The Personal MBA

Master the Art of Business

A world-class business education in a single volume. Learn the universal principles behind every successful business, then use these ideas to make more money, get more done, and have more fun in your life and work.

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What Is The 'Planning Fallacy'?

The Planning Fallacy is the tendency for people to underestimate completion times on complex projects. When planning, we imagine a scenario where everything goes well, and we underestimate the likelihood of things that could impact the plan.

Planning is useful because it helps you understand requirements, dependencies and risks. Plans don't have to be 100% accurate or predictive to be useful.

Josh Kaufman Explains The 'Planning Fallacy'

People are consistently and uniformly horrendous at planning. As uncomfortable as this sounds, any plan created by even the most intelligent and skilled CEO or project manager is very likely to be grossly inaccurate.

As Jason Fried and David Heinemeir Hannson memorably quip in their book Rework, “Planning is guessing.”

The reason we’re so bad at planning is because we’re not omniscient — unforeseen events or circumstances can dramatically impact even the best plans. When we create plans, we’re simply guessing and using Interpretation to fill in the blanks, even if we cloak that uncomfortable reality in official-sounding language and fancy-looking charts.

The Planning Fallacy means that people have a persistent tendency to underestimate completion times. The more complex the project, the more Interdependencies the project contains. The more interdependencies there are, the more likely it is that something at some time will not go according to plan.

When planning, we naturally tend to imagine a scenario in which everything goes well. As a result, we tend to underestimate the likelihood of things that could impact the plan, as well as how much those contingencies will affect the project. Rare is the project plan that contains a line item that says “Project Manager contracts mononucleosis: out for a month.”

Most plans drastically underestimate the amount of Slack necessary to make the plan accurate. If you’re responsible for completing a complex project, including a few months of slack time is appropriate — unexpected delays, vacations, sicknesses, and other unforeseen events are likely to make things take longer than expected.

The challenge is that including significant slack time is almost never seen as acceptable or appropriate. If you go to a CEO, customer, or partner with a plan that involves three months of slack time, the most common response is, “that’s not acceptable — get it done faster.” The slack is eliminated, and as a result, almost every project plan is very likely to be completely wrong.

The inaccuracy of plans doesn’t make planning worthless. Plans aren’t useful because they help you predict with better accuracy—they’re useful because the act of creating the plan helps you understand requirements, dependencies, and risks more thoroughly than when you stared.

In the immortal words of Dwight D. Eisenhower:

“No battle was ever won according to plan, but no battle was ever won without one… Plans are useless, but planning is indispensable.”

The value of planning is in Mental Simulation: the thought process required to create the plan itself.

Use plans, but don’t depend on them — as long as you keep working as quickly and effectively as possible, the project will be done as soon as it’s feasible.

Questions About 'The Planning Fallacy'


"Hofstadter's Law: it always takes longer than you expect, even when you take into account Hofstadter's Law."

Douglas Hofstadter, cognitive scientist and Pulitzer Prize–winning author of Gödel, Escher, Bach: An Eternal Golden Braid


From Chapter 8:

Working With Others


https://personalmba.com/planning-fallacy/



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The Personal MBA

Master the Art of Business

A world-class business education in a single volume. Learn the universal principles behind every successful business, then use these ideas to make more money, get more done, and have more fun in your life and work.

Buy the book:


About Josh Kaufman

Josh Kaufman is an acclaimed business, learning, and skill acquisition expert. He is the author of two international bestsellers: The Personal MBA and The First 20 Hours. Josh's research and writing have helped millions of people worldwide learn the fundamentals of modern business.

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