346. Defeating the Planning Fallacy: Strategies for Smarter Time Management (Refreshed Episode)

Welcome to episode 346 of the Brainy Business Understanding the Psychology of why People Buy Today's episode is all about Planning Fallacy. Ready? Let's get started.

You are listening to the Brainy Business Podcast where we dig into the psychology of why people buy and help you incorporate behavioral economics into your business, making it more brain friendly. Now, here's your host, Melina Palmer.

Hello. Hello everyone. My name is Melina Palmer and I want to welcome you to the Brainy Business Podcast. Today's episode is all about Planning Fallacy. If you suffer from never ending to do lists and always feeling like you're going to do more than you actually do, this episode is for you. You're going to hear all about what planning fallacy is, how it creeps up, why we continually fall victim to it, and how to avoid it during the episode, which originally aired in August of 2020. So I'm not going too much about that now. What I do want to talk about is why I chose to refresh this episode today. It's because of my conversation with Nick Sonnenberg, author of Come up for Air, which is coming out this Friday. I loved his book and got so many amazing insights from it to optimize the way we work behind the scenes here at the Brainy Business. More on that in the next episode. And while I was reading, I kept thinking Planning Fallacy Planning Fallacy Planning Fallacy. I knew this was the episode to refresh before next episode and you're definitely going to see why as you listen to these two. If you aren't already subscribed to the Brainy Business podcast, by the way, now is a great time to do so. As you listen to the episode today, I want you to be thinking about all the tasks and to dos on your desk and those around you, as well as your email notifications where you keep information in your business, how your team communicates. There are so many ways and places to optimize when you have a format for it, and Nick is going to talk all about that on Friday. Keep that all in your mind as you learn about planning Fallacy today. Make note of where you have the most room to optimize and get ready for tips to do just that. And don't forget, there are links for everything, including past episodes, articles, books like Come up for Air, your free Planning Fallacy worksheet, and a timestamp summary of the episode all waiting for you in the show notes which are found within the app you're listening to and at the brainy business.com346 all right, let's talk about Planning fallacy. As I've said already, I'm a big victim to planning fallacy. As an ambitious and optimistic person, I'm confident that I can do things quickly and perfectly each time, and I'm prone to underestimate how long something will take me to complete. I need to leave in five minutes. I can knock out these emails before then. Sure, I only completed two things on my to do list today, but now that those are out of the way, I can get the other 16 things done tomorrow and have time to go to the gym. Well, an episode usually takes eight hours, but this is a pretty easy topic, so I can knock it out in four. Sound familiar? Fortunately, I've been able to identify this tendency in myself, and having knowledge of the planning fallacy makes it so I can adapt and do better in practice than I might have left to my own devices. If you've struggled with this yourself, today's episode is intended to help you get some tools that have been scientifically proven to help combat planning fallacy. First, let's start with the foundations of how this works. As with so many concepts discussed on the show, planning fallacy was first introduced by Kahneman and Tversky way back in 1979. Their original paper, which is linked for you in the show notes, found that the errors in judgment were not random, but more systematic, which made it clear that these aren't just caused by being confused, but rather as a bias from the brain. They also found these errors are present for all kinds of people, including experts who should know better. And one of the biggest issues for this fallacy to perpetuate is that even when we know it exists, it's so compelling it's really hard to stop doing so. Don't beat yourself up if you continue to struggle with it. Like I said, I do it too. This episode is being completed a little bit later than I would have liked, but you know, it happens and we can learn from it every time and continue to grow. As Kahneman said much more recently, we fall victim again and again because success is so much easier to imagine than it is to imagine. Imagine the failure, and there's often only one correct outcome we hope to achieve, yet countless ways for the plan to go haywire. And when we don't allocate for those ways the plan can go off the rails. We're likely to be victim to planning fallacy. And we just want things to work out and to be able to do it all. And so our brain is going to keep stacking that up against us, even when we've, you know, overcome it before and we know that it shouldn't be impactful. It still creeps up from time to time. But as I've said, the tips in this episode are going to help you to do better about planning for these sorts of errors that your brain will make. Now here are a few examples just to show how common this really is. Our first study asked college students how long they thought it would take them to complete their thesis papers. The average prediction was 34 days. They were then asked to give estimates for how that might change if everything went amazingly smooth, in which case they predicted it would take only 27 days. And what if things went crazy and there were