So far, we've talked about three key barriers the Catalyst need to overcome. We've talked about reducing reactants, easing endowment, and shrinking distance. Now, we'll talk about the fourth key barrier we have to mitigate. To change minds and drive action, we have to figure out how to ease uncertainty. Whenever it comes to any sort of change, there's always switching costs involved. Take buying a new phone, for example, or a new car, you have to pay money to get that new item. Think about installing a new software potentially at work or at a larger system, it takes time and effort to do that. Each of these is a cost involved in doing something new, there's extra money, extra time, or extra effort involved to do something new compared to doing what was done already. And, obviously, people don't like these costs, that's one reason change is so difficult, right? We don't like paying money or putting in time or effort, but there are a couple more reasons that makes switching costs even more challenging. First is when those costs and the benefits occur. Think about getting that new phone, for example, well, the costs are always right away, you have to pay the money before you get the new phone. Same with new software, you have to spend that time installing it and figuring out how to integrate it with the old systems before you get to figure out whether it actually works. If you think about the cost of change and the benefits of change, there's always what's called a cost-benefit timing gap. Costs are usually now or upfront and benefits are often later, we have to wait to get a benefit and we have to have the cost now. Now, obviously, that's not something people like, think about that in our personal lives, for example. We all know we should eat healthier, right? We should eat more spinach and kale and flaxseed, yet we don't, we want to eat a cookie now and a cake now and maybe save the healthy stuff for later. We want the benefits now and the cost later, and so that cost-benefit timing gap is one thing that makes change difficult. But there's a few more layers to add on to that, think about certainty and the uncertainty of those costs and benefits. Sure, costs are now and benefits are later, but even worse, costs are certain and the benefits are often uncertain. Sure, there's a cost of that new phone but that cost is very certain, to buy that new phone, you have to pay up to $1,000 to install that new software. You have to take hours of your time to do it. All those costs are very definite and they're real and they might even get larger. Well, the benefits are often quite uncertain, I don't know whether that new software is going to be better. Am I going to like that new phone more, is the car going to give me more room and drive better than the car I used to have? I have some sense about those things but I have uncertainty, and people really don't like uncertainty. Think about for a moment the last time you were worried about say missing an important meeting. Maybe there was a late flight or you were stuck in traffic and you weren't sure if you would make the meeting or not. If you're like me, you probably felt pretty anxious, right? Think about how anxious and upset you might feel, am I going to miss that meeting, am I not going to miss that meeting? Or think about all the consequences if you did miss that meeting, it feels pretty bad. Now, contrast that for a moment with what happens once you know that you've missed the meeting, right, you're so late that you're sure you're not going to make it. Well, objectively, missing the meeting is clearly worse than not knowing if you're going to miss the meeting, right? The worst thing that could happen when you're uncertain if you missed that meeting is missing the meeting. Yet somehow, weirdly, when you know you're going to miss the meeting, you feel better, right? Having the chance to make the meeting is objectively better off but it feels worse when we don't know. Why, because uncertainty, when we don't know whether we're going to make the meeting or not, we have that anxiety. Great example of this, on a television show recently, someone lost a bet and as a result they had to get slapped and they had a choice. Do you want to get slapped ten times in a row now or one time later, but they wouldn't know when that later would be. And, of course, the character said, well, god, I don't want to get slapped ten times now. One time is a lot less bad than ten, I'll take one rather than ten, and so they took the uncertain slap later, but then they spent the entire episode wondering whether they were going to get slapped. And that's a silly example, but that again shows that cost of uncertainty, we really don't like uncertainty. Let me give you one more example of the cost of uncertainty, there was a study that was done at Stanford University a number of years ago. It was running on some students and they were told that, it's the end of the semester, that they just took a tough exam. They feel tired and run-down and they find out that, congratulations, you passed that exam. So you're feeling pretty good, now you have the opportunity to buy a very attractive 5-day Hawaii vacation package at a pretty low price, the offer expires tomorrow, though. Would you buy the vacation package, not buy the vacation package or decide later? It's a pretty simple choice, right, you passed the exam, you're feeling pretty good about yourself, why not buy that vacation package? It's a nice reward, go ahead and buy the package. And indeed, that's what most people did, they went ahead and bought the vacation package. But there was a second group of people that got a slightly different scenario, same situation, same end of the semester, same tough exam, same feeling of tiredness and run-down. But you take that exam and, unfortunately, sorry to tell you, but you failed, right? Now, you do have that opportunity to buy very nice Hawaii vacation package, same price, it expires tomorrow. Would you buy the vacation package, not buy the vacation package or decide later? Now, people found out they failed the exam, didn't feel very good, and they were faced though with the same choices, thinking well, look, I can't take the exam right away. I'm feeling pretty tired and rundown anyway, I got to wait till next semester to retake it. Most people decided, well, why not buy the vacation package, right? I don't feel good, anyway, I'll go to Hawaii, I'll lick my wounds, and I'll come back later. And so if they passed, most people said buy the vacation package and for other people who were told they failed, most people decided to buy the vacation package. But there was actually a third condition that's a little bit more interesting, Imagein you took that same exam, you feel tired and rundown, but you don't know yet whether you pass or you fail. You'll find out tomorrow, and before tomorrow happens though, you have this opportunity to buy that attractive Hawaii vacation package. What do you want to do, do you buy it, do you not buy it or decide later? Exactly the same situation, exactly the same choices, but now there's uncertainty. You don't know whether you passed and you don't know whether you failed. Now, you guys are pretty smart, you can think about decision trees, think about both branches of that decision tree. If you pass you go on vacation and if you failed, you go on vacation, so even if you don't know whether you passed or failed or not, what should you do? Well, you should go on vacation, right, it's pretty obvious. Either way, you would want to go on vacation, so why not buy the vacation package? But what do you think, do you think that's what people did? Well, as you can guess, they didn't, they decided to decide later. Or very simply, uncertainty made them hit the pause button, right? Whenever there's uncertainty, whenever we don't know how something's going to turn out, often both the anxiety around it and that feeling of uncertainty leads us to do nothing. Whether we're trying to change the boss's mind about a new project at work, whether trying to change a client's mind about particular sale. Even in our personal lives, whether we're trying to change our spouse or our neighbor's mind, any time we're trying to get them to do something new. There's often uncertainty around that new thing and whenever people feel that uncertainty they go ahead and they hit the pause button. Now, the pause button is fine for the status quo, the pause button is fine for whatever they were doing already because people just stick with what they were doing before. But the pause button is terrible for change because people are uncertain about doing something new, and they stick with the old thing rather than doing something new. And so the question very simply is how do we get people to unpause, how do we get them to overcome that sense of uncertainty and be willing to move forward?
