As the vast majority of companies rush to reopen, they’re falling into the trap of “getting back to normal.” They’re not realizing we’re heading into a period of waves of restrictions once again, due to many states reopening too soon. Indeed, some of the states to open early onward have already reimposed some restrictions, showing that as I predicted way back at the start of the pandemic, we will be facing rolling waves of restrictions and shutdowns, and need to focus much more on virtual interactions.
We need to realize that the COVID-19 pandemic has disrupted the way companies and organizations – big or small – operate. Organizations have to find a way to survive and thrive in this new abnormal, so it’s important for leadership teams to do a reality check regularly. To do so, we need to understand the parallels between what’s going on now, and what happened at the start of the pandemic.
Consider Tim, the CFO of a 90-person tech start-up based in Texas that provides HR and Payroll software, along with other business back-end software. Unfortunately, the company’s leadership team, including Tim, believed Elon Musk’s statements when he downplayed the coronavirus in March.
Since the C-suite thought the pandemic wasn’t a big deal and would blow over soon, they didn’t take the necessary precautions and preparations and ended up in a bad place when the shutdowns occurred. They had to turn to their very basic business continuity plan that did not factor in something as large scale as a pandemic. Thinking that things would “normalize” soon, they held off on making major decisions, such as moving all their operations to a virtual setup.
Tim decided to contact me for a consultation after learning about my work through a recent webinar I conducted about how organizations can adapt to the changes brought by the pandemic. When he called me, his company was already embroiled in internal team conflicts and service interruptions, which resulted in a number of clients having problems with the software, and a couple of major clients even threatening to cancel. It was evident that the company needed help getting out of murky waters – and soon.
Knowing and Facing This New Abnormal
When I met with Tim as well as the company’s CEO and COO over Zoom – by this time I had already moved my previously hybrid in-person and virtual consultations to all virtual – I told them that there were some essential points that they needed to understand in order for their company to survive in this new COVID-19 reality.
First and foremost, we won’t get anywhere if we don’t face the facts. We need to acknowledge that COVID-19 fundamentally disrupted our world, turning it upside down in a few short weeks in February and March 2020. Regrettably, it will not disappear; believing that it will helped get us mired so deep in this mess, making the US outbreak one of the the worst in the world in terms of the number of deaths.
However, you might be wondering, why did Elon Musk – and even some political leaders – downplay the COVID-19 pandemic? It’s not like doing so had personal benefits for these leaders. They wound up thoroughly humiliated when proven wrong, hurting their credibility.
The causes stem from a combination of three factors: the nature of the virus itself, the preexisting beliefs and plans of the political and business leaders, and the dangerous judgment errors we all tend to make that cognitive neuroscientists and behavioral economists call cognitive biases.
Cognitive Biases and the Coronavirus
So what are cognitive biases? Many pundits heap praise on business leaders who make quick gut decisions: about the direction of their company, about whether to launch a new product, about which candidate to hire. Sadly, just going with our gut frequently leads to devastating results for our professional and personal lives.
Consider the Equifax data breach scandal. In May 2017, hackers stole the credit information of over 148 million people from the consumer credit reporting company Equifax, exploiting a security flaw that the company should have known it needed to fix, with the data breach called “entirely preventable” by a December 2018 Congressional Report by the House Oversight Committee. Even worse, the Equifax C-suite decided to cover up the incident for several months. The disastrous decision to conduct a cover-up – inevitably discovered later – gravely damaged Equifax’s reputation, caused a large and lasting drop in the company’s stock, and led to the CEO and a number of other top executives being forced out due to incompetence.
What about the Boeing leadership’s catastrophic decision making on rushing its 737 Max airplane into production, despite a number of safety issues well known inside the company? In fact, one Boeing pilot, in a message to a colleague in 2016, said “this airplane is designed by clowns, who in turn are supervised by monkeys.” Undeterred by such concerns inside the company, the Boeing leadership went ahead with production, cutting corners in the approval process. The story ends with two deadly crashes that killed 346 people and grounded the 737 Max, Boeing losing over $25 billion in market value before the pandemic, and the Boeing board firing its CEO.
Make no mistake: each of the cases above exemplify value-destroying decisions that hurt shareholders by top corporate leaders who followed their gut. These examples of top leaders at prominent companies are not an isolated instance: a four-year study by LeadershipIQ.com interviewed 1,087 board members from 286 organizations of all sorts that forced out their chief executive officers. It found that over 20 percent of CEOs got fired for denying reality, meaning they refused to recognize negative facts about the organization’s performance. Other research shows that professionals at all levels suffer from the tendency to deny uncomfortable facts in business settings. Sadly, just going with our gut frequently leads to devastating results for our decision-making and leadership initiatives.
