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If you have ever played in any sport, you have probably heard your coach telling you that you need to give it everything you’ve got. Give it 100%. They may have even told you that you need to give 110%. My accounting brain always cringes at this advice. I know what they mean, but I take things literally. It is impossible to give 110% unless you are borrowing 10% from somewhere. I always wondered where that place was that you go get another 10% effort. But I digress. I know it is only meant as motivation to get you to dig deep into the level that you didn’t know existed.
The 100% idea is ingrained in our way of thinking. We apply it to everything that we do without much analysis. Its time to rethink that idea. It really is what gets us in trouble over and over again. We do it with our schedule. We do it with our budget. What this really amounts to however, is planning for the perfect, which never exits. We plan our schedule based on everything going right. We plan our money assuming that all will go as planned.
When the plans don’t work out as expected, then it is easy to point to the thing that got us off track and blame that thing. Well, traffic was bad. Sales weren’t what we hoped they would be this month. The weather was bad. The delivery truck needed repair. My meeting ran late. The first batch didn’t come out right so we had to do it again.
In our head everything turns out perfect the first time. In real life? Never. Everyone suffers from this planning fallacy to one degree or another. We are just too optimistic about future plans. So what is the solution to this fallacy? Slack.
Slack is one of the most important concepts to avoiding the stress created by plans that only can succeed in a perfect world. Yet, there is a considerable bias that we have to building slack into our time schedule or budget. It seems like a waste. In the perfect future, that time or money isn’t being fully utilized. In fact, having slack allows us the feeling of abundance which produces much different results than living in the scarcity mindset.
The scarcity mindset puts your brain in a different place. The lizard brain takes over and focuses on the fastest way out of the immediate problem. It gets us into short-term thinking and dismisses the consequences of only thinking short-term. This becomes a perpetual cycle that is very difficult to break. But without the ability to think longer term, you will always be struggling with today.
Slack provides you with room to fail. The perfect never happens. Even so, that is how our plan was drawn. If you have built in slack, that slack can pay for the unexpected, or your error in judgement, or the temptation that you couldn’t resist. Without slack, suddenly you are faced with trade-off decisions. The delivery truck broke down. Do you put off paying the utility bill? Not a good choice. Maybe there is a better one. Maybe you could put the expense on the credit card or draw on the line of credit. This will still force a trade-off decision. It is just further down the road with interest, literally.
Maybe if we were better in our planning this wouldn’t happen. Nice thought but not very realistic. Mistakes are still going to happen. Unexpected things will still come up. We can probably get a bit better in this area. For example, it is likely the delivery truck will need repairs over time. That expense really isn’t unexpected. The only part that is unexpected is when and in what amount. Temptations will still present themselves. Gosh, you have done so well lately. Don’t you really deserve to spend on a little luxury? It would be great to think that we can over come these things. But is it realistic?
Building in slack is probably a better solution. Slack provides us with the mental luxury of abundance which is a much better place than scarcity.
What do you think? Do you avoid building in slack? Have you tried other solutions?
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