Don’t Get Stuck – the Dangers of Incumbent Bias

“Let’s just stick to what we know”.

In many ways, that is one of the most dispiriting sentences in the English language. Let’s go back to that same resort we’ve holidayed in for the last 20 years, the restaurant or pub we use every last Saturday of the month, the same old TV programmes.

It stops us having new experiences. It stops us finding better ways of doing things, better goods and services to buy, its stops us learning and developing. That is true in our personal lives; it is just as true in the business world. Firms that don’t innovate and try new things will die eventually.

Yet humans have a natural bias towards not changing – we don’t like risk, and will do quite a lot to avoid it. So in procurement terms, we seeincumbent bias when existing suppliers often go unchallenged and untested for many, many years.

When it comes to contract renewal, too often it just seems easier, simpler and less risky to stick with what you know. That is true even where a supplier is not particularly popular with internal users (or indeed external customers in certain cases). The temptation is often just to avoid risk, hassle and effort and simply roll the contract over for another year – or decade!

We’re not advocating that every supplier is changed every year. But we are suggesting that simply continuing with the current supplier without at least testing the market will in many cases rule out that chance of innovation, new ideas and approaches. Remember, sometimes the bigger risk is nottrying something different.

Not for reproduction

Post by: Koble
10/12/2016