It’s Not You, It’s Base Rates
One of my favorite things to do is nothing. This is a passion that dates all the way back to 2007 when I read a study that found that the optimal strategy for a soccer goalkeeper to stop a penalty kick is to just stand there. Not dive, not jump…just stay in the middle of the net.
So that’s why I found myself nodding along with this story about Dr. Bent Flyvbjerg and his research into how often attempts to do big things go awry:
His seminal work on big projects can be distilled into three pitiful numbers:
47.9% are delivered on budget.
8.5% are delivered on budget and on time.
0.5% are delivered on budget, on time and with the projected benefits.
It’s brutal enough that 99.5% miss the mark in one way or another. But even those stats are misleading. The outcomes are bleaker than they look. Dr. Flyvbjerg has found that the complexity, novelty and difficulty of megaprojects heighten their risk and leave them unusually vulnerable to extreme outcomes.
“You shouldn’t expect that they will go bad,” he says. “You should expect that quite a large percentage will go disastrously bad.”
Some people who work with me call me a pessimist, but the fact of the matter is that I’m a slave to base rates. This is the idea that the likelihood of you being able to do something is equal to the number of times that thing has actually been accomplished. In other words, if you’re planning a big project, you should expect that there is a 0.5% chance that it goes according to plan.
Of course, not doing anything ever isn’t really practical. But one can try to traffic only in no-brainers and in such a way that when that no-brainer inevitably goes off the rails, it doesn’t cost you the shirt off your back.
– By Tim Hanson
