The Planning Fallacy
Life is what happens to you while you are busy planning
Planning ahead is crucial. Whether it’s for personal or professional reasons, it’s paramount that you make detailed and accurate forecasts of where you and your company will be in the next 5, 10 or 20 years.
This is what you are supposed to say in an interview or a business meeting.
Unfortunately, it’s bullshit.
I’m not talking about organizing your schedule, setting some goals or knowing the general direction you want to go. I’m talking about planning that involves forecasting the future.
Planning is just mental masturbation, we have no idea how the world will look like in 3 months, let alone in 5 years.
The company I was working for, produced a 5-year plan in which some highly paid consultants made educated guesses about the growth, market share and brand penetration.
Then Corona-virus happened…
They would have had more success by getting a finger in the wind.
Granted, nobody could have foreseen that, but that’s beside the point — now it’s Corona, later it’ll be something else — There is always something disruptive about to happen, it’s just a matter of time.
The future is changing so fast that strategic planning is not only useless, it’s also dangerous.
Next time somebody asks you in an interview where do you see yourself in 5 years, tell them you don’t have a crystal ball and advise them to get real.
I wonder what happened to all those plans that were made before COVID19.
The dangers of planning for the future
False sense of security
When planning, there is a tendency to narrow down the possible scenarios and then overestimate the likelihood of them happening. This creates a false sense of security making us complacent, thinking we’ve done our homework when we haven’t.
None of those scenarios are going to happen. The future doesn’t care about your plans. Those who don’t plan, at least know that anything can happen any time, so they aren’t under the illusion of safety.
Wrong decisions
Predictions are always off the mark. Making decisions based on them is wrong and will cost dearly. Don’t try to second guess the future, just get ready for any scenario.
Missed opportunities
By concentrating on those “likely” scenarios, you will lose focus on the current situation and you’ll miss opportunities in the present. Now it’s all you’ve got, focus on the best you can do today and you’ll do fine.
Avoiding uncertainty
Planning is a form of deluded thinking. We don’t like uncertainty so we cling on to the idea of safety even though we know it’s just an illusion.
This way of thinking makes us avoid uncertainty, just because it’s uncomfortable. We play safe and our minds develop risk atrophy. When the situation requires improvisation, we won’t be able to perform.
Living outside the now
Don’t live in an imagined future that most likely won’t happen, instead focus on the present and make the most of it.
Most planning consists of projecting the past into the future and that’s a double fallacy.
What to do instead?
Embrace uncertainty
Get used to reality changing at no notice. You can lose your job today, get divorced, fall sick, or have an accident…or win the lottery! Whatever the scenario, be ready to embrace it, not by planning, but by cultivating an impermanence mindset. Enjoy what you have because you will lose it sooner than you think. Don’t become attached to anything and make the most of today.
Get good at improvisation
Improvising, thinking on your feet and reacting to changes, it’s the best tool to manage uncertainty. Put yourself in situations in which you are forced to react. Don’t get ready for it, just do it. There is no preparation, that’s the whole point.
Read the situation and do your best. The more you practice the better you’ll become.
Speak in public, perform on the stage, dance with the bride, be a flaneur. Every time a challenge presents itself, take it and you’ll do well, even if you don’t.
Focus on the present
Now is all you’ve got, everything else is an illusion. You are stuck in the present forever so you might as well enjoy it. Depression comes from focusing on the past and anxiety from focusing on the future.
Realize that you are complete as you are. No need to wait until you get that promotion, buy that car, or get married. Here and now is everything you’ll ever need. Don’t use escapism to avoid reality.
Meditation is the best tool for living in the now.
Get comfortable with being uncomfortable
Comfort is just a way to escape uncertainty, which is just another word for reality. Embrace discomfort and you’ll be ready for any situation life throws at you. Run a marathon, fast, have a cold shower, sleep outdoors, eat food you dislike, talk to a stranger, learn a language and practice it, make yourself vulnerable. This will develop your tolerance and you’ll be ready for anything.
Open your eyes to opportunities
The world is your oyster. There are so many opportunities out there to make money or do anything you want that it’s impossible to pursue them all. The internet has lowered the entry barriers and anybody with desire and imagination can reap the benefits of their work.
There is YouTube, blog, podcasts, Amazon FBA, eBay, Etsy, online courses, etc. You can learn any skill for free and then apply it to your own business. You don’t need money, or contacts, or a fancy title, you just need an internet connection and the determination to succeed.
Pick your niche, invest time, and be ready to pivot when things change.
Learn
Instead of planning, ask yourself: What can I do now that can be useful in the future no matter what?
Learn, experiment, test, make, build, invest in yourself. Nobody can take away your skills, your knowledge, and your experience. Improving yourself is the best future proof strategy.
Become robust or even better, Antifragile
As Nassim Taleb describes in Antifragile, robust is the ability to resist disorder and still survive, while Antifragile is the quality of benefiting from disorder.
A rock is robust, the human body is antifragile. Your body becomes stronger when you punish it in the gym and your immune system benefits from fighting disease.
In order to be antifragile, you have to be able to reinvent yourself at the drop of a hat. Be nimble, flexible, always ready to pivot, invest in liquid assets, avoid debt, don’t get addicted to a salary, generate multiple streams of income, don’t buy, rent.
Every time you make a decision, ask yourself: When SHTF, will this be an asset or a liability?
Remember that an asset is anything that puts money in your pocket, while a liability takes it out of your pocket.
Assets are skills, experiences, health, habits, discomfort, detachment, the ability to pivot, liquidity, independence, freedom, and flexibility.
Liabilities: Ownership, debt and unnecessary stuff.
Uncertainty and optionality
Clearly, we are living in uncertain times. Nobody has a clue what’s going to happen in the next three months, let alone in ten years. Planning in these conditions is a fallacy, a way to produce the illusion of control.
One way to face the future is optionality (Taleb) — limiting your downside while maximizing your upside.
When information is incomplete is better not to commit. For example, it is better to rent than to invest in a big purchase since there is less commitment. An even better option is to rent-to-own in which you rent an asset — car, house, equipment — and later decide whether you purchase it or not. You have the option ( but not the obligation) to buy. This way you buy time to get all the information while you see how the market evolves. It’s a way to avoid hidden risks, like construction defects for example.
In an unpredictable world, optionality is the best policy.
To make sure you keep the upside, never settle for a fixed gain. For example, if you are working for a start-up, chose equity instead of a salary — the upside is unlimited and the downside is limited.
Conclusion
The world has become unpredictable and this trend is only accelerating. Planning in these conditions is futile.
The best you can do is protect yourself from the downside while keeping the upside. Be flexible, nimble, and ready to pivot. Open your eyes to the opportunities ahead.
Independence, agency, and self-sufficiency are great qualities to develop during these unpredictable times.
A company publishing a ten-year plan means they won’t be around in ten years.
Planning gives you a false sense of security and it’s useless at best and dangerous at worst.
Did anything in your life go according to plan?
I rest my case.
