Something You Should Know - The Upside of Being Taken For A Sucker & Why Projects Are Often Late and Over-Budget

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Starting point is 00:00:27 Download June's Journey now on Android or iOS. Today on Something You Should Know, if your credit card company raises your interest rate, you don't have to pay it. Then no one wants to be a sucker or played for a fool. But maybe we worry about that way too much. Really what I'm trying to do here is to make the case for being a sucker or played for a fool, but maybe we worry about that way too much. Really what I'm trying to do here is to make the case for being a sucker sometimes. And the reason I'm making that case is because I think that in a number of contexts in our lives,

Starting point is 00:00:54 the fear of being played for a fool is counterproductive to our own actual goals. Also, why siblings raised in the same family often turn out so different. And it seems like every big project always takes longer than predicted and is over budget. Does anyone ever get it right? Actually, we have the numbers. 8.5% of projects are on time and on budget, so not even 1 out of 10. But they do exist, you know, and that's the uplifting thing about this. There actually are people that are able to do things on time and on budget.

Starting point is 00:01:28 All this today on Something You Should Know. At Wealthsimple, we're built for whatever you're building. Built for Jane, who wants to break into the housing market. We're built for Ted, who's obsessed with what's happening in the global markets. And built for Celine, who just wants to retire and explore the world's flea markets. So take a moment and think about what you're building for. We've got the financial tools to help make it happen. Wealthsimple. Built for possibilities.

Starting point is 00:02:00 Visit wealthsimple.com slash possibilities. Something you should know. Fascinating intel. The world's top experts. And practical advice you can use in your life. Today, Something You Should Know with Mike Carruthers. Hey, hi. Welcome

Starting point is 00:02:16 to Something You Should Know. I don't really have any statistics to back this up, but it seems to me that more and more people are using cash less often and using credit cards more often. And I came across some interesting information about credit cards you might not know. For example, the first number of your account number identifies the type of industry that issued the card. If your credit card number starts with a 1 or 2, it was issued by an airline.

Starting point is 00:02:45 Number 3 is for companies in the travel and entertainment industry. For instance, all American Express and Diners Club cards start with the number 3. Number 4 and 5 are for banking institutions. 4 is for Visa cards and number 5 is for MasterCards. And if your account number starts with a 7, it's issued by a gasoline company. Here's something that I bet you haven't heard before, but you know when your credit card company sends you a notice and says they're raising the interest rate? You can say no. I don't want to pay it.

Starting point is 00:03:20 Credit card companies don't advertise this, but under the Credit Card Accountability and Disclosure Act, you have the right to refuse to pay a higher interest rate. Ask them nicely and they might agree to keep the old interest rate. But you should get that agreement in writing. A more probable outcome, however, is that your credit card provider will lower your line of credit, hike your monthly minimum payments, or just cancel your card altogether. Even if your credit card gets canceled,

Starting point is 00:03:48 you still get a minimum of five years to pay off your balance at the old rate. And that is something you should know. Have you ever been scammed? I have. I imagine most people have. Nobody likes that feeling of being taken advantage of. Most of us are on guard a lot of the time

Starting point is 00:04:10 to prevent being taken advantage of because it's such a horrible feeling to feel like a sucker. You feel foolish. And that actually may be a problem. The fear of being taken advantage of may be worse sometimes than being taken advantage of.

Starting point is 00:04:29 So how can that be? Well, here to discuss it is Tess Wilkinson-Ryan. She is a University of Pennsylvania law professor and psychologist and author of the book, Full Proof, how fear of playing the sucker shapes ourselves and the social order and what we can do about it. Hey Tess, welcome to Something You Should Know. Thank you so much. So what I love about this topic is it's a topic that I didn't know was a topic. I didn't know this was a thing that people study. I always thought that the fear of being a sucker was just like common sense, good consumerism, smart thing to do. But is this like human nature to always think, is this a real deal? Or is this guy trying to

Starting point is 00:05:13 take me? I think I agree with you that everyone thinks this is common sense, which is why I'm kind of having fun pushing back a little bit on this common sense and saying, wait a minute, aren't there a whole bunch of places in our lives when actually we'd be better off like playing the fool a little bit and sort of making the case for being a sucker? Even though I think you're right, we are pretty programmed to have sort of our antennae always on the lookout for the potential scam. So is this perpetual fear of being taken or worrying about, is this legit? Is this human nature or is this a learned behavior? You know, that's a really interesting question. There are studies in other areas of psychology about sort of a natural ability to detect cheating. But I also think that it's clearly learned. And the reason I think that is because of all of the different sayings we

