5 Ways to Avoid the Planning Fallacy
One of the hardest leadership lessons to grasp is how to plan effectively. It’s a lesson we humans seem to struggle with in all aspects of our lives. We think we can plan well, but the truth is we can’t. Psychologically, part of the problem may be that we all want to “under promise and over deliver.” But we often hurt ourselves by wildly underestimating the time it truly takes to complete certain tasks and projects, thus, in essence, devaluing them. This is where the “planning fallacy” comes into play.
The planning fallacy is the tendency to underestimate the time it takes to complete a task.
We’ve all seen many examples of the planning fallacy in action. The Denver International Airport was completed 16 months later than estimated and 2 billion dollars more than the planned budget.. The Sydney Opera House took 10 years longer than expected and cost almost 15 times more than forecast.
But it’s not only the big projects that routinely suffer from the planning fallacy: If you’ve ever had remodeling work done, you’re intimately familiar with it. In fact, the planning fallacy pervades even our most common promises to ourselves and others. It’s as simple as planning to get your work “to-do” list done before the weekend or tackling a long “honey-do” list over vacation . . . and only being able to finish the bare minimum, if that.
Why does this happen?
According to researchers such as Kahneman & Tversky (who developed the theory in 1979), Buehler, Griffin, & Ross (1994), Kruger & Evans (2004), Sanna, Parks, Change, & Carter (2005), and numerous others, the main reason seems to be our propensity for optimism. We present the best-case scenario, even when we’re asked to present the realistic one. And what usually happens is closer to the worst-case scenario.
Keep these other characteristics of the planning fallacy in mind:
When we think about how long something is going to take us, we get selective amnesia about how long a similar task took in the past.
Planners tend to recall the successful elements of past projects rather than the failures. This leads us to focus on an unrealistically optimistic future.
We perceive the new task as unique, though it probably shares numerous characteristics with past projects.
The planning fallacy is amplified in groups, possibly because we want to appear at our best in order to get funding or peer approval.
We tend to focus on the overall task and its benefits rather than all its individual – and necessary – parts. So, we overlook key actions we should consider when predicting how long a task will take.
Monetary incentives often increase the likelihood of us underestimating the amount of time required for a task.
A sense of perceived power in a situation causes us to focus inordinately on the best-scenario outcome and ignore other important information.
So, what can we do to push back against the planning fallacy?
Research suggests the following may be helpful:
Start by asking, "How long do tasks like this usually take people?"
Take the “outside” rather than the “inside” perspective whenever possible. As a leader, you may be looking at the Big Picture in wanting to get a client or project, but if your project manager on the ground says it’s going to take twice that long, it probably is.
Focus on three specific obstacles to a task. This forces you to face Murphy’s Law and consider what might happen. Your undue optimism fades and you look at timelines more realistically.
Frame deadlines in a more negative time frame to decrease the planning fallacy among groups. For example, say “We only have X amount of time left to finish this project,” rather than “After today, we still have X amount of time to finish this project.”
When you need to make big projections, do your research! Get and use data from comparable efforts to help ground your timeline projections.
Most of all, we should remember the words of philosopher/writer George Santayana: “Those who cannot remember the past are condemned to repeat it.” Originally published on the EPI blog in 2014. Updated in 2018.