It’s much more deadly than the flu, especially for older people. Those over 50 have a fatality rate of over 6%.
We won’t have a vaccine until late 2021 if things go perfectly, and more realistically not 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 fortunate, 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 fortunate.
We need to prepare for a moderately pessimistic scenario.
Why our brain causes us to be underprepared for major disruptions
We suffer from many dangerous judgment errors that researchers in cognitive neuroscience and behavioral economics like myself call them cognitive biases.
This response is an excellent fit for the kind of intense short-term risks we faced as hunter-gatherers.
The fight-or-flight response is terrible at defending us from major disruptions caused by the slow-moving train wrecks we face in the modern environment, such as the COVID-19 pandemic.
More specifically, you need to watch out for three cognitive biases.
The normalcy bias causes our brains to assume things will keep going as they have been – normally – and evaluate the near-term future based on our short-term past experience. As a result, we underestimate drastically both the likelihood of a severe disruption occurring and the impact of one if it does occur.
When we make plans, we naturally believe that the future will go according to plan. That wrong-headed mental blindspot, the planning fallacy, results in us not preparing for contingencies and problems, both predictable ones and unknown unknowns.
Last but not least, we suffer from the tendency to prioritize the short term and undercount the importance of medium and long-term outcomes. Known as hyperbolic discounting, this cognitive bias is especially bad for evaluating the potential long-term impacts of the COVID-19 pandemic.
It’s inherently uncomfortable to prepare for the realistic pessimist scenario.
Envision a future where COVID-19 isn’t eradicated but keeps on going.
Let’s say it becomes like the flu, a seasonal affliction that comes every September and lasts through March, with a weakly effective vaccine that decreases the likelihood of infection by 50%.
To prepare for this moderately unlucky scenario, you need to make significant changes to the way you do business, not merely make emergency plans:
The most significant changes could be in human-to-human contact. Does your business model rely on it? Explore creative ways of changing your business model to be more virtual in serving your customers.
Can your employees work from home? Forward-looking companies are already encouraging their workers to do so as a result of the COVID-19 pandemic. You could, too.
So much business relies on relationships and networking. How can you switch your relationship cultivation and management to virtual venues?
Can you shift your team meetings and even more significant corporate events to virtual forums? Instead of in-person conferences, consider doing virtual ones.
Prepare for significant disruptions to your supply chains, and especially to your service providers.
Anticipate a variety of travel disruptions and event cancellations.
Society could undergo a wide variety of social norm changes. Evaluate the extent to which such changes will impact your business model and staff.
Help your employees prepare much better at home than the current guidelines from the CDC and other health organizations suggest.
Be ready for unknown unknowns, also known as black swans, by reserving extra capital and other resources for unanticipated threats and disruptions associated with COVID-19.
By taking all of these steps early, you could have a significant 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 highly-qualified employees who will be let go in this environment by companies that trust too much the highly optimistic 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.
By taking these steps, you could protect your business from the way-too-optimistic preparation guidelines of official health organizations and our deeply inadequate gut reactions in the face of slow-moving train wrecks.
Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of Richtopia. Examples of analysis performed within this article are only examples. They should not be used in real-world analytic products as they are based solely on very limited and dated open-source information. Assumptions made within the analysis are not reflective of the position of Richtopia. Please conduct independent research when making decisions and do not rely on the opinions published on this page.