tons of delays, in which case they estimated 48 days. What really happened? Well, it actually took 55 days on average, a full week longer than the worst case scenario and three weeks more than that original estimate of 34 days. And looking beyond term papers, have you ever done a remodeling project on your home? Or maybe landscaping the yard or buying new furniture? A 2002 study had homeowners estimate the cost of their kitchen remodels and the average guesstimate was $19,000. The actual cost, $39,000. Again, their guesses were less than half of what it ended up costing. Another study of railway projects found that four out of five overestimated how many people would use it, which means their numbers for making the money back are going to be off. I already mentioned the Big Dig in Boston, which was projected to cost $2.6 billion and came in close to 15 billion, and it was eight years late. Seattle's viaduct replacement project, which was similar, did better on the budget side. It was projected at 3.1 billion and came in at around 3.3 billion. So only a couple hundred million dollars off. But it was still three years behind schedule. And much earlier than that was the Sydney Opera House, originally budgeted at 7 million, but actually costing $102 million and taking 10 years longer than predicted to be complete. There's a link in the show notes to an article comparing Seattle's viaduct project to the Big Dig in Boston, which outlines one of the tips for overcoming planning fallacy, which is to have others look objectively and give an estimate for how long it took them to complete a similar project. And I'm going to talk about that more toward the end of the episode. But seeing what happened in Boston and knowing that Seattle did not want to have a snafu of that scale made it so people were more likely to have a more accurate prediction. And while it still did come in over budget and behind schedule, it was much better than the original Big Dig issue that had lots of other problems and things it is important to know that planning fallacy is more than mere procrastination. It isn't about setting better deadlines, and it's something that everyone does. Our brains are programmed to continue to do this even when we set up plans, when we're familiar with the task, when we have motivations or incentives to finish on time, or if we have planned with a team. All those things we believe should help us to avoid the planning fallacy have often been shown to make it worse. And as you heard earlier in the episode, having deadlines doesn't necessarily help either, because people are expecting everything's going to go smoother than they will, and they aren't planning to fail. I mean, how many of us plan for things to go wrong and to be bad and expecting to fail? But if you don't, you're actually setting yourself up to miss your deadlines and come in, you know, over budget and over time. There are several biases and brain tricks working against you and contributing to planning fallacy, like fundamental Attribution error, time discounting the focusing illusion, and bike shedding, all of which have full episodes that are linked for you in the show notes@thebrainybusiness.com 114Let's dig into those concepts, starting with the focusing illusion and Fundamental Attribution Error. You may remember from those episodes. But as a little refresher, or for those of you who haven't listened to them yet, the focusing illusion shows us that as you look at or consider something, it feels like it's more important than it really is. So if you're focusing on how long it's going to take and really digging in and thinking about what's going on, you're just going to allocate different amounts of time and only look at the things that you're considering and not necessarily those that don't come easily to mind. Fundamental attribution error is about when you attribute external or internal motivation onto a situation incorrectly. The example there being if someone cuts you off in traffic and you assume they're a bad person and put this whole negative about their entire personality. But when you cut someone off in traffic, you have the whole story of why you needed to do it in that moment. Like maybe you were running late for a meeting, or you know that you're a good person and that you don't usually do that, but it was really important right now. Speaking of which, if you do show up late to the meeting, you have that same internal dialogue and story where you understand what happened. You had back to backs and needed to eat something, whatever it is. But when someone else is late, it's because they're lazy. One of the theories of why we fall victim to planning fallacy is from a similar issue with the internal and external factors at play. Let's say you're a graphic designer and you've made lots of logos before. You know that for the last 10 projects it's taken you about five hours to get a first draft of a logo. But when you start to budget your time for the logo now, you feel like it's only going to take you four hours. Why? You have that optimism bias, saying you've learned from your past projects and this is really similar to the one that you did for XYZ company so you can capitalize on some of that pre work or whatever it is. So that internal dialogue and story of your own skill is really played up. You expect that you're going to be more efficient than you have been so far. And this is also related to time discounting and pre committing your future self, who is awesomely more capable and focused than current you. So when predicting how much time you're going to need, you're looking at what you expect, which is only intrinsic, that inside stuff and likely