Starting point is 00:06:13 have that reinforce this message. So if you think about how many fables are about scams, like the Trojan horse, or the boy who cried wolf, and all the sayings from your parents, like don't take any wooden nickels, right? Fool me once, shame on me, that kind of thing, which does suggest that there is this like built up cultural apparatus that wants the members of a society to stay on guard. And we want to keep people honest. You you know we don't want to reward dishonesty we want absolutely we want a level playing field and there's always the fear that that it's not and so what's wrong with that if anything why are you uh shining a light on this it seems like that's pretty good advice most of the time trying not to put yourself in the position of being suckered, taken advantage

Starting point is 00:07:07 of, betrayed. Most of the time, that's a really sensible, reasonable thing to do, right? I do not want to invest my money with a person who's going to scam me out of it. That seems totally right. But let me describe a study to you where it seems like people are taking this fear of being betrayed and applying it in a case where it doesn like people are taking this fear of being betrayed and applying it in a case where it doesn't make a lot of sense. The study is an investment study. The task is you are going to be given a hundred dollars to invest in this company. There's a 95% chance of either breaking even or of making a real profit.

Starting point is 00:07:47 There's a 5% chance that you lose your entire investment. Now this is an experimental study, so half the subjects are randomly assigned to one additional piece of information and half to another. Here are the two additional pieces of information that subjects could conceivably get. Participants in one condition are told the 5% risk of losing money is because the founders of this company may be scammers. They may be fraudsters. How much do you want to invest? This is a hypothetical task, so people are supposed to say how much of this investment was a scam were willing to invest much, much less than those that heard that the exact same level of downside risk was just because of regular sort of misprediction of the market by something like $30 out of 100. So a huge

Starting point is 00:09:06 difference in whether or not they'd be willing to enter this gamble based on the kind of mistake that they might make. If the mistake was the mistake of being scammed, they really were much more hesitant than if the mistake was the mistake of a regular kind of error. And why do you suppose that is? I think that the experience of being betrayed or scammed is really humiliating. Being a sucker is like a very, is a very sort of alienating kind of low status position to be in. And if you're just, if you're just the victim of a random mistake or of even of a random crime, it doesn't have the same effect as if you are the victim of some kind of an interpersonal hustle where you could have saved yourself. You could have taken better precautions. And now you're going to blame yourself for having let yourself be taken advantage of.

Starting point is 00:10:01 And so what's the big so what here? So why are we talking about this? I mean, you've laid out what it is, but so what? It seems like it's going to happen. So what? Yeah. Really what I'm trying to do here is to make the case for being a sucker sometimes. And the reason I'm making that case is because I think that in a number of contexts in our lives, the fear of being played for a fool is counterproductive to our own actual goals. So give me an example of that. Okay, great. Actually, if it's okay with you, I'm going to give you two examples,

Starting point is 00:10:37 one of which is really trivial. So the trivial example is this, and this is an example that I will thank my sister for because she knew that I was thinking about these issues and so she called me to tell me about it. And the example is that my sister and some friends were taking a bike ride in Vermont and it was a very intense ride. They pulled into a town in Vermont and went to a general store. In Vermont, general stores can kind of have one of two different flavors to them. Some of them are obviously aimed at sort of out of towners and others are just sort of standard country stores. And she, this one turned out to be something more

Starting point is 00:11:10 of a touristy general store. And so my sister who lives in Vermont couldn't believe when she went inside that they were going to charge like $6 for a Gatorade. And she was like, this is outrageous, right? I'm not going to be the kind of person who gets scammed into buying a $2 drink for $6 just because this store has fancy artisanal maple syrup. And she actually considered for a moment not buying the Gatorade, even though she was miles from home. And as she finally told me, finally she said, at that moment, this Gatorade was literally worth $100 to me. Like I really needed to be hydrated to even get home. And she talked herself out of this sort of worry about, you know, about the racket of the store and bought the Gatorade and went home. I think that's an experience a lot of us have had of being like,

Starting point is 00:11:56 I can't believe this. This is outrageous. But her point was like, look, I got to get home. In fact, this Gatorade is more expensive than other Gatorades, but its value to me right now is higher than almost any other thing I could buy at any store. Yeah, that's a great example. And that's happened to everybody. I mean, even things like, you know, you pass up the gas station because you think the price of gas there is just ridiculously high, and then you run out of gas. Well, exactly. This is exactly the kind of, I mean, I myself have done, of course, this exact thing. Because you have some idea in your head about like what the price is that's fair. And so, and the price seems unfair. You think, well, this is, you know, what a racket.

