Outsmart the Planning Fallacy

We fool ourselves in planning. Stop that. Plan smarter.

We spend a lot of energy on planning. But, as the adage goes, “nothing goes as planned,” which often leads us to not take planning seriously. So, if we’re fooling ourselves in our planning efforts, what’s the point? Is there any real value in planning?

Thank you to my peers for coming together to discuss this intricate topic at our September 10, 2024, Mental Model Dōjō. Great perspectives were generated, and here’s the summary.

Coach Takeshi

Why It Matters

Bad planning wastes energy. Good planning saves energy. And we still need planning. So do it right.

4 Pitfalls of Bad Planning

The planning fallacy was originally defined and introduced by Daniel Kahneman and Amos Tversky in 1979 as a cognitive bias in time management. They described it as a phenomenon in which:

• Overly Optimistic: We tend to be overly optimistic in our planning, underestimating the time and effort required to get things done.

I see many other situations where we fool ourselves in planning, and I would like to include them as an expanded definition of the planning fallacy:

• False Sense of Accomplishment: Sometimes, the act of planning itself can give us a false sense of progress. We feel productive after creating a detailed plan, even if we haven’t actually started working on the project itself.
• Dismissing Plans Entirely: After experiencing several failed plans, some people adopt a defeatist attitude, believing that planning is pointless because “nothing ever goes as planned anyway.”
• Planning as a Placeholder for Action: Parkinson’s Law states that work expands to fill the time available for its completion. In planning, this can manifest as leisurely spending time on a task according to the allocated time, rather than completing it as it would normally take.

Why We Fool Ourselves with Planning

Understanding the psychological biases behind these pitfalls can help us learn why we often act irrationally when planning:

1. Optimism Bias: We tend to underestimate the time and resources required for tasks by focusing on best-case scenarios and overlooking potential obstacles. This leads to unrealistic timelines and budgets.
2. Illusion of Progress: Thank you to my peers for coming together to discuss this intricate topic at our September 10, 2024, Mental Model Dōjō. Great perspectives were generated, and here’s the summary.
3. Negativity Bias and Availability Heuristic: Negativity bias causes us to give more weight to negative experiences, while the availability heuristic makes recent or memorable events seem more probable. Together, these biases can lead us to overgeneralize from past planning failures, causing us to abandon planning altogether.
4. Present Bias and Hyperbolic Discounting: Task expansion (Parkinson’s Law) basically happens because of procrastionation. We overvalue immediate comfort (present bias) and undervalue future consequences (hyperbolic discounting, a.k.a. “crunch time” as the deadline nears), leading us to delay action until the last minute.

Note how optimism bias and negativity bias are both here. That’s how complex our psychology around planning is!

We Still Need Planning

Despite its pitfalls, planning is still essential. Without it, we’re lost—there’s no direction, no shared understanding, and no coordination of efforts. Consider annual budgeting or strategic planning in large organizations. These exercises are far from perfect, but they’re critical for aligning teams, prioritizing resources, and preparing for future challenges. Planning helps us structure the chaos, even if the plan needs adjusting along the way.

How to do Good Planning

1. Task-based planning — where it fits: To-do lists and writing out steps are our default mode of planning. Task-based planning works best when the scope of work fits “in one hand,” meaning you can count the items or steps to accomplish the goal on one hand (up to five). For goals with a limited number of steps, this approach is efficient and keeps you focused.
2. Plan in chunks: When the work requires more than five steps to achieve, break down the scope into manageable pieces of five tasks or fewer, and stage these chunks sequentially. This reduces cognitive overload and makes progress feel more achievable.
3. Adaptive planning: As work becomes more complex, uncertainty creeps in, and things inevitably won’t go ‘as planned.’ This is where chunking shines. After completing (or failing to complete) a chunk, inspect and adapt: should you continue as planned, adjust, or pivot entirely? Adaptive planning helps you respond dynamically to real-time feedback.
4. Game planning: Planning is also a communication exercise, especially with stakeholders. Instead of crafting an unrealistic end-to-end plan, present a “game plan” with different scenarios. Start with an “opening game” that outlines the initial approach, then move to the “mid-game” with potential scenarios and responses, and conclude with the “end-game” to show your focus on achieving the final goal. This approach acknowledges uncertainty while maintaining focus on success.

Good planning means choosing the right approach for the situation. For simple and somewhat complicated work, task-based planning can be effective. But as complexity increases, linear planning falls short. Shift to a non-linear approach: break tasks into chunks, adapt based on feedback, and use game planning to communicate effectively. By applying these strategies, we can navigate uncertainty and stay focused on our goals.

TL;DR: Bad Planning, Good Planning

Bad planning is overly optimistic, creates a false sense of progress, or treats planning as action itself—leading to wasted energy. Good planning involves breaking tasks into manageable chunks, adapting as you go, and effectively communicating through scenarios. The key is to shift from rigid, linear planning to an adaptive, strategic approach that prepares you for the unexpected. Outsmart the planning fallacy and save energy by planning wisely.

Found this Dōjō session recap useful? Then you should join our next session:

• Oct 10 Wed, (A) 8am SGT, (B) 6pm SGT

The Accountability Culture Shift — How Organizations are Finding Ownership Key for Transformation

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