Seven More Planning Pitfalls: III

In two previous posts, I noted five different phenomena that can lead planning teams to devise unworkable plans. They included Group Polarization, Trips to Abilene, False Consensus, Groupthink, and Shared Information Bias. In this final post of the series, I explore effects that cause planning teams to adopt or accept approaches for reasons other than their merits.

The IKEA effect

A cognitive bias known as the IKEA Effect causes individuals to place an inordinately high value on products they assembled themselves. [Norton 2012] One might speculate that an analogous bias occurs with respect to organizations. If this speculation is valid, organizations would tend to place inordinately high value on assets and processes that they created or helped to create, compared to similar assets or processes that they could acquire elsewhere. This phenomenon, if confirmed experimentally, might be related to what is sometimes called the not-invented-here syndrome. [Katz 1982]

Planning teams A cognitive bias known as the
IKEA Effect causes individuals
to place an inordinately
high value on products
they assembled themselveswould be affected by the "organizational IKEA Effect" by assessing as more valuable or effective approaches that exploited products or technology developed in part or in toto by in-house efforts. That might also cause them to be compelled by internal political forces to use such assets, even if they were inferior to commercial alternatives.

Competition bias

When internal experts provide estimates of cost and schedule, they're vulnerable to a number of cognitive biases that cause them to underestimate both. I've noted some of these, such as the priming effects or Shared Information Bias, in previous posts. But even if the members of the planning team weren't vulnerable to these biases, another problem — potentially even more significant — causes them to produce underestimates. The forces that create this problem are traceable to competition, both internal and external. I call this phenomenon Competition Bias.

Boehm, et al., observe that because organizational resources are finite, project advocates compete with each other for resources. [Boehm 2016] They are compelled by this competition to be unrealistically optimistic about their objectives, costs, and schedules. Although the authors call this mechanism the "Conspiracy of Optimism," possibly facetiously, it isn't actually a conspiracy. Rather, it's a variant of the N-Person Prisoner's Dilemma. [Hamburger 1973]

Market dynamics provide a second illustration of the effects of competition. Those who advocate marketing strategies based on the so-called "first mover advantage" believe that the organization that first delivers an offering to a marketplace can gain advantages by arriving early. The strategy is somewhat controversial [Suarez 2005], but it is believed widely enough that it leads to pressure on project planning teams to reduce their estimates of cost and schedule.

Estimates of cost and schedule are more likely to be realistic if the estimators aren't subjected to pressure to produce low estimates.

Last words

In these last six posts, I've inventoried 14 different phenomena that can lead to unworkable plans.

But there is a trap here. Some might feel that when a plan goes awry, and we see some evidence that the IKEA effect might have played a role, then the people who devised the plan are at fault for not recognizing the problem and doing something about it. That would be a mistake. Replacing those people, or disciplining them in some way, is unlikely to affect substantially the probability of a recurrence.

The root cause of the problem lies not in the people who devised the unworkable plan, but in the processes they used when devising the plan. To reduce the probability of recurrence of the IKEA effect, for example, we need to add to the planning process new steps. Those new steps must ensure decision-maker objectivity with respect to the origins of the assets they're planning on using. For each of the 14 phenomena I've been exploring, we would need to add some measures like that.

Undoubtedly there are dozens more phenomena that lead to unworkable plans. It's a wonder that any of our plans are workable.   First issue in this series   Top    Next Issue

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Footnotes

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Related articles

More articles on Cognitive Biases at Work:

Effects of Shared Information Bias: I

Shared information bias is the tendency for group discussions to emphasize what everyone already knows. It's widely believed to lead to bad decisions. But it can do much more damage than that.

On Standing Aside

Occasionally we're asked to participate in deliberations about issues relating to our work responsibilities. Usually we respond in good faith. And sometimes we — or those around us — can't be certain that we're responding in good faith. In those situations, we must stand aside.

Seven Planning Pitfalls: III

We usually attribute departures from plan to poor execution, or to "poor planning." But one cause of plan ineffectiveness is the way we think when we set about devising plans. Three cognitive biases that can play roles are the so-called Magical Number 7, the Ambiguity Effect, and the Planning Fallacy.

Choice-Supportive Bias

Choice-supportive bias is a cognitive bias that causes us to assess our past choices as more fitting than they actually were. The erroneous judgments it produces can be especially costly to organizations interested in improving decision processes.

The Risk Planning Fallacy

The planning fallacy is a cognitive bias that causes underestimates of cost, time required, and risks for projects. Analogously, I propose a risk planning fallacy that causes underestimates of probabilities and impacts of risk events.

See also Cognitive Biases at Work and Cognitive Biases at Work for more related articles.

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