How to Overcome the Planning Fallacy
A mistake many business leaders fall victim to is a phenomenon that economists call the “planning fallacy”. This term describes our universal human tendency to underestimate the amount of time it takes to complete Projects and Complex Tasks.
My experience is that things never go as planned. Let’s face it, “S… happens!”
But time and time again, I see business leaders create Projects and Sub-Tasks with due dates that are far too optimistic. This invariably leads to Tasks not being completed on time, and the due date for the overall Project being overshot by a considerable margin. Making progress visible using a software dashboard makes this phenomenon very obvious.
Let’s face it, it’s no fun staring at a list of overdue Tasks and seeing your Project fall behind schedule, yet I’ve seen clients do it to themselves week after week, feeling like failures, and the managers ignore the issue by pretending that it isn’t happening.
Psychology plays a part in perpetuating this error. Salespeople are likely to underestimate the implementation time of a Project in order to close large deals with customers. Employees are likely to agree to optimistic due dates for Projects and Tasks because they want to please their manager, whether or not they are fully committed to the deadline.
Managers perpetuate this error when they let their people off the hook for failing to get Tasks done on time. When the manager fails to hold people accountable the pattern gets repeated over and over. People keep putting down unrealistic due dates and fail to keep their commitments to the team, and the Project Manager fails to achieve the overall goal on time. You create a culture where broken promises and a lack of accountability become the norm.
Here is the advice I give to my business coaching clients:
Don’t guess. Scope it out.
Where possible, list all the big critical Tasks upfront and estimate how long they will take. This will give you your first due date estimate for the Project, which is a best-case scenario. (Hint – it will be wrong). This step may not be possible if your Project is creating something completely new or unknown.
Studies have shown that people are poor at calculating the probability of single events, let alone compound probabilities. Many professional Project Managers say it’s not enough to simply add an additional 20% or 40% to your original time estimate. For large, complex Projects, whatever your initial time estimate is, the experts recommend you should double it. I’m not saying you need to be this extreme when scoping out your company’s quarterly Strategic Projects (Big Rocks), but it is a sobering reminder to take into account the planning fallacy.
Conduct a Pre Mortem.
Here is my summarized version of a Pre Mortem methodology that works well for the size of organizations I commonly work with:
Create a rough first draft of the project scope. Just quickly list out the big critical tasks that are known at this point – and estimate tentative due dates for these critical tasks.
Typically what happens is that people only consider the best-case scenario, and are overly optimistic with the initial due date estimates.
Document the worst-case scenario.
Ask the project team to imagine they have time travelled 3 months into the future. Unfortunately, the project is significantly behind schedule. There were delays, distractions, and interruptions. People took time off sick and went away on vacation. Everything took longer than expected. Unforeseen issues took us by surprise. Everything that could go wrong did go wrong. Even worse, the results are not what we hoped for. The project team is disappointed with their achievements when we meet to conduct the next Quarterly Strategic Review in 3 months time.
Ask everyone to individually write down their story of “what happened”, listing all the things they can think of that caused this project to fail. Set a timer for 5 minutes and get everyone to do this without talking.
Once 5 minutes are up, ask everyone to read aloud what they wrote to the group. Start with the most junior member of the team, go around the room one after another, and conclude with the team leader. Everyone needs to listen to these stories without making any comments or judgments. Don’t be defensive. Just listen.
Now, as a group, verbally work through these 3 questions one at a time and list your answers:
1. What risk factors could negatively impact or delay this project?
2. What actions could we take to reduce or mitigate these risk factors?
3. What changes do we need to make to create a more realistic Project scope?
Document the scope as a list of Tasks that are “in scope” and Tasks that are “not in scope” to be completed during this planning cycle.
Once the scope is finalized, present it to the leadership team for sign off, and enter the Tasks in your project management software.
It sounds simple, yet studies show that making time to do a Pre Mortem exercise generates better decisions, more accurate project forecasts, and much more robust implementation plans.
The Pre Mortem exercise makes it “safe” for everyone to consider things from a negative perspective and not be ostracized for being a naysayer. It helps to reduce the likelihood of people slavishly agreeing to unrealistic expectations just to please the boss. It helps to scope out our Projects more accurately. It helps to set our Strategic Projects up to succeed right from the outset.
Due dates are “commits” not “hopes”.
Setting due dates for Projects and Tasks is a negotiation. Don’t let people be bullied into accepting deadlines that only take into account best-case scenarios, otherwise, you are setting yourself up for failure.
When coaching clients to set due dates I say to them, “By all means get it done sooner, but due dates are “commits”, not “hopes”, so give me a conservative and realistic due date that we can all count on.”
Another questioning approach I use is, “Are you willing to make a promise to your team that you will absolutely have this Project/Task completed by this date?”
Nobody likes to break promises. When faced with this line of questioning, people give the Project scope and due date forecasts a lot more thought, and typically replace their initial scope with one that is much more cautious (and realistic). At the end of the coaching session, everyone reports being much more comfortable with the decisions that get made.
If you are a manager, you want firm due dates you can count on and enforce. You also want to be able to praise people for keeping their commitments to the team, and for everyone to feel like “winners” for reaching the agreed milestone at the end of each planning cycle.
Follow up with a Post Mortem (After Action Review).
Conduct a post-mortem debrief at the end of a big project and note down your original time estimate, and compare it to how long the project took in reality. Here is my summarized version of the After Action Review process:
- What was the Goal?
- What actually happened?
- What went well and why?
- What could be improved and how?
- Next steps?
Make time at the conclusion of each project to debrief and “bank the learnings” using this format. It is another tool to help you to overcome the Planning Fallacy and be more effective with business execution in the future.
Until next time…
Stephen Lynch is the author of the award-winning book; “Business Execution for RESULTS: A practical guide for leaders of small to mid-sized firms” winner in the “Management” category of the 2014 Small Business Book Awards in the USA.
He’s also written articles on strategy and management for The Economist magazine.
Need a Strategic Plan Facilitator for your next planning session? A Business Coach to help you scale your business? Management Training to upskill your team? Contact Stephen to discuss your needs.