Rich irony: 37signals, publisher of Basecamp, the leading web app for project management, ought to know better than anybody that real business planning is a process, not a plan. After all, they do the kind of nuts and bolts management that makes that happen. Instead, however, Matt of 37signals posted the planning fallacy last week:
If you believe 100% in some big upfront advance plan, you’re just lying to yourself.
I object. Who ever said planning was “believing 100% in some big upfront plan?” Good business planning is always a process involving metrics, following up, setting steps, reviewing results, and course correction.
He goes on:
But it,s not just huge organizations and the government that mess up planning. Everyone does. It’s the planning fallacy. We think we can plan, but we can’t. Studies show it doesn’t matter whether you ask people for their realistic best guess or a hoped-for best case scenario. Either way, they give you the best case scenario.
OK that’s a dream, not a plan. Matt seems to confuse the two, but good business planners don’t. Any decent business planning process considers the worst case, risks, and contingencies; and then tracks results and follows up to make course corrections.
Which leads to this, another quote:
It’s true on a big scale and it’s true on a small scale too. We just aren’t good at being realistic. We envision everything going exactly as planned. We never factor in unexpected illnesses, hard drive failures, or other Murphy’s Law-type stuff.
No, but you do allow extra time for the unexpected, and then you follow up, carefully (maybe even using 37 Signals’ software) to check for plan vs. actual results, changes in schedule, new assumptions, and the constant course correction. Murphy was a planner. He understood planning process, plan review, course corrections.
Matt concludes:
That messy planning stage that delays things and prevents you from getting real is, in large part, a waste of time. So skip it. If you really want to know how much time/resources a project will take, start doing it.
Really bad advice there, based on a bad premise. Sure, if you define planning as messy and preventing you from getting real, then it would be a waste of time. But is that planning?
I wonder if Matt takes his own advice. When he travels, does he book flights and hotels? Or does he skip that, and just start walking.
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Comments
You guys will not go far wrong listening to Tim’s advice
Having spent more than 30 years in business planning myself, I concur with his points and his article
Tim,
You’re correct, that WAS an ill-conceived post by 37signals. The starting point for the post, which it linked to in the first paragraph, was from Eliezer Yudkowsky’s (sorry if it is misspelled) Less Wrong blog. “In the Heart of Rational Thought” is my slightly cynical, mostly affectionate name for it. URL is
http://lesswrong.com/lw/jg/planning_fallacy/
But guess what: That post cites various research studies about cognition, human foibles and over-optimism in setting project completion estimates. However, it does NOT conclude that it is foolish to make plans! The conclusion is that one should formulate a plan, then get a subject matter expert who is not involved in the project to provide a quick estimate of overall time required to completion. The recommendation from an outsider is usually very conservative compared to the existing plan, i.e. that it will require as much as twice as long as the working group, according to the research study cited. The Less Wrong blog post then recommends using that more cautious time frame, NOT discarding the planning process, as 37signals suggests!
Sounds like someone at 37signals either
1) Didn’t read that Planning Fallacy post to the end (there were lots of numbers and detail in it) or
2) Deliberately chose to use it as a “hook”, without bothering to mention that it was merely a starting point, not a source of evidence. That doesn’t make me feel a lot of confidence in 37signals. But it does vindicate your point of view, which I would be inclined to believe even in the absence of behavioral studies. Over-planning is not good, but some planning is essential.
Thanks Ellie, I love the additional detail here, that’s a great addition.
Hey Tim – Old post I know, but we wrote a similar 37signals post that I’d love to get your take on: http://blog.lessmeeting.com/2011/01/boycott-meeting-day.html. Is 37signals’ approach to meetings flawed too?
Looking at your own meeting post (https://timberry.bplans.com/2011/03/do-you-do-this-at-meetings-i-hope-not.html) I’m glad to hear that you acknowledge that good meetings do exist, albeit rarely.
And maybe 37signlas is just trying to get our attention, in which case it’s working!
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Hi Tim.. I’m interested in your thoughts.. Does 37signals or E-myth have the right philosophy for online business today? http://www.purlem.com/blog/?p=38
Thanks for asking Marty, but I don’t think I know enough to make a useful comparison between 37 signals, the company, vs. E-myth, the book. As you can tell from the post above I’m not real big on what a member of the 37 signals team says about planning in that one place; but I don’t think that reflects the company’s strategy or its management process or its success. I admire that company a lot, it’s really paved the way for web applications. It’s a good role model.
E-Myth is a very thoughtful book but I know it only through summaries and the respect that some people I respect have for it. I’ve tried to read it a couple of times, but I wasn’t able to keep my interest up.
Great post. I read and usually like the Signal To Noise blog but it definitely seems like the ratio trends low when it comes to their planning articles.
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There are three reasons to take the time – and the effort – to write a business plan. First to help obtain financing (can’t get a loan without one), second is to develop an objective evaluation for your success (dreams good in the head, looks different on paper), and the third -and most important – is to have an operations guide for your business. It should change as business conditions change. Use it and don’t let it gather dust on a shelf.
Good call and I use the analogy of planning a trip:
You already have a destination, you choose a rough start time and a rough path. There are always unforeseen things that come up that may change things. Some are “known unknowns” like traffic around a major city or a baseball game wrapping up while others are “unknowable unknowns” like a car accident or a flat tire. Either way, you can acknowledge those (Risk Assessment) and either plan around them or lessen their impact (Risk Mitigation).
The idea of starting off with *no* plan, no rough estimates, or even a metric of when to try plan B is careless at minimum and stupid at worst.
“Good business planning is always a process involving metrics, following up, setting steps, reviewing results, and course correction.”
How wonderfully true and naive. Sure that is business planning utopia, ie does not exist. Reality is more like how Matt describe (not saying this is correct, just pretty normal).
Stopped reading at: 37Signals, a great Web app for project management.
What a waste of time. Must you take everything so literally?
You really sound like you’re doing your best to be contrary, but in several of the statements above I think you’re trying to twist things so you can disagree with them.
Planning a business is a little different to planning a journey. But your idea of just start walking sounds like a whole lot of fun – it also means your on a journey (in a business) already rather than sitting at home thinking about it. There’s some merit even in your exaggeration IMO. YMMV!
It’s “37signals” (lowelcase s), and you probably meant “Basecamp” in the first paragraph. 37signals is a company, not a web app.
Other than that, nice article 🙂 I’m usually on 37s’ side of things, but your points are very good. The world isn’t as black and white as 37s tends to portray it!
@August thanks, I just made those changes. Tim.
Matt’s the durst.
I have been around the chops and haven’t EVER seen a business plan for a startup [established companies use them well] that has been worth anything more than the paper its printed on.
@Ben I like your point “paper they’re printed on.” Maybe that’s the problem: a lot of the best and most useful business plans, ones that are part of the planning process, never get printed. A printed document is something static; a business plan needs to be alive and growing.
Spot on.