Written for EO by Dr. Gleb Tsipursky, disaster avoidance expert, speaker and author. You probably heard the advice for entrepreneurs that “failing to plan is planning to fail.” That phrase is a misleading myth at best and actively dangerous at worst. Making plans is important, but our gut reaction is to plan for the best-case outcomes, ignoring the high likelihood that things will go wrong. A much better phrase is “failing to plan for problems is planning to fail.” To address the very high likelihood that problems will crop up, you need to plan for contingencies. When was the last time you saw a major planned project suffer from a cost overrun? It’s not as common as you might think for a project with a clear plan to come in at or under budget. For instance, a 2002 study of major construction projects found that 86 percent went over budget. In turn, a 2014 study of IT projects found that only 16.2 percent succeeded in meeting the originally planned resource expenditure. Of the 83.8 percent of projects that did not, the average IT project suffered from a cost overrun of 189 percent. Going over budget can seriously damage your bottom line. Imagine if a serious IT project such as implementing a new database at your organization goes even 50 percent over budget, which is much less than the average cost overrun. You might be facing many thousands or even millions of dollars in unplanned expenses, causing you to draw on funds assigned for other purposes and harming all of your plans going forward. What explains cost overruns? They largely stem from the planning fallacy, our intuitive belief that everything will go according to plan, whether in IT projects or in other areas of business and life. The planning fallacy is one of many dangerous judgment errors, which are mental blind spots resulting from how our brain is wired that scholars in cognitive neuroscience and behavioral economics call cognitive biases. Fortunately, recent research in these fields shows how you can use pragmatic strategies to address these dangerous judgment errors, whether in your professional life, your relationships, your shopping choices, or other areas in life. Solving the Planning FallacySpecifically for the planning fallacy, my coaching and consulting clients have found three specific research-based techniques effective. First, break down each project into component parts. An IT firm struggled with a pattern of taking on projects that ended up losing money for the company. We evaluated the specific component parts of the projects that had cost overruns and found that the biggest unanticipated money drain came from permitting the client to make too many changes at the final stages of the project. As a result, the IT firm changed its process to minimize any changes at the tail end of the project. Second, use your past experience with similar projects to inform your estimates for future projects. A heavy equipment manufacturer had a systemic struggle with underestimating project costs. In one example, a project that was estimated to cost US$2 million ended up costing US$3 million. We suggested making it a requirement for project managers to use past project costs to inform future projections. Doing so resulted in much more accurate project cost estimates. Third, for projects with which you have little past experience, use an external perspective from a trusted and objective source. A financial services firm whose CEO I coached wanted to move its headquarters after it outgrew its current building. I connected the CEO with a couple of other CEO clients who recently moved and expressed a willingness to share their experience. This experience helped the financial services CEO anticipate contingencies he didn’t previously consider, ranging from additional marketing expenses to print new collateral with the updated address to lost employee productivity due to changing schedules as a result of a different commute. If you take away one message from this article, remember that the key to addressing cost overruns is to remember that “failing to plan for problems is planning to fail.” Use this phrase as your guide to prevent cost overruns and avoid falling prey to the dangerous judgment error of planning fallacy. Dr. Gleb Tsipursky is CEO of the training, coaching, and consulting firm Disaster Avoidance Experts, which empowers entrepreneurs to avoid business disasters by addressing potential threats, maximizing unexpected opportunities and resolving persistent personnel problems. He’s an EO speaker, a recent EO 360° podcast guest and author of Never Go With Your Gut, The Blind Spots Between Us and The Truth Seeker’s Handbook. The post Are You Falling for the Myth of “Failing to Plan is Planning to Fail”? appeared first on Octane Blog – The official blog of the Entrepreneurs' Organization. via Octane Blog – The official blog of the Entrepreneurs' Organization https://ift.tt/2AFQDyg
0 Comments
Written by Annie Button. Attracting and retaining the right talent is a fundamental building block for business success. But recruiting staff and keeping them is getting harder. Putting together a team of exceptional people is much more than simply getting hires in with the right skills and paying them a decent salary. Demand for labor is strong, and ambitious candidates are getting increasingly picky about who they work for. Brand voice and business culture when it comes to recruitment and retaining people matter much more now than most businesses realize. Corporate social responsibility programs (CSR) and environmental strategies are taking center stage in the list of things exceptional candidates expect from a business. CSR and sustainability can be viewed as new magnets for talent. Here’s why. Millennial Workforce DemandsHow to engage millennials in the workplace is hot in the press, for good reason: By 2025, millennials will make up three-quarters of the workforce. Forbes has reported that millennials “put an emphasis on corporate social responsibility, have a great reverence for the environment, place higher worth on acquiring experiences than material things, and are adept at building communities around shared interests.” Research by Gallup says that millennials are currently the least engaged generation in the workforce, with only 29 percent engaged, 55 percent not engaged and 16 percent actively disengaged. The 2019 Deloitte Global Millennial Survey states that “Millennials’ opinions about business continues to diminish, in part due to views that businesses focus solely on their own agendas rather than considering the consequences for society.” Engaging and retaining millennials is the new business productivity puzzle.
