Big Picture

Unproductivity arising from a planning fallacy

Human beings are fascinating, even in their natural imperfection. The awareness of this limitation allows a person to seek continuous improvements, both on a human level and at work. Moreover, despite various personal flaws, there are some common to all, which are inherent in our nature.

One of these can be detrimental in its effects. It concerns the systematic underestimation of the time needed to perform a task or any other daily activities. This error is called the “planning fallacy” and it is characterised by being a very common error based on a cognitive bias that limits the perception of reality. The planning fallacy is a case of over-optimism that cognitive psychology has long studied, finding that pessimistic people tend to have a more accurate prediction of task timing.

The two Nobel Prizes Kahneman and Tversky discovered that people tend to underestimate the time needed to complete a project, whether in the professional or everyday life, even though they have already experienced the negative effects of underestimation for that specific task. The fact that we have already experienced an event, does not make us immune to the planning fallacy because our brain tends to compress the time in our memories, making us remember it much shorter than it actually was. Scientific evidences underline that in fact, who has finished later than anticipated offered explanations that made the experiences seem relatively unique and unlikely to recur.

As we work out the scenario we are going to face, we fall into this fallacy because our brain relies on approximations that do not consider several variables, making it less realistic. The question that arises is: is there a solution to the problem? The answer is yes, but it is up to us to make it a reality. Here are some useful tips:

  • Segment the objectives, we tend to be much more precise and effective if we proceed in small steps, focusing on micro-objectives, details, and not focusing only on the macro-level. Several studies have shown that the total time obtained by summing up the individual estimate of the various steps needed to reach the goal is always greater than the global estimate, and therefore more realistic.
  • Keeping precise track of past events, in this way we mark down errors of judgement in detail and use them for future planning. Subsequently we develop an awareness of the error that is difficult to ignore, and we decide to rely as much as possible on numbers, calculations and data based on past experiences.
  • Analysing of all possible scenarios, leave the ability to manoeuvre and assume that unforeseen events are not exceptions, they are the normality.
  • Be realistic and concrete, avoid designing plans that are too rigid and complex and aiming for unachievable results.

Focusing on companies’ dynamics, this error usually creates an incongruence between what people want to do, the plans, and their development, the results. This creates important consequences in terms of time, productivity, and efficiency. It becomes clear how an untruthful estimation of time creates shortcomings in these variables, as well as possible emotional damage to the person concerned.

Moreover, the planning fallacy leads to underestimate the risks and resources required to complete a task, both in terms of time and resources to be invested. This creates tensions within companies but also with external networks. For example, if a boss assigns a project to an employee and gives an unrealistic timeframe to complete it, once a delay occurs, he will create a cascade of other delays that will affect his colleagues and perhaps also to the final creditors.

In conclusion, the natural inclination of people to overestimate their capabilities is evident, but the need to better know our limits is the first step in trying to overcome them.

Written by Riccardo Pandini.
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Riccardo Pandini
Riccardo Pandini is an Academic Tutor at the University of Milano-Bicocca and a writer at the State of Mind, an online journal of psychology, psychotherapy, neuroscience, psychiatry, and various current affairs.

Riccardo Pandini is an opinion columnist for the CEOWORLD magazine. Connect with him through LinkedIn.