Starting point is 00:12:36 I'm not going to be part of this. But there's a difference between, I think, between that kind of scam. Because, you know, you do have the option of not buying the Gatorade for $6, but then there are people who are much more dishonest. I remember when I was in college and I was living in an apartment and there was a knock on the door and this guy was a young guy selling magazine subscriptions. And I thought, oh, I'll help the guy out. And I wrote him a check. And I think I subscribed to People Magazine. And he came in. I think I gave him a glass of water. And the whole thing was a scam. And he stole my money. And the fact that I still remember that,

Starting point is 00:13:24 that's different than just the price is too high. That's a legitimate scam where somebody very dishonest took advantage of me. Absolutely. I think that the scam that you're describing is exactly the kind of thing that you want to ideally avoid. Part of the suggestion I'm making is that we often overestimate the risk of that kind of scam, and it sort of bleeds over into situations in which we actually would prefer to go ahead and do the thing, even though it's going to have a small risk of that kind of a scam. Yeah, I think you're right. And what's your other example? I see this particular thing happen less often. But this was a sort of a common hustle in Philadelphia when I would be walking around in my like student days,

Starting point is 00:14:05 which would be that somebody would come up to me with a bus schedule and say, excuse me, is there any way you could help me? I've missed my bus and I've lost my wallet and I just need six dollars to get on the bus and get a transfer out to where my car is parked way out in the suburbs. And they would have like a pretty elaborate story about what they needed. I remember finding this to be particularly hard, in part because I felt somewhat, I felt like the risk in that case that they were not telling the truth was very high. But there was also a part of me that thought, you know, if the story is true, or even if a sort of a piece of it is true, which is just this is a person in somewhat dire financial circumstances, who's asked me for help in a moment when I have the ability to do that. Even if a piece of the story was true, it was kind of worth it to me to give the money, given the risk to me, right? We're talking about

Starting point is 00:15:07 $6. I wasn't going to lose more. It wasn't a situation where I was going to be stolen from in some other way. And so the question was, are my sort of sucker antennae potentially steering me away from something that I actually think might be the better choice, which is to give the money and move on? That to me is the harder kind of question. And this kind of question comes up not just in these kind of one-on-one interactions, but in cases like how people donate money to charities. One of the things people suggest is that there's a real preference for in-kind donations. People prefer to donate food to food shelters rather than money to food shelters, in part because the food feels like

Starting point is 00:15:51 it's less vulnerable to being exploited or used for things like drugs, something like that. But that fear, the fear that the money is going to be somehow taken advantage of, leads people to make sort of less efficient donations, because actually from the food shelters point of view, it's a lot more efficient for them to get $10 in cash than it is for them to get $10 in canned goods. Well, and there's something interesting about the difference in our two examples I want to ask you about. I'm speaking with Tess Wilkinson-Ryan. She is a law professor at the University of Pennsylvania and author of the book, Full Proof, How Fear of Playing the Sucker Shapes Ourselves and the Social Order and What We Can Do About It. This is an ad for BetterHelp.

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Starting point is 00:17:52 just a total scam. So I know I was scammed. You'll you'll never know. You'll never know if that was a real thing or not. And who and it. So who cares cares that's a really good point there's some of the um some of the research on regret which i think is obviously tied very tightly into the idea of being a sucker because suckers obviously really regret agreeing to something there's a super interesting research on regret that basically says the things that makes people nervous is is the decisions they make that they know that they're going to find out whether or not they made the right decision or the wrong decision whereas you're right in the situation i'm know that they're going to find out whether or not they made the right decision or the wrong decision. Whereas you're right, in the situation I'm describing, I was never going to know. And I'd rather not know. I'd be blissfully ignorant.

Starting point is 00:18:31 Yeah, I think ignorance is bliss in that case, because not only will you likely never know, but there wouldn't even be a way to go find out that would itch at you. So you just let it go because it's $6 and so what. So what's your message here? What do you think people should take away from this? My message is often the fear of being a sucker feels so intense that it's a little bit closer to a true phobia where people don't want to go anywhere near it. It takes up more space than we actually intend to give it. And so it's totally sensible to think rationally about what kind of deals are going to yield outcomes that you want. You know, do I want to buy this product? Do I want to make this investment? Do I want

Starting point is 00:19:19 to make this loan? Those things, it's totally sensible to think, you know, what is the outcome here really going to be? But that oftentimes the fear of playing the sucker gets to take up a ton of space in the decision that it doesn't actually deserve. And so my message in a lot of ways is the fear of being a sucker, the risk of it should get to be like any other risk, like just a normal risk that can be traded off against other priorities, depending on how serious it is or what the real goals are. And oftentimes the real goal is something deeper than I want to avoid scams.

