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Business plans, diet plans, plans to get a degree and your plan to get rich. Life is full of planning. You’d think that all your practice planning would make you at least somewhat good at it. Then why do so few things go “according to plan?”

Your business can’t make money the way you intended. You quit your diet on day three and start eating the chocolate cake. You realize that you hate the subject you’re studying. The map rarely matches the territory. “Okay,” you might say, “I’ll admit some of my plans didn’t work out perfectly, but it can’t be that bad, can it?”

The Planning Fallacy

People are notoriously bad at planning. The worst part is, we don’t even know it. One psychological study conducted asked students to predict when they expected to complete an assignment, almost none gave enough time. Other looks into financial analysts show that few can consistently beat the market.

The real problem is that these planning failures aren’t recognized. People make wildly overconfident projections but fail to notice their abysmal track record in predicting. The question is, what can you do about this?

New Planning Techniques Aren’t the Solution

The problem isn’t a better planning method. We’ve all had a great deal of practice planning. Different planning styles can help, but they can’t solve the core problem of uncertainty. That is, you have no idea what the future holds.

The planning fallacy creates two major problems – the inability to plan and being blind to that incompetence. The real solution is to keep a careful eye on your track record and learn to stomach uncertainty.

Watching Your Track Record

The way to tackle overconfidence is to be aware of your success rate. Whenever you make plans, keep a record of occasions you were forced to deviate from them. I’ve done this, and the differences between your map and reality can be surprising.

How does humility help you? We’ve all been told to have faith and certainty in our efforts, otherwise it is too easy to give up. I’d argue the opposite. When you are motivated to do something, being humbled about your ability to predict forces you to be highly flexible.

Stomaching Uncertainty

Does risk make you queasy? Stomaching uncertainty is the next problem. Once you become aware of your inability to plan, you need to find a way to make the unknown tolerable. There are a couple ways you can do this: worst-case planning and flexible planning.

Planning for the Worst

One way to mitigate the actual risk is to plan for the worst cases possible. The point of this is to make you aware of the negative outcomes, and knowing you can handle it. The worst-case rarely materializes, or if it does, it usually happens in a way you didn’t expect. Worst-case planning can’t give you a look at everything that could go wrong, just a bit more confidence in knowing you can handle it.

The other benefit of worst-case planning is it balances the built in optimism plans have. Most people can’t distinguish between their best-case plans and expected plans. In other words, when predicting the future they imagine the most optimistic scenario possible.

A common rule I heard in software development was to figure out how long it should take. Then double that time and add six months. For your best-case. This adjustment was another method to offset the natural optimism in predicting.

Flexible Planning

The second option is simply not to plan. This may seem crazy, but I’ve found using what I’ll call a “flexible planning” model to be ideal for areas where there is a heavy amount of uncertainty.

Flexible planning isn’t planning in the traditional sense. Traditional planning involves looking at your outcome and devising a route to reach there. Flexible planning defies this entirely by not focusing on an end result. Instead, the emphasis is placed on doing actions that will place you in more favorable positions.

Flexible Planning VS Traditional Planning

Traditional planning starts with your objective and works backwards from that. Let’s say you were planning out what career choice you wanted. A traditional approach would be to work out your career choice, possible firms to work with, education you’ll need, classes you’ll need to take and how to fund your education. Each step determining the one before it.

The problem with this method is it cleanly erases uncertainty along the way. What if changes happen in the industry and firms you want to work for start downsizing? What if your school of choice doesn’t accept you? What if you don’t like the classes or eventual career? What if you can’t fund tuition?

Flexible planning starts where you are and works forward. So your current position might be limited post-secondary schooling and funds. Flexible planning suggests that many outcomes are favorable and that the paths to get there are almost infinite. Instead your job becomes to put yourself in increasingly more favorable positions.

The next step might be to get some schooling, apply to different Universities and scholarship programs or work to earn money for tuition. The best step is the one that has the most favorable options flowing from it.

In a business context this would mean planning your business so that it would have the largest amount of opportunities available. This way if one of your original plans fails, you can easily switch to another.

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