to be downplayed. Your brain likes to think it's constantly getting better. So it feels good to predict that you're going to be faster than before while creating a superior product. Of course, and this combines with the issue of the external pieces, we tend to ignore all those little things that will inevitably come up. Calls, time between meetings, a colleague stopping by to ask a question, a pop up on the site. When you're looking for something online, your brain basically assumes that none of those things matter enough and they won't be a factor. Each little thing by itself isn't that big of a deal. Five minutes here, three minutes there, ten minutes over there. But those can add up really quickly. When you don't plan for those external pieces and factor them into your time budget, you're falling victim to planning fallacy. One thing that's proven to be helpful in this case is is to have people determine their timing as if a coworker was taking on the project. If you were to think about the project as if your co worker was doing it, you have less of that intrinsic stuff and you can see the external pieces a little more clearly, especially if you choose a co worker who you think is slower than you. This is why at the advertising agency we would always add in a 10% contingency for 8 any budget. There are all sorts of random things that are going to happen and it's better to pad the proposal than to come back and say the client needs to pay more money to get what you promised them. That's never a good situation. I still do this now when thinking about projects. If my gut instinct is to say, I bet I can do that in only 25 hours, it's probably best to plan for 30. One of the other brain tricks you want to watch out for is bike shedding, where your brain will look for smaller things to work on that are less scary and make you think you need to do those in this exact moment and you can't work on the thing you should be really working on until this other thing is complete. Being able to spot and reduce bike shedding is important and knowing it exists is a big part of the battle. But because our brains like to get themselves distracted, it's also important to plan for that time and expect you're going to still do this. This may mean working in breaks to give your brain a little bike shedding treat so that it'll keep working. A lot of writers will give the tip of breaking your project into chunks. So instead of thinking you're going to sit down and write for eight hours straight, you need to factor in those little breaks to know how much time you're going to actually spend writing. And planning for the breaks actually makes it easier to push through in the work sprints. Let's say you have a 9 to 5 block of time to write today. Your planning fallacy would say, I'm going to write for eight hours today. But you know you need breaks and you'll get distracted. So sitting down for eight hours is. Isn't really eight hours of writing. And for the sake of numbers and to see what this can actually turn into, let's say you write four pages an hour. So if you were planning that you're going to sit down for eight hours of writing and come out with 32 pages, that is going to turn out being a little bit different as we get to the end. So one trick that a lot of people suggest is to write for 25 minutes and then take a five minute break, and then do 25 minutes and take a five minute break. So 10 of every 60 minutes is a Break and distraction time. I would expect that the likelihood you'll come right back in and be exactly 10 minutes, even if you plan for that is another planning fallacy. So let's say it's really more like 15 minutes of the 60. That's not productive. Because if you take a five minute break and then come back and settle in, you know it's six, seven minutes each time time. Let's say you're also going to take breaks for email or an inevitable project that pops up that's an emergency for one of your other clients, assuming you aren't writing on a typewriter with your phone locked in a box. So let's say that's going to take another hour plus lunch, which we're going to give an hour for as well, knowing that you fully intend to take less. But we're trying to be realistic and avoid the planning fallacy. So your eight hours became six when you expect the work issue and the lunch break. If 15 minutes of each of those hours is going to be victim to distraction and breaks to keep you moving, you're now down to four and a half of your eight hours being writing time. And put another way, that means your 32 pages are now only 18. And because that sounds a bit depressing, your brain is now rebelling and saying, no way, I don't need to take all those breaks. I bet I could take a shorter lunch and I just won't get distracted by the emails and I'm only going to take one break an hour. That again is planning fallacy. My advice is to plan your day's commitments using the worst case scenario. And remember on those college term papers where people were thinking they needed, you know, 30 something days and it was 47. I think that by the time they actually got to it, it was a full extra week of time, even from their worst case scenario. So what you're planning for in the worst case is probably still underestimating. So if you plan that you're going to have four or four and a half hours of productive writing time in a day and you end up with five or six, that's fantastic and you can celebrate. The proper anchor will let you feel great about yourself when you get through those five hours of productive time. But if you plan for eight, every time you get distracted or have a snack, you're going to beat yourself up. And it actually takes longer to