Starting point is 00:19:56 Oftentimes the real goal is something like I want to be a compassionate citizen or I want to be a person who connects with other people or something like that. Well, it's such an interesting thing because I, as I said in the beginning, I've never thought about this as a thing to think about, but how many times have you gone to a store and, and, and seen something with a price that seems very high and you at like your Gatorade example. And so you, and you think to yourself, I could get this for half the price at, you know, at Costco or whatever, but then you never do. You, you had the chance to buy it. Then you wanted it. Then you, you, you pass it up because you think you're getting taken advantage of and then you never buy it.

Starting point is 00:20:46 You never buy it. Exactly. And there's part of what I like about that example so much is that what do I care if the store makes a couple dollars off of me for some random product if I got to have the if I got to actually enjoy myself for this particular thing. Like in some ways, the focus on the store taking advantage just isn't even like part of my, it should, I think if I, my like rational self says that doesn't need to be part of the decision. What matters is how valuable would this thing have been to you? That's what really matters. Not like, is this store sort of pricing their goods in a way that seems sort of the platonic ideal of the prices for these goods. And you see this, and well, it's kind of my thing is like I hate high gas prices and I hate ATM fees.

Starting point is 00:21:34 But I'm not nuts about it, but I know there are people who will drive for a long time to find an ATM that doesn't, because it's their bank, that doesn't charge fees or never find a bank that doesn't, because it's their bank, that doesn't charge fees or never find a bank that doesn't charge fees and never get the money they needed to do whatever they were going to do because they're so afraid of paying ATM fees and they think it's such a scam. I mean, there's a million examples

Starting point is 00:22:00 now that you've kind of opened the drawer here of how that really works against you in your life, just for the sake of saying, aha, I didn't get scammed. No, that's, you know, you don't want to be the one who's like the fool in the sayings, you know, one born every day, that kind of thing. You don't want, it just feels like that's a sort of a cultural status nobody wants to occupy. But, you know, a lot of times if your goal is something like getting things done quickly or, you know, or having some sort of deeper integrity in some kind of a process, right? And you think, well, listen, actually, the risk that this is going to cost me a little bit more or whatever, all else being equal,

Starting point is 00:22:45 it's a relatively small risk. So really my only sort of pitch here is just to right size the risk, right? Just to give it the space it deserves rather than the sort of like radioactive sense that I can't go anywhere near a situation that would make me feel a little bit foolish. Yeah. Well, it's a great message and it's one I've never heard before. And there's a lot of missed opportunities when I listen to you talk and I think of my life of things I've done or not done because of that fear, and I never really thought of it as a one singular thing to think about. But it really is.

Starting point is 00:23:21 It's like, wow. Yeah. Thank you. I will say, as a person who in my day to day life, I teach contract law and in contracts, there are a ton of cases where you think these people are spending so much money to litigate a dispute because neither of them is willing to feel like they were the sucker in this situation. And you think, was it really worth all this? Well, that's really interesting when you think about contracts,

Starting point is 00:23:49 because not only do you want to not feel like you've been scammed, but you have evidence to prove that you, in your view, should not have been scammed. Like you almost have an obligation to fight it because it's in black and white. It isn't some kind of vague, I should have paid $4. No, no, this is clear right in black and white, and you got scammed, and so you're going to sue when maybe you could just suck it up

Starting point is 00:24:16 and move on with your life. Settled for a little bit. You know, one of the interesting kinds of cases that I come across, usually at the end of a contracts course, are these cases where both people think that they were scammed. Like, they both think the other one. So they're litigating and everyone's mad. Because oftentimes it's because they disagree on what the contract actually meant. And once you get everybody, once you have both sides insisting that the other party is the scammer, it is so hard to untangle that kind of a case,

Starting point is 00:24:53 and it becomes incredibly expensive because both parties are sort of willing to litigate to the hilt. Yeah, right. Because there's a righteousness there that I'm right and it says so right here in paragraph five, section three. Exactly. I think people even have a sense that they're supposed to fight back. If you think about the idea of avenging your honor, I think that sometimes people even feel like they have to fight back to save face, because if they sort of just take it, it's going to make them seem weak. And so it's not only that they have a strong emotion, but they feel like, well, I think I'm supposed to do this thing, which is to make sure I don't seem weak to others, even though it turns out to be incredibly costly in other ways. Well, I like this conversation because, well, through your

Starting point is 00:25:45 explanation, you're really giving people permission not to worry about it so much, that by putting that fear of being a sucker so high up on the priority list, you may be denying yourself some real possibilities and some real joy in life. So why not? I've been talking with Tess Wilkinson-Ryan. She is a law professor at the University of Pennsylvania. And the name of her book is Full Proof, How Fear of Playing the Sucker Shapes Ourselves and the Social Order and What We Can Do About It.

