What does the Cost of Inaction Really Cost?

Most people don’t truly understand what the cost of inaction is costing their organization. Conversely, it’s quite easy to see what an action is costing them. So how do you bridge the gap? How do you get someone to embrace necessary change when the cost seems so high? Professor and noted author Jonah Berger shares his thoughts that are outlined in his most recent book: The Catalyst: How to Change Anyone’s Mind.

Overcome endowment: Bring the cost of inaction to the surface

“Endowment” is the idea that people are already attached to what they do or have. To overcome that bias, Jonah emphasizes the importance of bringing the cost of inaction to the surface.

The escalation of commitment is this pattern where someone facing increasingly negative outcomes from a decision or an investment—or whatever it is—continues to make those decisions instead of altering behavior. By elevating the cost of inaction to the surface, you are showing them their escalation to commitment.

If you’re just trying to get people to do something, it means they’re not already doing something. You’re just trying to get them to do something new. “But if you’re trying to get them to change, they have something they have to let go and something they have to move to.” It’s challenging, and there are downsides to both.

Uncertainty is all about the fact that humans are neophobic. We are attached to old things. Per Jonah, “That’s where the endowment effect comes in. Things we’re already doing. Products we’re already using. Services we’re already engaging in.” We have a bias towards the status quo.

We tend to stick with the stuff that we’re doing already. In an organization, Jonah points out they tend to keep working on projects they’ve been doing—even if they’re failing. They are unwilling to start new projects because they’re struck by the cost of uncertainty. “We’ve always done it that way” or “It’s not working yet, but let’s give it a little bit longer.”

How can we highlight that what they’re doing already may be good, but not great? Jonah shares an example: There’s some research on injuries, and researchers ask: “Which do you think hurts more, a major injury such as breaking a leg? Or having a twisted knee or back pain?” Everyone says that major injuries hurt more. But the truth is, they’re wrong. Minor injuries hurt more. Why?

Jonah points out that the reason why is not the injury itself—it’s what we do when those injuries occur. When a major injury occurs, you have to do something about it. It’s so bad that you have to fix it. If you can’t walk, you have to go to the doctor. But with a minor injury, it’s not so bad that it requires action. But you live with a nagging pain that may never go away. It ends up causing more pain because you never get it fixed.

If you have cockroaches? You call an exterminator. If you have a few flies, you’re not calling an exterminator, you’re just living with the issue. Jonah points out that the challenge is getting people to see that their “house” is infested with cockroaches. That’s the idea of highlighting the cost of inaction: making it clear that doing nothing is costly.

The cost of inaction is making people realize that doing nothing—that’s the status quo—isn’t as safe as they might think. Jonah states: “Yes, it feels safe. And maybe even in the moment, it’s fine. But over time it’s more costly. And so that’s a way to drive change.”

How to frame the cost of inaction

We often brush off what we can’t change because it will cost too much. We never think about the cost of what we are doing and compare it against the cost of change. You need to make the cost of inaction painful for someone and then compare it to the cost of change.

If the cost of change is less than the cost of inaction, it’s a no brainer, right? It’s like, okay, where do I sign? What do I need to do to make this happen? The cost of change is often very obvious—the cost of inaction often isn’t. The costs of action are big and immediate whereas the costs of inaction are slow and happen over time.

In one of his classes, Jonah shares an example of a large company. Every year, that company is losing 2% of their sales. They’re considering taking on a new line of business, but it will be really costly and expensive. What they forget to look at is the fact that a 2% loss per year will eventually put them out of business. Jonah points out that “It’s much easier to see that big, immediate change, but it’s harder to see those slow drips that eventually make a big bucket of water.”

To hear more of Jona’s thoughts on barriers to change, the cost of inaction, and what the catalysts to change are, listening to episode #153 of the Negotiations Ninja podcast. He shares so much wisdom and practical thought from his years of experience. Don’t miss it!