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- Dr. Gleb Tsipursky is a cognitive neuroscientist, expert on behavioral economics and decision making, and the CEO of Disaster Avoidance Experts.
- He says there is a dual problem in the way we're dealing with the coronavirus - we are drastically underestimating the potential of the disease, while simultaneously allowing our actions to be driven by panic from our cognitive biases.
- Instead, Dr. Tsipursky urges companies to understand the true, real risks of COVID-19, and make decisions based on 'pessimistic realism.'
- He adds that this is an opportunity for companies to take advantage of being better informed and prepared than their competitors, and enact major changes to the way they do business.
- Visit Business Insider's homepage for more stories.
The US Center for Disease Control and Prevention (CDC) predicts the COVID-19 coronavirus will definitely develop into a widespread pandemic; it's a question of when, not if. With growing outbreaks of diagnosed cases in 34 states as of this writing and vastly larger numbers of undiagnosed cases, there's serious cause for concern. And we're working against ourselves in some essential ways: We are hard-wired with mental blindspots - cognitive biases - that make it more difficult for us to evaluate risk and make effective plans.
For companies and businesses, that poses a challenge. The mainstream media and official health organizations have published tons of articles on how to prepare for the COVID-19 coronavirus pandemic. There's plenty of advice for companies as well, such as:
- Cross-train employees in case some get sick
- Prepare for event cancellations
- Encourage sick employees to stay home
- Perform additional cleaning
- Make a disease outbreak response plan in case there's an outbreak in your area
But these preparations are for disruptions due to a local outbreak, and they last for a couple of weeks at most. Is that enough?
Considering the facts and possibilities
Let's consider what we know about COVID-19:
- It's highly contagious. Each infected person on average infects 3-5 others, and the infection is doubling every 4-6 days.
- It's far more deadly than the flu, especially for older people. Those older over the age of 70 have a fatality rate of 8%.
- We won't have a vaccine until late 2021 - and that's if things go perfectly. More realistically, we may not have a vaccine until 2023-24.
- If we're moderately unlucky, the COVID-19 vaccine will be only as effective as the flu vaccine, reducing the chance of illness by 50%.
- If we're very lucky, the virus will burn out by the end of the year. With moderate luck, it will be a seasonal affliction and come back like the flu every year. With somewhat worse luck, it will just keep going, unaffected by seasons.
With that in mind, let's reassess the COVID-19 preparation guidance. The current guidance for both assumes a highly optimistic scenario, where we get very lucky. But that's not good advice: You can't predict luck, and you certainly can't predict good luck. It would be far more prudent to prepare for a scenario based not on optimism, but on realistic pessimism.
Blame our brains
We tend towards optimism because our brains themselves are wired this way. We suffer from many dangerous and deepseated judgment errors. Researchers in cognitive neuroscience and behavioral economics, like myself, call these cognitive biases. These mental blindspots result from a combination of our evolutionary background, and specific structural features in how our brains are wired. In the case of coronavirus, three cognitive biases are especially pernicious:
- Normalcy bias: Our brains assume things will keep going as they have been - normally. We evaluate the near-term future based on our short-term past experience. As a result, we drastically underestimate both the likelihood of a serious disruption occurring and the impact of one if it does occur.
- Planning fallacy: When we make plans, we naturally believe that the future will go according to plan. But that's a wrong-headed mental blindspot that results in us not preparing for contingencies and problems. We're not ready for both predictable challenges and unknown ones.
- Hyperbolic discounting: Last but not least, we suffer from the tendency to prioritize the short term, and undercount the importance of medium and long-term outcomes. This blind spot is especially bad for evaluating the potential long-term impacts of the COVID-19 pandemic.
Preparing for the realistic pessimistic scenario
It's not unrealistic to envision a more pessimistic future - where we aren't lucky, we're moderately unlucky. In this scenario, COVID-19 is not eradicated, but keeps on going. Perhaps it becomes like the flu, a seasonal affliction that lasts from September through March, which is somewhat tackled by a weakly effective vaccine that cuts the likelihood of infection in half.
Courtesy of Gleb Tsipursky
Gleb Tsipursky.
To prepare, you need to make major changes to the way you do business - not emergency plans, but fundamental underlying transformations:
- Human-to-human contact: The most important changes address this factor. It's time to explore creative ways of changing your business model so you don't need to rely on human-to-human contact and you can be more virtual in serving your customers.
- Working from home: Forward-looking companies are already encouraging their workers to work remotely as a result of the COVID-19 pandemic. Follow their lead.
- Networking: Business relies heavily on relationships and networking. Consider how to switch your relationship cultivation and management to virtual venues.
- Events: Shift your team meetings and even bigger corporate events to virtual forums. Instead of in-person conferences, conduct virtual ones.
- Supply chains: Prepare for major disruptions to your supply chains, and especially to your service providers.
- Travel: Anticipate a variety of travel disruptions and event cancellations.
- Social changes: Society will undergo a wide variety of social norm changes. Evaluate the extent to which your business model and staff will be impacted by such changes.
- Employees: Help your employees prepare much better at home than the current guidelines from the CDC and other health organizations suggest.
- Unknowns: Prepare for the unknown unknowns - or black swans - by reserving extra capital and other resources for unanticipated threats and other disruptions associated with COVID-19.
Taking all of these steps early will gain you a major competitive advantage. Be ready to use the consequences of this competitive advantage to seize market share from your competitors who are inadequately prepared for these transitions. Be ready to hire those highly-qualified employees who are let go in this environment by companies that put too much faith in official guidelines on how to prepare.
Of course, you'll want to adapt these broad guidelines to your own needs. Right now, you need to sit down and revise your strategic plans in a way that accounts for the cognitive biases associated with COVID-19. Do the same revision with major project plans. By taking these steps, you'll protect your business from the over-optimistic preparation guidelines of official health organizations, and from our deeply inadequate gut reactions in the face of slow-moving train wrecks.
Dr. Gleb Tsipursky is a cognitive neuroscientist and expert on behavioral economics and decision making. As CEO of Disaster Avoidance Experts, he has consulted and coached hundreds of clients worldwide, including Aflac, IBM, Honda, and Wells Fargo. His academic career includes seven years as a professor at Ohio State University and dozens of peer-reviewed pieces published in leading academic journals. He's appeared in Fast Company, CBS News, CNBC, Inc., and elsewhere. He authored the bestselling The Truth-Seeker's Handbook, and his new book is "Never Go With Your Gut: How Pioneering Leaders Make the Best Decisions and Avoid Business Disasters." Learn more at disasteravoidanceexperts.com, and follow him on Twitter at @Gleb_Tsipursky.
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