trading slash commodity trading slash cryptocurrency trading game, you know, it is a wild ride Jono, but you already knew that didn't you, you and the 9 million other Aussie investors who truly understand the thrill of the short, the rush of an exotic derivative or the pure unadulterated joy of using your ledger to buy NFT with ether no wonder you've been hitting refresh like a sneaker head on drop day until now, of course see how things are different that folder on your home screen. The one that got all the action in the last 12 months, eh, it's looking a little lonely now, isn't it sure. You're probably just too busy to check where things are at these days. So maybe you've realised that logging in at the wrong time can jinx your balance, which is totally possible, but you know what else is possible?

Dan: (01:27)
It's possible that the smoke alarm batteries will magically recharge themselves, that your sore tooth will fix itself. And that at some point, that weird smell will just kind of go away. Right? Well, let's dig a little deeper today. We are talking about the ostrich effect, which refers to our tendency to avoid negative information. Instead of facing the facts we choose instead to bury our heads in the sand, which fun fact OSTs don't actually do by pretending that the information doesn't exist, we get to hide from the fall out of any bad news and avoid all those unpleasant icky feelings. We fight so hard to keep at bay. The seminal ostrich effect study comes from Carlson Stein and CEPI in 2009, as the world entered a deep financial crisis, the teams did out to study how often investors check the health of their portfolios over a four year period.

Dan: (02:!4)
The researchers found that daily logins were consistently and significantly higher following good news. The market's gone up pre compared to bad news. The market's gone down, Ooh, rationally having the most up to date information, no matter how good or bad helps us make better financial decisions. Emotionally though, it's a different story. Why get reminded about the 150 grand you lost before breakfast? If you don't really have to be for product and services that customers would rather ignore think financial counseling, weight, loss products, prepaid funeral services. You can look at ways to demonstrate how avoiding the issue will actually be far more problematic than confronting it beyond this brands can reframe negatives as positives, removing the I factor and improving permissibility. So think about the impact of switching out guidance through bankruptcy, with achieving financial independence, same service, completely different feeling. No ostrichs required. So there you have a Jonathan that is at least my take on why you have stopped compulsively, checking your investments. Uh, but chin up, they say it's a long game hanging in there. And if you feel like it flick me some Bitcoin, if you don't wanna flick me some Bitcoin, the other thing you can send my way is your questions about weird and wonderful human behaviors. If you've seen something and would like to know what is driving it, shoot it through to me. You can get me all over the internet at Dan Monheit or via email askdan@hardhat.com catch you on the next one.