Guest post from Dr. Gleb Tsipursky:
is planning to fail.” That phrase is a misleading myth at best and actively
dangerous at worst. Making plans is important, but our gut reaction is to plan
for the best-case outcomes, ignoring the high likelihood that things will go
likelihood that problems will crop up, you need to plan for contingencies.
overrun? It’s not as common as you might think for a project with a
clear plan to come in at or under budget.
found that 86% went over budget. In turn, a 2014 study of IT projects found that only
16.2% succeeded in meeting the original planned resource expenditure. Of the
83.8% of projects that did not, the average IT project suffered from a cost
overrun of 189%.
serious IT project such as implementing a new database at your organization
goes even 50% over budget, which is much less than the average cost overrun.
You might be facing many thousands or even millions of dollars in unplanned
expenses, causing you to draw on funds assigned for other purposes and harming
all of your plans going forward.
everything will go according to plan, whether in IT projects or in other areas of business and life.
planning fallacy is one of many dangerous judgment errors, which are mental
blindspots resulting from how our brain is wired that scholars in cognitive
neuroscience and behavioral economics call cognitive biases. We make these mistakes not only
in work, but also in other life areas, for example in our shopping choices, as
revealed by a series of studies done by a shopping comparison website.
dangerous judgment errors, whether in your professional
life, your relationships, or other life areas.
hurting you and others in your team and organization. Then, you can use
structured decision-making methods to make “good enough” daily decisions quickly; more
thorough ones for moderately important choices; and an in-depth one
for truly major decisions.
truly effective long-term strategic plans. In
addition, you can develop mental habits and skills to notice
cognitive biases and prevent yourself from slipping into them.
and consulting clients have found three specific research-based techniques effective.
struggled with a pattern of taking on projects that ended up losing money for
the company. We evaluated the specific component parts of the projects that had
cost overruns, and found that the biggest unanticipated money drain came from
permitting the client to make too many changes at the final stages of the
project. As a result, the IT firm changed their process to minimize any changes
at the tail end of the project.
estimates for future projects. A heavy equipment manufacturer had a systemic
struggle with underestimating project costs. In one example, a project that was
estimated to cost $2 million ended up costing $3 million. We suggested making
it a requirement for project managers to use past project costs to inform
future projections. Doing so resulted in much more accurate project cost
external perspective from a trusted and objective source. A financial services
firm whose CEO I coached wanted to move its headquarters after it outgrew its
current building. I connected the CEO with a couple of other CEO clients who
recently moved and expressed a willingness to share their experience. This
experience helped the financial services CEO anticipate contingencies he didn’t
previously consider, ranging from additional marketing expenses to print new
collateral with the updated address to lost employee productivity due to
changing schedules as a result of a different commute.
to addressing cost overruns is to remember that “failing to plan for problems is planning to fail.” Use this
phrase as your guide to prevent cost overruns and avoid falling prey to the
dangerous judgment error of planning fallacy.
Dr. Gleb Tsipursky is on a mission to protect leaders from dangerous judgment errors known as cognitive biases by developing the most effective decision-making strategies. His cutting-edge thought leadership was featured in over 400 articles and 350 interviews in Time, Fast Company, CBS News, Inc. Magazine, and CNBC. His expertise comes from over 20 years of consulting, coaching, and speaking and training experience as the CEO of Disaster Avoidance Experts, along with over 15 years in academia as a behavioral economist and cognitive neuroscientist.
A bestselling author, he is best known for The Truth Seeker’s Handbook (2017). His new book, published November 2019 with Career Press, is Never Go With Your Gut: How Pioneering Leaders Make the Best Decisions and Avoid Business Disasters. It’s the first book to focus on cognitive biases in business leadership and reveal how leaders can overcome these dangerous judgment errors effectively.
Contact him at Gleb at DisasterAvoidanceExperts.com, follow him on Twitter @gleb_tsipursky, on Instagram @dr_gleb_tsipursky, and visit https://DisasterAvoidanceExperts.com/GlebTsipursky.