recover, making it all worse and compounding on itself when your brain doesn't know when the next break is coming. It's also a lot harder to keep focused so it really becomes a vision. Vicious cycle. I've linked to episode 83 in the show Notes, which has my suggestions for tools and tricks that I use to stay on task and keep my brain organized. One of those is my time timer, a little clock that goes up to 60 minutes and has a nice visual element so you don't have to do the mental calculation of what's left every time you look at the clock. If you're allocating 25 minutes for writing and set the timer, you know that you're going to work until the beep and then you get to grab a snack or scroll through Instagram for five minutes, which you can also set the timer for. And often I've had myself get into a flow and write for 45 minutes or an hour, which is a great little win. And then I can take my five minute break. I want to stress that your brain is going to tell you that you don't need to do this, that you don't need as much time as other people, or that you won't get distracted. That is the optimism bias and planning fallacy talking. Plan for it. Expect that error so you can be pleasantly surprised and well anchored in the moment. It will absolutely help in the long run. And one way to overcome some of those urges to bike, shed or get distracted in the moment is to think about the urgent versus Important grid. If you don't know what I'm talking about, it's created for you on the worksheet for this week's episode, which is a freebie you can find on the Show Notes page. Essentially, every task can be sorted by whether it's urgent or important, and it falls into one of four quadrants. A task is either urgent and important. Those are things you should do now. Urgent and unimportant. Potentially, you don't need to do those at all. And it depends on if you're ignoring anything important to take care of that urgent and unimportant item, as well as how it aligns with your goals. Items can also be not urgent, but important. Can you do this tomorrow or next week? And finally, not important and not urgent. You will be amazed at how many of those types of tasks slip into your day. So when your brain wants to tackle something you didn't plan for, one way to feel good about dismissing it in this moment is to ask is this important? Is it urgent? And if it is, both of those things, you can ask is it more important and more urgent than the thing I planned to be doing right now? Or does my brain just want to bike shed? Could I do this tomorrow? And again, planning for those distractions will make it so you can keep your projected timelines and overcome planning fallacy. As I talked about in the episode with my tips for starting a podcast, people will often ask me if they really need to take six or eight hours per episode of their podcast or an hour a day to really do social media well. And that's planning fallacy trying to help you cram in more than is possible because it makes you feel good about your potential productivity. And remember, when I say you know that I'm talking about all of us. As I said at the top of the show, I am one of the biggest victims of planning fallacy. I'm ambitious and I want to do everything. But over committing yourself is a recipe for feeling bad, stressed, overworked, and making others feel unimportant as well. Busy is not important. Stressed is not productive. Over committed does not equal successful. This pandemic has made me very reflective of time with family and focusing on my goals. If you're like me and have less dedicated time to work and what feels like more stuff to be doing, it could be easy to get stressed and like you need to multitask to be successful. So you plan to do 10 things when you know you're only going to do two because saying you'll do them makes your brain feel good, but it perpetuates a stressful problem and keeps you stuck. I've realized during this time that I would rather spend 15 focused minutes with the kids playing whatever game they want with my phone in the other room and an alarm set so I don't miss whatever meeting is coming up next than I would to be distracted and checking email while sort of putting playing with them for an hour and not doing either thing well. I would rather plan an appropriate amount of time to really be present on LinkedIn and show up for the people that are there answering messages and commenting on posts than trying to be on all the channels at once, leaving cursory thumbs ups that no one is ever going to notice or really care that much about. Narrowing your goals and priorities to what matters and being present when you're doing those things has helped me to tackle the planning fallacy and I think it can for you too. When I feel tempted to send one more email before jumping on the zoom call because I have two minutes, I realize that is a recipe for me to not do either particularly well and the email is going to be there in 30 minutes when I get off the phone and doesn't that person I'm responding to deserve a nice email where they can tell that I took time and I fully answer the question and maybe it still only takes me five minutes, but I'm not having to be so super stressed and I've planned for how much time it's going to take. And now that I've told you a little bit about how this impacts you on a personal level, I want to touch on how this comes up. When you're in a group, you may be tempted to think that if looking at external factors can make it so you're less likely to be a victim of planning fallacy. Having a group would help everyone catch each other in their bad planning and that you'd be less likely to do this. Sorry to tell you, but