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🏴 Black Friday lesson for Compliance
Why is Black Friday so attractive to many people? Why do people hunt shops and webshops to find the best deals? Why do they ignore the fact that they might not need all these products?
It's because of the "loss aversion" effect.
Loss aversion is the tendency of people to avoid losses. The fear of loss is twice as powerful as the desire to make gains.
Short-term deals, like on Black Friday, tap into this emotion. We get a deep feeling to protect ourselves from the loss of this potential dream sale.
We don't want to lose an opportunity to buy something at a lower price.
That's why we hunt deals.
So what's the Compliance lesson?
In companies, every department needs to seek (mostly) the approval of Compliance to get the final GO for a project:
Sales want to close a deal with a prospect.
Marketing wants to launch a social media campaign.
Product wants to place a new segment on the market.
They all see the opportunity for this new customer, social media campaign or new product segment already. It will make them successful.
But after the hard work they've done (research, business case, multiple meetings, etc.) they suddenly get a No-message from Compliance...
Then loss aversion also kicks in.
Every restriction imposed by Compliance, every delay triggered by Compliance, will be felt like a loss.
And of course, if Compliance says "No" to the project, it feels like a huge loss. (Even though nothing happened business-wise. There was no customer yet, there is still nothing published on social media and no new product has been manufactured.)
The "No" is however not the problem.
That is, Compliance may have no other option than to stop the project or asks for clarification.
You often hear the advice that Compliance (and Legal) should turn a "No" into a "Yes, but". But this will not change a thing: your colleagues are still aware of the loss (which will come after the "Yes, but...").
The result is the same for the project and colleagues will still feel the loss aversion.
The word "No" is not the problem.
It's the timing.💡
Timing matters way more than we think.
If we can proactively inform our colleagues about possible restrictions or obstacles ahead, then our colleagues will not feel that their project is already a done deal.
Define "green lanes":
If their project stays within the green lane, they should not fear a "no" later.
But if from the start the project deviates from the default, they are already warned from the start.
Don't give "loss aversion" a chance to get a grip on your colleagues' emotions.
There is no such thing as the Department of No.
There is only the Department of Bad Timing.
(now get those last Black Friday deals before it's too late!!!)