Within hours of planes crashing into the World Trade Center on 9-11, stories began circulating that it was not, in fact, the planes that caused the towers to collapse, but explosives planted inside by someone with access. Since then a number of conspiracy theories have circulated that people ranging from government employees to Wall Street Traders were responsible for the attack.
So it shouldn’t be surprising that there are no shortage of alleged schemes about the coronavirus epidemic, from theories that the disease is caused by 5G mobile networks to that Bill Gates cooked it up as part of a global plot to electronically track us through vaccinations. Even the president’s son has a pet theory.
The simple truth is that when a tragic event happens, we lose our sense of control and there will never be a shortage of hucksters willing to take advantage of that, for profit or for other reasons. Often, these are elaborate narratives and can seem very convincing. Yet the schemes tend to have common characteristics which we can use to spot and nullify their effect.
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“Greed…is good,” declared Gordon Gekko, the legendary character from the 80s hit film Wall Street. “Greed is right. Greed works. Greed clarifies, cuts through and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind”
The line resonated because it answered a question that people cared deeply about at the time, “how can we become more efficient?” In the face of heightened competition from Japan’s doctrine of total quality management, American firms appeared too sclerotic to compete. Corporate raiders preaching shareholder capitalism offered an easy answer.
The results are clear. Since then the stock market has crashed a number of times, the last one resulting in a Great Recession. Productivity growth has been depressed for half a century. The incidence of extreme weather events and pandemics like coronavirus is on the rise. Clearly we’ve been getting the wrong answers. It’s time we started asking different questions.
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Like a lot of people, I’ve been participating in group Zoom calls with people from my past lately. One that’s especially engaging is a group from my high school class that meets once a week. It’s interesting to hear people from very different parts of the country share their experiences in the type of candid way that only old acquaintances can.
Unfortunately, a number of my classmates were infected with the virus. One, an executive at a paramedic services company, was filling in on the front lines when he got it, even though he had on full protective gear. He believes he got it through his eyes. Others spoke of weeks in bed, unable to move.
So I find it bizarre when I see other people I know who deny the severity of the crisis. In most cases, these are otherwise reasonable people, who watch YouTube videos or other alternative sources of media that minimize the crisis or portray it as a hoax. As hard as it is to believe, these people aren’t crazy. Rather, they are falling prey to very common cognitive biases.
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We’re beginning to see the peak of the Coronavirus crisis in hard-hit urban areas like New York City, thanks to social distancing measures and the bravery and dedication of healthcare workers. Yet despite the progress, you only have to look at Singapore to see that the epidemic can back flare up at any time.
Meanwhile, we’re seeing armed mobs show up at state capitals to protest lockdown restrictions even as Covid-19 hotspots shift from larger cities to rural areas like Albany, GA, Sioux Falls, SD and Gallup, NM. In many ways, these areas are more vulnerable due to higher prevalence of health conditions and less access to medical care.
Clearly, we have a deep problem with trust. Research from Gallup finds that trust in institutions has been declining for decades. A study at Ohio State found that, when confronted with scientific evidence that conflicted with their views, people would question the objectivity of the science. Our social contract is broken. We need to establish a new one.
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Why are organizations so resistant to change? Many point to a corporate immune system or to organizational antibodies that instantly attack change. The idea is that leaders prefer stability to disruption and put systems in place to reduce variance. These systems will instantly seek out and destroy anyone who tries to do anything different.
This is a dangerously misleading notion. There is no such thing as a corporate immune system. In fact, most senior executives are not only in favor of change, they see themselves as leading it! However, while most people are enthusiastic about change as a general concept, they are suspicious of it in the particular.
The truth is that is if the change you seek has the potential to be truly impactful, there are always going to be people affected who aren’t going to like it. They will seek to undermine it, often in very dishonest ways. That’s just a fact of life that you need to accept. Yet history clearly shows that, with a smart strategy, even the most ardent opposition can be overcome.