Starting point is 00:26:17 And there's a link to that book in the show notes. Thank you, Tess. Thank you so much, Mike. This has been such a pleasure. This winter, take a trip to Tampa on Porter Airlines. Enjoy the warm Tampa Bay temperatures and warm Porter hospitality on your way there. All Porter fares include beer, wine, and snacks, and free fast-streaming Wi-Fi on planes with no middle seats.

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Starting point is 00:27:28 It's a great conversation. And he spoke with Dr. Sarah Hill about how taking birth control not only prevents pregnancy, it can influence a woman's partner preferences, career choices, and overall behavior due to the hormonal changes it causes. Apple named The Jordan Harbinger Show one of the best podcasts a few years back, and in a nutshell, the show is aimed at making you a better, more informed critical thinker. Check out The Jordan Harbinger Show. There's so much for you in this podcast. The Jordan Harbinger Show on Apple Podcasts, Spotify, or wherever you get your podcasts.

Starting point is 00:28:13 If you've ever done some big project, like a construction project on your house, or some big project at work, or maybe you've noticed that the government announces a new public works project, they're going to build a new bridge or a new road, what inevitably seems to happen? The project is never finished on time, and it always costs more than the original estimate. Why? I mean, it seems almost universal that every big project comes in late and over budget.

Starting point is 00:28:44 Well, there's some fascinating reasons why this happens, and here to explain them is Bent Fupia. He is considered one of the leading experts, if not the leading expert on this. He is a professor at Oxford. He has consulted on over 100 projects costing a billion dollars or more, and he's author of a book called How Big Things Get Done, the surprising factors that determine the fate of every project, from home renovations to space exploration and everything in between. I bet welcome to Something You Should Know. Thank you. Thank you for having me, Mike. So it does seem that every project comes in over budget and takes longer. It just seems to be.

Starting point is 00:29:20 I would have a hard time telling you of any project I'm aware that came in on time and on budget. But there must be some. Do we know? Are there statistics? Actually, we have the numbers. 8.5% of projects are on time and on budget, so not even one out of 10. But they do exist, you know, and that's the important thing. That's the uplifting thing about this. There actually are people that are able to do things on time and on budget. And based on your statistics, those people are pretty rare. And it seems that, at least to me, that when government is involved, when it's a government project, those numbers have got to be worse, right? No. So this is one of the myths is that government is bad and the private sector is good.

Starting point is 00:30:12 They are both bad. Both the private sector and government is bad. And we have the data to document this. There are some differences, you know, like in some instances, for instance, IT project, it actually turns out that the private sector is a little bit better than the public sector. But that's probably because the public sector is taking on much more complex projects that are more difficult to do than the private sector. And the difference is not that big. So the finding here is not that the private is better than public, it's just a little

Starting point is 00:30:41 better. The commonality is they're both bad, you know, so that's the really striking results here. Is it true that the bigger the project, the more likely it is to take longer and cost more money? Because it seems, when I think of small projects that I have to do, like, you know, like this episode of this podcast, I know pretty well how long it's going to take to complete it. I know what it's going to cost to complete it. I just know because it's a pretty small project. I can do it in my head and I'll be right. So is it the bigger the project, the more likely things will get out of hand? See, this is another interesting thing that this actually applies to both small and big projects. And probably the reason that you know how to do this on time and the way you planned it is that you have done it many times by now. Maybe the first time you did it, you had to be a bit more careful if you got it on time and everything,

Starting point is 00:31:36 and maybe you had some hiccups. I had a podcast just last week. We were supposed to start at the hour and due to difficulties with the technology. It's often the technology that's the problem. The IT didn't work. We were 20 minutes delayed and this was with an audience, 150 people all around the world, which is sitting there waiting for 20 minutes. So it happens even on small things like arranging, you know, the kind of talk that you and I are doing right now. Well, sure. But I mean, it's always there's always going to be problems and glitches. And, you know, I've done hundreds and I've done thousands of interviews. And yeah,

Starting point is 00:32:15 a couple of them, the power went out or, you know, the Internet went out. And I mean, the numbers are get so big that things have to go wrong once in a while. But it seems like a lot of projects go wrong so much, as you said, more than 90% of the time. Yeah. We have two examples from New York City. One is a small kitchen renovation in Brooklyn, and the other is the Empire State Building. We actually have three projects. We also have the H. Spruce Street, which is another skyscraper that's very recent. So we have an old skyscraper, we have a new skyscraper, and we have this small home renovation, actually just a kitchen renovation. And guess what? That small kitchen renovation went much worse than the two skyscrapers. So it's not only related to science, it's related to do the people in charge