Why Sustainability in Business MattersWe have much to thank the digital age for. Enhanced transparency is just one of its benefits. The era of information is upon us. Among the daily flood of information is news that we are heading for a climate catastrophe is everywhere. Couple digital transparency with the opinions of the millennial generation and it’s not hard to see how sustainability has become an attractive strategy for businesses, for both brand promotion and attracting talent. Millennials are educated, knowledgeable and socially aware. They are committed to sustainability, equality, climate change, peace and justice. They demand sustainable and ethical business practices both as employees and as consumers. Millennials are a huge generation that simply can’t be ignored. The American clothing company, Patagonia, was founded more than four decades ago. The business has always been focused on sustainability and the environment. It embodies a responsibility to proactively do good. The company is a huge success story. It’s a brand millennials love. Energy consultancy, Geo Green Power, says they have seen a surge in businesses making the move to more sustainable energy options. “The number of businesses contacting us for energy consultancy is growing year on year. Businesses are starting to take the issue of climate change and sustainability seriously,” says Kitty Cunningham, operations director. “Companies are making simple changes from switching energy supplier to conserving energy by addressing things like insulation and changing to LED lighting.” Cunningham goes on to say that, “an increasing number of companies are also considering bigger projects, such as installing biomass boilers, ground source heat pumps or solar panels in a wider move to support environmental sustainability.” CSR Surging in PopularityJohn Clese, director of CSR Solutions, a software company that creates solutions to enable businesses to offer CSR programs, argues that CSR is surging in popularity in business largely because millennials demand meaningful CSR initiatives from their employers. This, he says, isn’t because they have the luxury of choosing where they work in today’s labor market, but is due to the fact that millennials have a genuine desire to have purpose. “Young people in the workforce today are more purpose-driven than any other generation before them, and to me, this is the most significant difference between the generations and the driving force behind CSR programs,” Clese explains. Many larger corporations have long seen the difference CSR programs can make to employee engagement, and also in attracting and retaining talent. Smaller businesses are now seeing they too can benefit from making an investment in the local community through CSR. Multinational professional services network, PwC, says in its study on people management that corporate responsibility is no longer an altruistic nice-to-have, but a business imperative. Their research found that 90 percent of US respondents actively seek out employers whose corporate responsibility behavior reflects their own “New graduates look for employers with strong environmental and social credentials; in response, HR departments play a key role in developing the corporate social responsibility program.” The report also highlights a popular post-2010 trend: Candidates now look for incentives such as paid secondments to work for social projects and needy causes. There is overwhelming evidence to suggest CSR and sustainability are the latest ways to attract talent. This is good news for millennials, society and the planet. Annie Button is a writer who specializes in business growth and development. Annie shares her experiences and knowledge through blog posts in a variety of publications. The post Are CSR and Sustainability the New Magnets for Top Talent? appeared first on Octane Blog – The official blog of the Entrepreneurs' Organization. via Octane Blog – The official blog of the Entrepreneurs' Organization https://ift.tt/2pnAETc |
AuthorWrite something about yourself. No need to be fancy, just an overview. Archives
November 2020
Categories |