groups are often worse at predicting how long things are going to take or how much something is going to cost. Remember, that's part of planning fallacy too. It's more than just time when the group gets together. I guess everyone is trying to look good in front of their peers so they undershoot and bid low to seem better than they are and expecting that they're going to hit those plans since they've committed themselves publicly and it really matters, but it just doesn't happen. One way to get around this for groups is to have each person or department do their forecast on their own and then have someone else add them all up behind the scenes instead of having a big group discussion. If the person adding things up is unbiased, they can add in those contingencies and make sure the predicted hours are realistic. This is why a lot of companies have a separate project management department that can track and budget hours and money for projects while being hopefully less likely to be victim to planning fallacy. But this is not a fail safe and is a spot where a lot of companies are going to struggle and think that they're not going to be victim to this planning fallacy. But those people that are running the projects have their own optimism bias and planning fallacy tendencies as well, plus other deadlines and stressors that may make them look for ways to push this up by two days so that other project can hit its deadline without properly planning for the consequences. And the plan is only as good as the tracking that goes into it. I've had to track hours in multiple roles and I know a lot of people that do this. Whether you have billable hours or just trying to know how long things take, we often don't keep a good count. If you're multitasking, you may be inclined to go back and adjust the numbers or say I checked my email and it took an extra five minutes or so, so I won't count that 15 minutes on my time card. That means the numbers adding up how long the project took are understated because you didn't track that time on the project that isn't necessarily billable to bring it back to the writing. Example in the eight hour day, which could be for anything you're working on. If you tell yourself or a project manager, you took four and a half hours to get the writing done or do the brochure or whatever it is, but that was completed over an eight hour span and they don't know that they might put two projects on your plate for today's eight hours expecting you can potentially get each of those days done in four since you'll build on your skills from last time. You see the compounding problem we have here. If you don't include the external stuff in the calculation, there's no tracking system or project management tool that can overcome planning fallacy. You're gonna underestimate the time and scope of what's needed and then underestimate how much it will cost or expect. There's a lot of value in what's being done to justify it being important. Important enough to focus on. Now looking back at the transit System example where 4 out of 5 expected more people would use the system than actually do. So if you say that a thousand people are going to use this thing every day and you're going to earn $5 per person on each of those thousand people, you are expecting you're going to make $5,000 a day on your system and it's going to cost a million dollars to implement. And that means you're estimating it's only going to take 200 days to make your money back and start having a profit, hooray. But you overestimated and only 750 people use it every day. Meaning you only make 3750 in profit and your million dollar expense is off because you didn't allocate for possible errors and breaks that should have been included and scope creep. So it actually cost 1.5 million. So it'll really take 400 days to break even, double what you originally planned for. It can all work together against you and snowball very quickly, which is why it's important to track properly, to allocate and properly plan for those breaks. And in addition to keeping track of how long the last project or all those past projects actually took. You should also know how long you think thought they were going to take so you can keep that into account when you're planning for the next one. So if you constantly plan by 25% less, you can pad your new prediction by 25% to make it more likely to be on target for what you're actually going to do. And another tip that studies have shown can help people overcome planning fallacy is to intentionally think about setbacks. When people were told to incorporate a step into their planning where they had to consider and write down three obstacles that could get in their way, they had more accurate predictions for how long something could take. If I'm planning to have a writing day tomorrow and have my eight hours, I might say, well, my mom usually calls on Thursdays so I should account for 30 minutes catching up with her. Another thing that could happen is the client problem. Like I talked about in the the example earlier and I slotted an hour for that and maybe I expect I could get a headache that's going to make me want to take a break and shut my eyes or the kids are going to need help with something or we need to order groceries. Whatever you come up with isn't as important as going through the exercise Intentionally thinking about and writing down what could happen will make it more memorable and salient for your brain, which means you're more likely to account for it in the plan and have enough time. Another thing you can do, and one of my favorites, is to go through a process called unpacking, and I've included this in the process I call the 