D.I.Y. or die trying - Build vs. Buy bias in regulatory technology

Buying regulatory technology is a little different than assembling IKEA furniture but then there's effort justification and the sneaky mental trap that makes decision making messy.

Effort justification is a sneaky mental trick that makes us value things more just because we worked hard for them. Imagine spending hours assembling a piece of furniture from scratch. You’re covered in sweat, swearing at instructions in every language but sense, and when it’s finally done, you look at that wobbly table like it’s a work of art. You know you could have bought something sturdier and nicer and fully assembled, but you’re attached because of all that effort you put in. That’s effort justification, part of the psychological phenomenon known as cognitive dissonance, at its finest.

Now, let’s flip this to the corporate world, especially in those high-stakes “build versus buy” decisions in regtech projects. Here’s how it goes - companies often think building an in-house solution will be better, because, well, it’s customised, and you’ve got your best team on it. But here’s the catch, they might be overvaluing the build option simply because of all the blood, sweat, and tears that go into it. That “we did it ourselves” feeling can cloud judgment, making the build option seem shinier than it really is, even when there’s a slick, ready-made solution just sitting there, waiting to be picked up.

Why does this happen? Effort justification feeds into our deep-seated need to feel like our hard work pays off. Nobody wants to admit that all those late nights and tight deadlines might have been avoidable. So, we keep pushing for the custom solution, convincing ourselves that it’s the only way to go even when buying could be the smarter, faster, and cheaper option.

The problem is, when we fall for effort justification, we’re not just valuing effort over outcome,  we’re doubling down on it. Companies can end up in a vicious cycle of justifying past decisions rather than making the best decisions for the future. And the more effort that’s sunk into a project, the harder it becomes to see things clearly. The build option, while initially appealing, often leads to missed deadlines, overblown budgets, and solutions that don’t quite hit the mark. It’s easy to overlook that buying something off the shelf doesn’t just save time and money, it can often mean adopting tried-and-tested solutions with a team of experts behind them.

So, how do we break free from the effort justification trap? First, let’s get real with some hard numbers. A thorough cost-benefit analysis is key, but it can’t just be about the dollar spend. You’ve got to factor in the human cost, the time, the stress, the potential burnout. Plus, there may be a reason to add some additional weight to the  project – yes, it’s time to add in the cost of a consultancy firm.

Ultimately, understanding effort justification can help decision-makers cut through the noise. It’s about keeping the focus on what truly matters, about getting the best results, not just justifying past efforts. In the end, a bit of self-awareness and strategic thinking can save you from pouring time and resources into something that’s more about pride than practicality. So next time you’re contemplating a big decision, ask yourself if you are valuing it because it’s good, or just because it was hard?

Remember, the goal isn’t to prove your hard work was worth it,  the goal is to make the smartest, most effective decision for the future. Whether it’s build or buy, custom or off-the-shelf, the real win is in choosing the path that brings the best results. So, keep your eyes on the prize, not the effort it took to get there. And hey, maybe leave the IKEA hacks to the weekend.