Stuck in Neutral? Agile Managers: Strategies to Tackle the Endowment Effect

Waiting. Still waiting. Ever feel like you’re spinning your wheels while change sits idling in neutral? You’re not alone—it’s a common plight among Agile Managers and Scrum Product Owners. It’s called the Endowment Effect, where people prefer the comfort of the current option even when we know the new options will be better.

Let’s take a simple example: our Quality Assurance (QA) team. They prefer the tried-and-true method of testing software after it’s written, and they’re stuck with hard-to-maintain, screen-recorded test automation.

Understanding the Comfort Zone

Why do they stick to this? It’s familiar, it works to an extent, and it feels safe. The real challenge is that the current approach is overvalued. This is the classic Endowment Effect.

Anything new that we try faces the problem of us giving the existing approach greater value than it has earned.

Highlight the Cost of Inaction

To instigate change, reveal to your team the hidden costs of maintaining the status quo. In the case of a test-later QA group, try highlighting:

• Defects in the Field: Measure the defects that are found post release. QA teams pride themselves on finding problems before customers do. Highlighting the misses shows that the status quo has a price.
• Waiting for QA: Count the number of items queued in front of QA. A test-later approach results in a backlog of untested work. The longer it takes to test an item, the harder it is to find and fix the defects.
• Cycle Time: Measure how long it takes each Product Backlog Item (or User Story) to get from ‘started’ to ‘deployed’. A Waiting for QA backlog of items will balloon the Cycle Time (https://agilepainrelief.com/glossary/cycle-time)
• Test Maintainability: Screen-recorded tests are famously brittle, hard to change, and slow. Find a rough measure of this waste to illustrate the inefficiency.

By presenting these metrics, you can help your team see the compound interest-like cost of sticking to the old ways. Change isn’t just necessary—it’s urgent.

Not to single out QA groups—Endowment Effect can pop up anywhere! Even Agile Trainers and Coaches (I love my index cards).

#YourTurn How have you overcome the Endowment Effect?