Roughly speaking, we have two thinking systems. Daniel Kahneman, who won the Nobel Prize for his research on behavioral economics, calls them System 1 and 2. I prefer the terms autopilot system and intentional system, which I believe describe these systems more clearly.
The autopilot system corresponds to our emotions and intuitions, and its cognitive processes center around the amygdala, an older part of our brain. This system guides our daily habits, helps us make snap decisions, and reacts instantly to dangerous life-and-death situations through the freeze, fight, or flight stress response. While the snap judgments resulting from intuitions and emotions usually feel “true” because they are fast and powerful, they sometimes lead us wrong in systematic and predictable ways.
The intentional system reflects our rational thinking, and centers around the prefrontal cortex, the part of the brain that evolved more recently. This thinking system helps us handle more complex mental activities, such as managing individual and group relationships, logical reasoning, probabilistic thinking, and learning new information and patterns of thinking and behavior.
While the automatic system requires no conscious effort to function, the intentional system takes
deliberate effort to turn on and is mentally tiring. Fortunately, with enough motivation and appropriate training, we can learn to use the intentional system to address situations where we tend to make systematic and predictable errors.
Scientists call these mental blindspots cognitive biases. One of these is the normalcy bias, which caused Tim and his colleagues in the leadership team to decide erroneously at the onset, and amidst, this pandemic.
Dealing With the Normalcy Bias
The normalcy bias refers to the fact that our autopilot system drives us to feel that the future, at least in the short and medium term of the next couple of years, will function in roughly the same way as the past: normally. As a result, we tend to vastly underestimate both the possibility and impact of a disaster striking us.
This bias leads individuals, businesses, and governments to fail to prepare nearly as well as they should for the likelihood and effects of catastrophes, especially slow-moving train wrecks such as pandemics.
Given all that, the only way to deal with COVID-19 conclusively involves finding a vaccine. It usually takes a decade or more to develop a vaccine, due to the extensive financial costs and safety regulations around the approval process. Fortunately, government, market, and philanthropic forces have combined to channel extensive funding toward developing vaccines and minimizing the approval process standards to the bare minimum needed to ensure safety and effectiveness.
Still, while over a hundred organizations launched projects to develop vaccines, and several have
created a viable prototype, it will take many months for the vaccine to go through human trials. First, we’ll have a trial lasting several months to evaluate whether the vaccine has unacceptable side effects (in a regular, non-emergency situation, this part usually 1-2 years). Then, we’ll need more trials lasting a few more months to test whether the vaccine is actually effective (typically 2-4 years). Then, government bodies have to review the trial data to confirm effectiveness, which would take another few months (usually 2-4 years). Finally, we’ll need to see which of the many vaccines being developed and put through trials offers the best combination of maximal effectiveness with minimal side effects.
According to the top vaccine experts, this is the one step of the process that can’t be rushed or
solved by throwing money or expertise at it. If we’ll be pumping something into the arms of billions of people around the world, we need to get it right.
Now, if a vaccine shows a great deal of promise, it’s possible that those at highest risk and most impact, such as medical workers in areas with inadequate protective equipment, might get a vaccine as an experimental measure. For them, the risk might be worth it; besides, their medical training would help ensure that they can give truly informed consent. But that’s not mass vaccination.
In the ideal scenario, if one of the first several vaccines does successfully make it through the
trials and proves highly effective without any unacceptable side effects – a very big if – we might have a vaccine approved for widespread use by summer of 2021.
What then? Well, we need to manufacture the vaccine in mass, to vaccine at least the more vulnerable categories and eventually everyone. Producing enough vaccine for only, say, the 100 million vulnerable Americans would take a few months. You also have the obstacle of distributing it and actually vaccinating people, as well as dealing with anti-vaxxer sentiments, so another few months. That brings us into the start of 2022 on a highly optimistic timeline.
Given that only a very small percentage of all vaccines make it through the trials, due either to
unacceptable side effects or insufficient effectiveness, we shouldn’t expect that we’ll get so wonderfully lucky. More realistically, it might be not until 2023-24 when we get a sufficiently safe and effective vaccine.
And if the universe decides to show us the middle finger, we might never find an effective vaccine to COVID-19. After all, we don’t have a fully effective vaccine against the flu. The one we have is a weak vaccine, only about 40% effective on average in reducing the likelihood of getting the flu, as well as reducing the severity of the flu if you do get it. That’s because the flu virus mutates quickly. So far, it seems that the novel coronavirus fortunately does not, so it’s very likely that we’ll escape the middle finger scenario, but we can’t yet rule it out.