90 day sprint, which I do with clients and regularly with the members of the Be Thoughtful Revolution to help them achieve goals. And this is also a tactic I use for myself and accomplishing my own projects. When planning for how long something will take, we often look at the full elephant instead of all its components. When you don't break a project into small enough subtasks, you're going to underestimate how long things are going to take and then you've got that scope creep issue. There's just a lot working against you. Let's say you have a goal of launching a podcast in 90 days. When you aren't familiar with the process, you may have your tasks be Create, episode, Branding, Launch plan, and promote. When you look at them like that and haven't experienced the process, it's easy to say that creating an episode will take two hours and the launch plan is only going to take me one hour and I can create my promotional materials in two hours. That would mean everyone is coming up with and launching their podcasts in a day. And it doesn't happen like that. As we know. If you break those categories down into their smallest possible sub components, you can see how many there are and budget time for each of them. Let's take Create Episode as an example. Your subtasks are things like Brainstorm topics, choose best first topic, write the initial outline, research the topic, complete the outline, maybe research guests Send customized emails to five potential guests and please do not use obviously generic pitch templates to save time. They're just asking to get deleted and it really is just a waste of time. Next task might be follow up with potential guests confirm time with guests send them materials Record, edit send thank you email get imagery and bio write show notes edit and approve show notes review and approve audio create social images I'm not even done here, but you get the idea so I'm going to go ahead and stop. When you look at it like this, do you think it's a two hour project? Can you see why every episode takes me eight hours to complete? Some might be less, and that's great, but I need to plan for the time in my calendar and you should too. Unpacking the project into those minutiae tasks will allow you to more properly see the full scope and allocate enough time to get it all done without all the stress. Unpacking was shown to help with people getting ready for dates, prepping food, formatting documents, and more. And the most important thing to know when considering unpacking is that it has more influence as the task gets more complex. Simple tasks don't benefit as much from unpacking as launch a podcast or create an episode would. There are a lot of moving parts and pieces in each of those to consider, and if you underestimate by a few minutes on every single one, you're planning for lots of late nights and weekends and the stress that goes with them. Remember not to get down on yourself about planning fallacy. It's a natural human tendency that spans across gender, culture and personality type. We are all programmed to think this way, but knowing how your brain may try to trick you and using the tips in this episode can help you be less likely to succumb to it in the future, which can make you happier, less stressed, and living up to your commitments more often. Sounds great to me. So what got your brain buzzing as you learned about planning Fallacy today? For me, I think it's pretty darn clear that I love everything about this concept. Knowing how we make errors with over committing and thinking we can get more done than we really can and that things are going to take less time than they usually do. Trust, trust. Trust me when I tell you this is something I suffer from constantly. Yes, unfortunately, even after doing an episode on it and talking about it all the time. This is something that is innate in us so it will still come up. But knowing it exists and when to stop yourself or have a trusted friend or colleague who can help keep you in check is so important in not continually over committing yourself and working into the wee hours of the night or over every weekend. I have a whole chapter really centered around this concept in my second book, what your employees need and can't tell you, which is linked for you in the show notes. And I can't wait for you to learn from Nick Sonnenberg in his episode as he discusses insights from his book Come up for air. As I said, this one really changed the way I think and allowed a lot of little things I've been working on and thinking about for a long time in my own business to really click into place in a way that's paying big dividends. Optimized email communications, storage and retrieval of information workflows. It's all coming and trust me, you don't want to miss this one. So if you aren't already subscribed to the Brainy Business podcast, take a moment to do so now. And to make it easy, there's a link in the Show Notes along with links to related past episodes, books, a timestamped summary of the episode, your free Planning Fallacy worksheet, and more. It's all waiting for you in the app you're listening to and@the brainybusiness.com 346. And just like that, episode 346 on planning fallacy is done. Join me Friday for a brand new episode with Nick Sonnenberg to discuss his book Come up for Air. It's going to be a lot of fun. You don't want to miss it until the then. Thanks again for listening and learning with me. And remember to be thoughtful.

Thank you for listening to the Brainy Business podcast. Molina offers virtual strategy sessions, workshops and other services to help businesses be more brain friendly. For more free resources, visit thebrainybusiness.com.