Starting point is 00:33:05 know how to do this or not? You know, do they have the relevant experience or not? Those are the relevant questions. Do they put people in charge who know what they're doing or not? And very often, and this has been shocking to me when I started studying this, you will have people who have never tried to build a big project before they are put in charge of building a big project. Or it doesn't have to be building. It can be anything. You know, IT, we don't usually call it built, you know, but IT projects, defense projects, construction projects, you name it, putting on the Olympics and so on, they all have this

Starting point is 00:33:39 problem because often people are put in charge that don't have the relevant experience. You are experienced in delivering this podcast, so you get it right. But in the case of something like, well, in many of those things, I mean, not every skyscraper is the same. Each skyscraper project, I imagine, is a bit different. It's hard to have experience putting on the Olympics because they only happen every four years and they happen in different countries. So it's hard to find somebody who's really experienced at it because it doesn't happen very often. Wrong again. And we address this in the book. This is what we call

Starting point is 00:34:16 uniqueness bias, that you're arguing that projects are unique because they are different. You know, they're always different. And we hear this over and over. This is actually the common conception in project management. So somebody who is building an opera house for the first time, like Copenhagen, where I'm from, you know, in Denmark, built an opera house and, you know, they treat it like it's the first time ever. And it is the first time ever in Copenhagen. But to say that this is unique because of that is losing out on a lot of experience because there are hundreds of opera houses around the world with relevant experience that you can build on when you build an opera house in a new city like Copenhagen or wherever. It doesn't matter where. And this is what you need to realize, that there's a lot of experience out there that you need to build on and you actually need to hire somebody.

Starting point is 00:35:04 You don't hire one of the local builders because they've never built an opera house before. You hire somebody who has actually built an opera house before. That's very important. And if you don't do it, it's your own fault. You know, you're going to have problems. You would never, you would never desire to have, you would never decide to have your kitchen renovated by somebody who has never renovated the kitchen before, right? Right.

Starting point is 00:35:25 You wouldn't. I mean, or if you did, it would be a mistake. It would be because you didn't think about it or somebody fooled you or something. This happens in the really big projects over and over. When things go wrong, is it predictable what's going to go wrong? And if so, what are the things that go wrong? So one thing that goes wrong is that people start way too quickly. So instead of thinking slow and acting fast, they think fast and then they are forced to

Starting point is 00:35:51 act slow because when you think fast, there's a lot of things you haven't thought about. That doesn't mean that those things disappear. They will pop up during delivery. Like I said, that's much more expensive and much more difficult to deal with when you are actually in the process of delivering something. And then all of a sudden you can't deliver because there was this problem that you didn't anticipate that you now have and you now have to deal with. And we actually hardwired to do this. So behavioral economists and behavioral scientists have found that this is something that we do spontaneously. We just jump to conclusions very quickly. That's how our

Starting point is 00:36:25 brain is hardwired. We will take the most available information and run with it and not stop and think, you know, is there other information that is not available that we should also know about before we start? So we take everything into account. No, our brain isn't wired like that. Our brain is wired to just get going, you know. And therefore, we often start things before we have thought them through. It's very common, both at the individual level and at the organizational and societal level. So that's a common thing. That's common human behavior.

Starting point is 00:37:00 And therefore, we see it in everything. Since so many projects come in over budget and take longer, why is it that in the planning phases, the people who are planning this and who are eventually going to have to admit that it's going to cost more and take longer, why don't they build this into the projection? Why don't they sit around a table and say, look, we know things are going to go wrong, so we need to build that in rather than be so optimistic, and then when things go wrong, look stupid. That is what the people who know how to do things, that all the time, and many will simply refuse to start with a budget, you know, that they deem underestimated because they know it's their reputation that is on the line, and they know all the pain and agony they're going to go through if they accept it. And they know they're going to crash, you know. I compare it to, you know,

Starting point is 00:38:03 an airplane. If you're getting on an airplane and you hear the pilot say, I'm optimistic about the fuel situation. You don't want to be on that plane. You don't want a pilot who's optimistic about the fuel situation. That's misplaced optimism. We do need optimism in our lives. Of course, a can-do attitude and so on. And I find that with great project leaders. But they don't have optimism about the

Starting point is 00:38:25 things that really matter that can crash you. They're very realistic about those. So that's the difference between somebody experienced and somebody inexperienced. Yeah. Well, it's interesting what you said about it. We're wired that way because people will often, you know, they won't have money saved for something like their car breaking down. And you can't predict what's going to go wrong with your car, but something will go wrong with your car. And just because you don't know exactly what it's going to be doesn't mean you shouldn't prepare for it. Exactly. This is crucial, we find. And this is the thing, you know, you're actually talking about the famous unknown unknowns that Donald Rumsfeld talked about and made popular. And many people think, well, we can't know about the unknown unknowns, so we can't prepare for