Now, this information was known from February 2020. However, the normalcy bias makes it very
difficult for us to imagine that our world can turn upside down so quickly. In early 2020, it was extremely uncomfortable for political and business leaders, and ordinary citizens, to even begin to imagine that it would be until early 2022 that we can – with incredible luck – expect to deal with COVID-19, and more realistically 2024-25. That’s despite clear statements from the best scientific experts to that effect.
It was pretty clear even from my first Zoom call with Tim and the CEO and COO of the company that their leadership team had suffered from the normalcy bias. Fortunately, recent research has shown us how we can effectively deal with such dangerous judgment errors.
For the normalcy bias, it’s critical to understand the dangers of falling into it and acknowledge the pain you cause yourself and your company by doing so. Then, you need to consider realistically the long-term outcomes and plan for a realistic scenario that addresses the likelihood of major disruptions.
However, it took until the second consultation call for them to admit (more than a bit grudgingly, actually) that they had succumbed to this mental blindspot. This refusal to admit to reality had less to do with the veracity of the facts I presented to them but their initial unwillingness to let go of their “gut feel”.
After discussing the above points with them, they admitted that it was time to face what lies ahead. It was time to prepare their company for a much bigger disruption than they anticipated. We used the “Defend Your Future” technique to help them plan out for a variety of potential futures. We decided that while they would hope for the best, they would plan for the worst, a wise strategy for addressing the normalcy bias.
Road to Adapting to the New Abnormal
As the pandemic broke out, companies and other organizations overwhelmingly turned to their existing emergency business continuity plan and then simply continued with that plan as the pandemic continued.
Yet continuing with emergency measures throughout the minimal 2 years of the pandemic is not wise, to say the least. A business continuity plan is meant for a week or two, a month at most if it’s a really good plan, before things start returning to normal (I tell you this as someone who helped businesses and nonprofits design many business continuity plans).
Unfortunately, we will not return to the “normal” status quo ante pandemic. Ever.
Do you think that, even in the most optimistic scenario of only 2 years of waves of stricter and looser shutdowns and social distancing, our society will ever be the same? Of course not. And let’s remember that we shouldn’t plan for the most optimistic scenario. As the saying goes, hope for the best, but plan for the worst. So assume a 5-year horizon instead of 2 years.
Companies need to adapt to the next few months, not the next few years. And your emergency measures won’t cut it. You need to accept the current reality of ongoing waves of restrictions as the new abnormal, instead of a temporary emergency. That means fundamentally changing your business model if you want your company, nonprofit, or other organization to survive and thrive during these troubled years.
This will include taking a long, hard look at your internal and external business models and scrutinizing the elements that drive your business. It will also entail revising or, in some cases, even totally revamping your daily operations and business continuity plan.
No Longer Struggling, But Thriving
When I last spoke with Tim in the end of June 2020, he told me that he, along with the CEO and COO, had decided to share their findings and the points we discussed during the coaching sessions with the rest of the leadership team. It was a difficult conversation, due to the growing conflicts in the company and mutual recrimination.
However, after realizing that there wasn’t much sense playing the blame game given the urgency of the situation, the C-suite decided to buckle down and address the problems head on. After outlining the problems and potential solutions, they eventually got widespread buy-in to do what needed to be done in order to propel their company onto recovery.
The leadership team swiftly addressed the internal conflicts, which was the necessary first step to addressing all the other issues.
They focused much more efforts on a long-term transition to virtual. They minimized their physical footprint, having only a couple of people in the office to take care of necessary paperwork and finances.
Tim, along with the CEO and COO as well as the VP of IT, made sure that quick, effective changes were made to the company’s policies and processes so that operations would be in line with the transition to virtual.
After the internal conflicts and systems had been addressed, the leadership team focused on reaching out to the clients who were threatening to cancel due to the service interruptions. The company’s tech and customer service teams – at that time finally fully operational again – stepped up to soothe ruffled feathers and provide excellent support, from service restoration all the way to providing free additional wide-scale training on the software. Due to these efforts, most of the cancellations were averted, although two smaller clients did cancel.
Tim told me that he and the leadership team were pleased with the results of the changes they made. He also expressed to me how glad he was they did so once the numbers of COVID-19 cases in Texas began to increase in mid-June, prompting a pause of the reopening process that eventually led to shutdowns again in late June.
During these disruptive times of the pandemic, it’s important to be agile and resilient. Keep in mind that even if your company was not able to make the best decisions at the onset of the pandemic, you can still steer it back to the right path by fighting and protecting against cognitive biases.