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In 1964, as the financial revolution was gathering steam, an MIT economist named Paul Cootner published a collection of essays called The Random Character of Stock Market Prices. Based largely on an obscure dissertation by a forgotten frenchman, it laid the foundations for a new era of financial engineering.
Yet among the papers included was one that told quite a different story. Written by Benoit Mandelbrot—a mathematician not an economist—it showed that the seemingly sophisticated models significantly underestimated volatility and risk. In effect, he was predicting that these models would massively blow up one day.
No one disputed Mandelbrot’s facts, because they were clear and indisputable. Nevertheless, reputations were invested and there was of money to be made. So Mandelbrot’s warnings, although not altogether forgotten, were put in the back seat and we paid an enormous price. Clearly, then as now, we failed to invest in resiliency. Will we ever learn our lesson?
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I recently took part in an online open forum for thought leaders. While we were discussing a wide range of topics, including the economic and social impact of previous crises, somebody came out and said, “You know, when this is all over we’re probably going to have another #Occupy movement.”
It was an apt observation. #Occupy, after all, was a reaction to the Great Recession and it’s reasonable to expect that once we get the Coronavirus under control many will demand serious changes to be made. However we should remember that #Occupy was a massive failure that achieved little if anything at all.
Clearly, our government has failed us, but it goes far beyond that. Markets have also failed us. Technology and globalization have failed us. Perhaps most of all, we have failed ourselves. Collectively we have failed to make good choices as a society. So we need to learn the lessons of #Occupy. It’s not enough to get angry and make noise, we need to build a better future.
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In a 2015 poll, 30% of Republicans and 19% of Democrats supported bombing Agrabah, the fictional hometown of the Disney character Aladdin. In a similar vein, a 2014 poll found that the less people knew about where Ukraine is located on a map, the more they wanted the U.S. to intervene militarily.
To make matters worse, another study done by researchers at Ohio State University found that when confronted with scientific evidence that conflicted with their pre-existing views, such as the reality of climate change or the safety of vaccines, partisans would not only reject the evidence, but become hostile and question the objectivity of science.
It’s become fashionable in certain circles to dismiss experts. Yet as the Coronavirus crisis has shown us, we ignore expertise at our peril. The reason we need professionals with specialized knowledge, however, isn’t so that we can outsource our decisions to them. Rather, we need experts to help us ask better questions, explore options and to make better judgments.
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There’s a passage in Ernest Hemingway’s 1925 novel, The Sun Also Rises, in which a character is asked how he went bankrupt. “Two ways,” he answers. “Gradually, then suddenly.” The quote has since become emblematic of how a crisis takes shape. First with small signs you hardly notice and then with shocking impact.
That’s certainly how it felt to me in November, 2008, when I was leading a media company in Kyiv. By that time, the financial crisis was going full throttle, although things had been relatively calm in our market. Ukraine had been growing briskly in recent years and, while we expected a slowdown, we didn’t expect a crash.
Those illusions were soon shattered. Ad sales in Ukraine would eventually fall by a catastrophic 85%, while overall GDP would be down 14%. It was, to say the least, the worst business crisis I had ever encountered. In many ways, our business never really recovered, but the lessons I learned while managing through it will last a lifetime.
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In a 2015 TED talk, Bill Gates warned that “if anything kills ten million people in the next few decades, it’s most likely to be a highly infectious virus rather than a war. Not missiles, but microbes.” He went on to point out that we have invested enormous amounts of money in nuclear deterrents, but relatively little to battle epidemics.
It’s an apt point. In the US, we enthusiastically spend nearly $700 billion on our military, but cut corners on nearly everything else. Major breakthroughs, such as GPS satellites, the Internet and transistors, are merely offshoots of budgets intended to help us fight wars more effectively. At the same time, politicians gleefully propose budget cuts to the NIH.
A crisis, in one sense, is like anything else. It eventually ends and, when it does, we hope to be wiser for it. No one knows how long this epidemic will last or what the impact will be, but one thing is for sure — it will not be our last crisis. We should treat this as a new Sputnik moment and prepare for the next crisis with the same vigor with which we prepare for war.
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