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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When we think of great leaders their great successes usually come to mind. We picture Washington crossing the Delaware or Gandhi leading massive throngs or Steve Jobs standing triumphantly on stage. It is moments of triumph such as these that make indelible marks on history’s consciousness.
While researching my book, Cascades, however, what struck me most is how often successful change movements began with failure. It seems that those later, more triumphant moments can blind us to the struggles that come before. That can give us a mistaken view of what it takes to drive transformational change.
To be clear, these early and sometimes tragic failures are not simply the result of bad luck. Rather they happen because most new leaders are not ready to lead and make novice mistakes. The difference, I have found, between truly transformational leaders and those that fail isn’t so much innate talent or even ambition, but their ability to learn along the way.
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A 2019 study by the Brookings Institution found that over 61% of jobs will be affected by automation. That comes on the heels of a 2017 report from the McKinsey Global Institute that found that 51% of total working hours and $2.7 trillion dollars in wages are highly susceptible to automation and a 2013 Oxford study that found 47% of jobs will be replaced.
The future looks pretty grim indeed until you start looking at jobs that have already been automated. Fly-by-wire was introduced in 1968, but today we’re facing a massive pilot shortage. The number of bank tellers has doubled since ATMs were introduced. Overall, the US is facing a massive labor shortage.
In fact, although the workforce has doubled since 1970, labor participation rates have risen by more than 10% since then. Everywhere you look, as automation increases, so does the demand for skilled humans. So the challenge ahead isn’t so much finding work for humans, but to prepare humans to do the types of work that will be in demand in the years to come.
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In the 1960s, the federal government accounted for more than 60% of all research funding, yet by 2016 that had fallen to just over 20%. During the same time, businesses’ share of R&D investment more than doubled from about 30% to almost 70%. Government’s role in US innovation, it seems, has greatly diminished.
Yet new research suggests that the opposite is actually true. Analyzing all patents since 1926, researchers found that the number of patents that relied on government support has risen from 12% in the 1980s to almost 30% today. Interestingly, the same research found that startups benefitted the most from government research.
As we struggle to improve productivity from historical lows, we need the public sector to play a part. The truth is that the government has a unique role to play in driving innovation and research is only part of it. In addition to funding labs and scientists, it can help bring new ideas to market, act as a convening force and offer crucial expertise to private businesses.
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