Starting point is 00:39:21 them. But you just illustrated very precisely how we can prepare for them, because we don't need to know which specific unknown, unknown that's going to hit us. We just need to be prepared for some unknown, unknown is going to hit us. And one way to be prepared for that would be to have the money to pay for it, you know, when it happens. It does seem, especially with like this rail project here that that when they finally announced that it's gonna take longer and cost more money it's not a little longer and a little more money it's huge it's monstrous amounts of money and time like they were so far off that you wonder what were they doing yeah i mean we find the know, when we study this,

Starting point is 00:40:06 we find two root causes, as we call it. So what were they doing? Well, one possibility is that they were incredibly optimistic and they actually believed in their own optimism. So that's one explanation. And then on the other side, the second type of root cause we look at is a power bias, we call it, you know, that they actually weren't so innocent. They deliberately underestimated the cause because it's easier to get approval for a project if you underestimate the cost and the schedule. If something looks like it's going to be cheap and fast, it's much easier to get people to vote for it. And that was the case with the California project, right? It was put up for a referendum and Californians actually voted for it. So if you make something look very attractive on paper, it's easier to get people to vote for it and it's easier to get it funded. So that's the other possibility that it was what we call strategic misrepresentation. And we only call it this very technical term because people really don't like when we call it lying, you know, but that's what it is. It's lying about things.

Starting point is 00:41:05 Yeah. Well, I've always suspected that. The people who say, particularly with these big government projects, when they say this is what it's going to cost and this is how long it's going to take, they know they're lying. They know it when they say it. They know it when they wrote it. They know it when they wrote it. They're just lying. Yeah. Will Brown, the former mayor of San Francisco and member of the California Assembly, he was actually very honest. But only after he retired, this is something we find that people are only willing to talk about these things honestly after they have retired. He said, we never had a realistic estimate for the

Starting point is 00:41:46 Bay Bridge or other big projects in the San Francisco area. We would never get them built if we came up with a realistic estimate. So the thing is, just come up with an estimate and get the thing going. Just dig a hole that is so big that you can't cover it again. That's the way to get projects going, and that's the way we do it. He was very honest about this. That's rare, but he formulated the way people will talk to me off the record, you know, behind the scenes, but you don't get people to go on the record like Will Brown did in this case and say it. I guess there's this perception, I have it, that when there's these big projects and there's an announcement that it's going to cost more and take longer, that it's like it was like an aha moment. But now that I think about it and listening to you talk, my guess is there are probably people sounding alarms all along the way that are just shushed up.

Starting point is 00:42:40 Correct. Absolutely correct. That most of the organizations that are doing big projects are big organizations. And in big organizations, there are many people. Where there are many people, there are almost always some realists and people who actually are kind of hard-nosed realists, and they know what the situation is, even from the beginning, even before the project has started. So I've seen this on specific projects that people would tell me and even be able to document. They said, I said this upfront, but nobody would listen to me. The problem is that the realists are being seen as pessimists in the beginning. The majority on the project don't want to hear that and you're considered a naysayer if you say

Starting point is 00:43:24 the truth. You say the truth that this is unrealistic, this schedule can never be met, and then people will say, you know, we don't want to hear that. You are ruining the spirit on the team or in the organization, and we need people who think they can do this. So knowing what you know, what's the lesson here? If you're doing a project, where are the pitfalls? How should you do it better? First of all, you need to be aware of the psychology involved and the power issues involved. You really need to understand that. If you don't understand the psychology, you'll never get it right. And that's what I find with the people that I call master builders. So that's like a term

Starting point is 00:44:00 my team and I have developed for the people who get this right. And it doesn't matter whether they build, you know, the term comes from the medieval churches in Europe, but it doesn't matter whether you're doing actual construction or not. Anything you're building, if you get it right, we call you a master builder. And that's what I find the master builders really understand the psychology of this. They understand optimism. They understand overconfidence. And they have learned to harness it in themselves so they don't fall prey to this. They don't fall victim to their own cognitive biases. That's the first thing. The second thing is they need to understand what the power games are around their projects. Who's juggling for

Starting point is 00:44:37 position? Who's trying to get the resources here and so on? And they need to be able to put themselves in a position that is powerful enough that they can control that, that they don't become victims of the power play that is always at work in these really big projects. So these are the two basic things. And if you are somebody who's building a project, let's say you're the client and you need something done, and it doesn't matter whether it's your kitchen renovation or it's building a new skyscraper or a huge new IT system, you need to hire somebody who has tried to do it before and who has a track record of being able to do this successfully.

