A Letter from Chris Suarez
THE PANTS FROM PARIS
As I prepare for an upcoming move I find myself cleaning out, clearing out, and throwing out as much as I can. I need very little to live, to be happy, and enjoy my days. There were a few things however that I found myself struggling to get rid of. The attachment to one pair of pants I have referred to as “The Pants From Paris,” seemed completely irrational and out of character so I began to do some research. I came across a fascinating study that is the basis for my letter to you this week. In order to get the full impact of the study, let me tell you a story.
A few years ago I took the family to Europe for the summer. While there, we spent a few weeks in Paris. I had planned a series of experiences for the girls, or more accurately, they had planned a series of experiences that I would tag along for. One such planned meal was lunch at Frédéric Anton’s, Le Jules Verne, atop the Eiffel Tower that we prepaid for.
We were staying in the 3rd arrondissement (district) of the city, one of my favorite neighborhoods. When we woke up the morning or our reservation, we learned that it was going to be an abnormal 90 degrees by mid day. Our plan was to be out and about that morning and head straight to lunch after a tour at Musée d'Orsay. The Eiffel Tower sits in the 7th arrondissement and I always walk, as seeing cities by foot is a favorite pastime. This would be a fairly long walk.
Needless to say, walking around Paris in 90 degrees with long pants was not my idea of an experience. I confirmed with my wife multiple times that as long as I had slack-style shorts and closed shoes, I would be let into the restaurant for lunch. (I promise this will not be an “I told you so" story.) Well, we arrived at Le Jules Verne 45 minutes in advance. Upon arrival the maitre d’ seemed fairly appalled by my shorts, and notified me that I would not be let up without dress pants. Now I consider myself a fairly decent negotiator, but five minutes into an attempt to negotiate access to the restaurant with shorts it was clear that was going to be a dead end. He told me in a very vague description where the closest mens shop was and I left the family while I ran to buy a pair of pants.
Forty minutes until our reservation.
It took a bit of running, yes in 90 degrees, until I found a mens shop…a small boutique with suits, dress shirts, ties, and slacks. I hurried in to find the shop owner who only spoke French. Thru description and pointing to my watch I was able to communicate that I needed some slacks immediately to purchase. I am quite certain that only 80 year old rich French men had ever stepped foot in this shop, by both style and pricing.
Twenty five minutes until our reservation.
I found the only pair of pants that looked remotely acceptable on the hangar and rushed to try them on. Every pair of pants in the shop came un-tailored and un-hemmed, so she quickly pinned the legs but I told her the wait and rest of the pants would have to do. I had about five minutes before I had to run back to get to the Eiffel Tower and meet the family for this "incredible lunch experience”. Needless to say, when she came out with the hemmed pants (and I do have to acknowledge that she was a pretty quick tailor) I was going to be the proud new owner of grandpa pants.
Fifteen minutes until our reservation.
She went to ring me up at the cash register and gave me a number that certainly couldn’t have been accurate. I looked again, I did the currency conversion two or three times in my head, then twice on the calculator. Yes, the pants were $215 and the expedited hem would be an additional $55. I had just purchased $270 lunch pants that I'd prefer not to be seen dead in.
Ten minutes until our reservation.
There was no time to argue so I ran back to the Eiffel Tower with pants in hand…now sweat dripping from Im sure every pore on my body. If they were worried about my shorts before, Im sure they were worried about how I looked now!
My frustration of the unfolded events was at an all time high. So when the maitre d’ told me that the only restroom was up at the restaurant, however he could not let me into the elevator without long pants on, and I should have changed before arrival, I did what anyone would have done. I unbuckled my belt, apologized, and let him know that I didn’t just spend almost $300 on pants and had pre-paid over $500 for the lunch, to be told I could not go up for our reservation. I would gladly change into the slacks in the lobby in front of everyone dressed in their fancy outfits…or he could allow an exception, have me ride the elevator, and I would put on my brilliant slacks in the restaurant bathroom. He opted for the latter…and lunch went off without a hitch.
Now, here is the lesson. While having lunch it sunk in just how ridiculous the pants really were. Try as I may to find humor in the events over the past hour, I could not. And I convinced myself I needed to go back to the mens shop, and have her re-tailor the pants when she had more time…take in the oversized waist, taper the potato-sack like legs, eliminate the pleats…So after lunch I went back, explained my requests, and promised to pick the pants up the very next day, as it was to be our last day in Paris. I couldn’t see spending that much on a pair of pants if I would never wear them again. So begrudgingly she agreed to re-alter the pants (for a small fee) and I promised to pick them up the next afternoon.
