Why We Undervalue Our Time: The Sunk Cost Fallacy

Over the course of my career in the software ecosystem, I have worked with hundreds of clients across a variety of industries. My involvement centered around helping businesses streamline their processes and become more efficient. But despite the advantages of using technology to automate time-consuming drudgery, I’ve found that many people are reluctant to make a change. I believe this is because people often underestimate the value of their own time.

Legacy workflows have been created which have been passed down from generation to generation. While I have spent the last two decades offering ways to streamline these processes, the common enemy I’ve faced has been the Status Quo (aka Excel Hell). The allure of spreadsheets can be compelling with the promise of infinite flexibility, allowing us to put our exact vision into the computer. Excel is a blank canvas enabling you to turn ideas into reality with a familiar structure. This flexibility turns out to be a problem later down the line when one starts dealing with different versions of a file, mapping, and the structural issues associated with spreadsheets.

But what happens over time is what I call “feature-creep”. Calculations, formulas, lookup arrays, and pivot tables all contribute to solving specific problems, but combining and automating these processes tends to be a challenge. Automation is not Excel’s forte—we tend to rely on human attention to manipulate the data, and this is where the automation chain begins to unravel.

Many hours of time and energy have gone into the Excel workflow, and we have learned to adapt to the quirks of the process. It is for this reason that people are very protective of their huge investment in sweat equity. This is commonly referred to as the “Sunk Cost Fallacy”; in a nutshell, people have invested so much time, energy, and resources into something, that they don’t feel compelled to do a true comparison of the opportunity cost. How much time would one save by changing the way things have always been done, and throwing out the “if it ain’t broke don’t fix it” mentality?

When a scalpel is offered to replace the Swiss Army knife, there are a lot of factors going into the final decision:

  • Will the new application create a solution that will be as good or better than it is currently being done?
  • Will automation mean a loss of job security?
  • What about training and support if I get stuck?
  • If I am a fixed cost, then how can I justify the added expense?

These are but a few of the questions you may be asking yourself, but the decision ultimately comes down to how much you value your and your employees’ time. I have witnessed high-level staff toiling in a cavalcade of weekly, monthly, and annual projects, which could have been tackled by a laser-focused tech stack. It is simply a waste of time and money to continue to toil in legacy workflows when there are much better alternatives.

If you are interested in streamlining your Reporting, Forecasting, or Consolidation workflows please contact me directly at russell@spotlightreporting.com

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