Starting point is 00:45:18 Otherwise, don't even try. So that's the first thing. Experience. You need somebody with experience. And then you can start detailing this, of course. There's a lot of details. But if you're asking just for like one thing up front, it's hire somebody with experience who's done it before. This is like a big version of what I've always said and other people have said is, you know, nothing takes 10 minutes. but people say, it'll just take 10 minutes. Nothing takes 10 minutes. We are so over-optimistic about our

Starting point is 00:45:50 abilities and time and things that it just bleeds into all this stuff and every single project. And it's fascinating to watch. And the bigger the project, the bigger the problem. Exactly. And it's correct. Then you would think, well, we all like optimism. People like optimists. It's very clear. And then you would think, okay, are these people who actually know how to get this right? Are they depressed? Are they pessimists or whatever? And I can assure you they are not. I work with a lot of the people who are the best in the world at delivering projects. And they still have an optimism. They actually have a very, I think, a very attractive psychology, to me anyway, which is they're realistic optimists. So they're totally realistic about how the world works,

Starting point is 00:46:36 and they're totally optimistic about they can make a difference in the world, you know. And they're right on both counts. And it's very nice to be around people like that. I have to say, well, you have to be optimistic. You can't take a project on and go, well, this will never work. We can't do this.

Starting point is 00:46:51 Exactly. You have to have some sense of a can do attitude, but you know, this really points out to that, you know, how some people will say, I'm not an optimist. I'm a realist.

Starting point is 00:47:03 But as you're pointing out, those two terms aren't necessarily mutually exclusive. You can be an optimist and be a realist and get a project done on time in the process. I've been speaking to Bent Flubia. He is a professor at Oxford. He's consulted on over a hundred projects costing $1 billion or more. And his book is called How Big Things Get Done. The surprising factors that determine the fate of every project from home renovations to space exploration and

Starting point is 00:47:33 everything in between. And there's a link to that book in the show notes. Thank you so much for being here, Ben. Thank you very much, Mike. This has been real fun. I'm sure you've noticed that very often siblings have extremely different personalities, even though they're raised in the same house, by the same parents, with the same rules. According to psychologist Dr. Wes Crenshaw, it's partly because of where kids fall on the anxiety-slash-inattentiveness scale. Kids who tend to have more anxiety worry about their relationship with their parents and consequently try to please them by being more obedient and causing less trouble. Kids who are more inattentive just don't worry or care as much, particularly about what their parents think.

Starting point is 00:48:25 They tend to be more rebellious and are more likely to stay out late and misbehave. Neither is necessarily good or bad. They're just inherent personality traits and must be understood and dealt with by parents. And that is something you should know. Hey, here's a chance to put your creative writing skills to the test. Write a review of this podcast on Apple Podcasts or wherever, whatever platform you pull down this podcast from to listen to.

Starting point is 00:48:54 We read the reviews, they help us, and, well, we care what you think. I'm Micah Ruthers. Thanks for listening today to Something You Should Know. Hey, hey, are you ready for some real talk and some fantastic laughs? Join me, Megan Rinks. And me, Melissa Demonts, for Don't Blame Me, But Am I Wrong? We're serving up four hilarious shows every week designed to entertain and engage and, you know, possibly enrage you. In Don't Blame Me, we dive deep into listeners' questions, offering advice that's funny,

Starting point is 00:49:24 relatable, and real. Whether you're dealing with relationship into listeners questions, offering advice that's funny, relatable and real. Whether you're dealing with relationship drama or you just need a friend's perspective, we've got you. Then switch gears with But Am I Wrong, which is for listeners who didn't take our advice and want to know if they are the villains in the situation. Plus, we share our hot takes on current events and present situations that we might even be wrong in our lives. Spoiler alert, we are actually quite literally never wrong. But wait, there's more. Check out See You Next Tuesday, where we reveal the juicy results from our listener polls from But Am I Wrong?

Starting point is 00:49:54 And don't miss Fisting Friday, where we catch up, chat about pop culture, TV and movies. It's the perfect way to kick off your weekend. So if you're looking for a podcast that feels like a chat with your besties, listen to Don't Blame Me, But Am I Wrong on Apple Podcasts, Spotify, or wherever you get your podcasts. New episodes every Monday, Tuesday, Thursday, and Friday. Hi, I'm Jennifer, a founder of the Go Kid Go Network. At Go Kid Go, putting kids first is at the heart of every show that we produce.

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