At risk of this being the longest letter ever, I'll just share with you that the next day I missed a visit to Notre-Dame with the kids since I had to walk back a little over an hour to pick up these pants…and then walk another hour back to meet up with the family again. Another three hours of my trip invested into these "Pants From Paris.” Keep in mind, no amount of tailoring, altering, hemming, cutting, or de-pleating would make this pants remotely wearable. I took the pants back to the home we were renting in the city and threw them into my suitcase.
Fast forward three years and these pants continued to hang in the closet. Not because I don’t clean my closet regularly. Not because I collect things. Not because I am emotionally attached to “things” that I find myself just unwilling to throw away. But something about this pair of pants has caused me to keep them hanging in the closet…as if one day I would choose to wear them.
Enter an article written in the mid-80’s by psychologist and professors Hal Arkes and Catherine Blumer.
Their goal was to unpackaged why we often times either make odd decisions or oddly do not make decisions even when the right decision seems obvious to others. They found that humans often times fall into a trap which they labeled as the “sunk-cost effect”. Humans tend to continue down a path or stay committed to a behavior if they have invested money, effort, or time into that path already. This becomes a cognitive bias.
Money. Effort. Time.
I had all three of those invested in that pair of pants. I spent over $300 on those pants by the time I picked them up. I had run in 90 degree heat and was on a stressful deadline to find those pants. I had invested over 5 hours of my time into those pants. Because of those three things I was cognitively unwilling to get rid of them. Keeping them was completely illogical. But I had invested too much money, effort, and time in order to just walk away.
When we fall into the sunk-cost effect, we wind up committing ourselves to activities, business strategies, or even increased investments into things that we may ultimately know is not the best plan of action. I spent more money fixing pants I knew I wouldn’t wear. I spent more time going to pick them up.
Worse than that, we often let better opportunities, more strategic options, or even possible future partnerships slip by because we are too committed to what we have already spent time on, put effort into, or invested money in. Its too hard to walk-away or make a necessary change. We do this with business plans. We do this with product development. We do this with relationships.
Anytime we have invested in something we feel obligated to use that thing, even if a better option comes along. Perhaps you've spent money on a hotel room at the beach or a cabin in the woods for this weekend. Then a friend invites you to a party that promises to be a good time. You opt out of the party simply because you already put a deposit on the hotel room. On paper, a night partying with friends is priceless…but that $99 deposit seems too big of a commitment to walk away from.
So how do we break this sunk cost bias and assure ourselves that we aren’t continuing down a path simply because we already have too much money, effort, and time attached? How can we counteract this cognitive bias?
The simplest way is to look at the decision in front of you from an “external point of view”. Arkes and Blumer wrote about how we often make better decisions for others than we do even for ourselves. We are better advisors to others than ourselves. As we look at our situation from an external point of view, things can often times get clearer.
Any one of my friends would have told me to just throw those pants away. In fact, a few had. My wife told me to get rid of them at least 30 times over the past three years. When making external point of view decisions we are able to step out of emotion and not allow our previous time, money, and energy investments factor into our decisions making.
We all have certain things in our life where we are applying a cognitive bias, where the sunk cost effect prevents us from making good decisions. This bias puts our decisions making skills at a disadvantage. One of the greatest disadvantages is missing out on other opportunities because we were too stuck on strongly held beliefs.
Many of my partners had to let go of ways they used to do business. Many had to change their economic models. They changed their lead generations strategies. They changed their coaching playbooks. Everyone had money, effort, and time into all these things from the past. Incredibly, being willing to break possible sunk cost biases, has led almost every one of my partners to be on pace to double the size of their business this year, and in some cases more than double their profit. Partnering felt uncomfortable. Partnering felt like a risk.
Don't get caught in the sunk cost fallacy. Stop doing the wrong things. Start doing the right things.
Challenge you past activities. Question your future commitments. Be willing to eliminate the ego attached to the money, effort, and time we have invested in unproductive or unfulfilling businesses. Be open to the right partnerships.
Quick Update: The "Pants From Paris” are now someone else’s "Pants from Goodwill”.
Break The Bias,
Chris