Doorman fallacy

Behavioral economics, marketing

Rory Sutherland, one of the great thinkers on behavioral economics and consumer psychology, explains the "doorman fallacy" as a seemingly reasonable cost-saving strategy that ultimately fails due to a disregard of the unmeasurable.

If you understand a doorman simply as a way to open the door, of course you can yield cost-savings by replacing him with an automated system. But if you understand a doorman as a way to elevate the status of the hotel & create a better guest experience (hail taxis, greet guests, carry bags...), then you realize the full role of the doorman cannot be replaced with an automated system.

Another example: consider a big tech company, who amid financial pressure, decides to cut spending on free lunches, bus transportation to work, on-site massage or other benefits. On paper, the company can quickly generate a hefty cost saving, but they might fall victim to the doorman fallacy. The short-term cost savings come at the expense of a brand as an employer who provides unrivaled employee perks and places employee satisfaction over investor satisfaction, and the long-term damage to attracting new talent and retaining current employees may cost the company a lot more in the years to come.

You can think of the doorman fallacy as an extension or example of the Chesterton's fence fallacy: getting rid of the fence (doorman) without fully understanding why it was there in the first place.

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