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Hello everyone, here is Ricardo Vargas, and this is the 5 Minutes Podcast.
"If I had known it would be like this, I would never have started this project."
I am sure many of us have heard this sentence at the end of a difficult project, or even said it out loud. Today I want to ask a strange question: what if not knowing, at the start, is exactly what makes some projects happen?
This idea has a name and an author. In 1967, the economist Albert Hirschman published a book called Development Projects Observed, about development projects he visited in different parts of the world. In the first chapter, he introduced what he called the Principle of the Hiding Hand.
One of Hirschman's favorite examples was a paper mill in Karnaphuli, in what was then East Pakistan, today Bangladesh. The mill was designed to use bamboo from the local forests as its raw material. Shortly after it started operating, something happened that nobody had predicted. The bamboo flowered and died, something that happens with this plant roughly every fifty years. Suddenly, a brand-new plant that had cost millions of dollars had no raw material. This is the kind of risk that would hardly appear in any risk register.
But the team reacted and built a new supply chain, bringing bamboo from villages all over East Pakistan along the rivers. They started a research program on faster-growing types of bamboo. And they found other kinds of wood that also worked for making paper. In the end, the mill had a more diverse raw material base than anyone had imagined at the beginning.
For Hirschman, this story shows a very human mechanism. We underestimate the difficulties of a project. But we also underestimate our ability to solve those difficulties when they show up. One mistake offsets the other. And that is why difficult projects get started at all. If we could see every problem on day one, many important projects would never leave the drawing board. He wrote a line that I really like: "Creativity always comes as a surprise to us." And precisely because it comes as a surprise, nobody can put it in the plan.
Almost fifty years later, the Danish researcher Bent Flyvbjerg, author of the book How Big Things Get Done, decided to test it with data. He analyzed 2,062 large investment projects in 104 countries, built between 1927 and 2013. The result was tough on Hirschman. In the projects where it was possible to compare costs and benefits, the Hiding Hand showed up in about one out of five. In the others, almost 80%, the opposite happened. The project cost more than planned and, on top of that, delivered fewer benefits than promised. In the projects with cost data, spending ended up around 40% over budget on average. Flyvbjerg and Cass Sunstein, a Harvard professor, gave this pattern a name: the Malevolent Hiding Hand. It hides the difficulties but does not bring the creativity that would save the project. For Flyvbjerg, Hirschman looked at too few projects and drew a conclusion that was too big. And he summed it up in a strong sentence: "Hirschman was a victim, not a student, of bias."
But the story does not end there. In 2018, the researcher Lavagnon Ika replied in the same academic journal, World Development. He analyzed 161 development projects and found the opposite: in his sample, the Hiding Hand was much more common than the malevolent version. And he proposed a change of question that I find very useful for us. Instead of arguing about whether Hirschman was right, he suggested asking under what conditions the Hiding Hand works. Flyvbjerg replied that Ika's data came from the perception and memory of the people who supervised the projects, and that memory is optimistic too. He accepted that the Hiding Hand exists, but insisted that it is the exception, not the rule.
So, whose side am I on? I think they are looking at different moments of a project.
Flyvbjerg is looking at the decision to start. When a sponsor approves a project based on optimistic numbers, the organization pays the bill, and often society does too. At that moment, optimism is not courage; it is a risk that someone chose not to see. Hirschman is looking at what happens later, when the problem shows up, and the team has to invent a way out. At that moment, believing in what people can do is what keeps the project alive.
The mistake we often make is mixing the two. We put the team's creativity inside the budget, as if it were a line in the spreadsheet. We count on a solution that does not exist yet to justify a deadline we already know is impossible. And then we call it ambition. So I leave you with a question for this week. Think about the most difficult project you are working on right now. If you had known on day one everything you know today, would you have started it? If the answer is no, but the project is worth it, maybe you found Hirschman's hand. If the answer is no, and the project is only consuming money and energy, maybe it is the malevolent hand Flyvbjerg talks about. And then, maybe the bravest decision is to stop.
I hope you enjoyed this episode, and see you next week with another 5 Minutes Podcast.
