Preparing Your Business for COVID-19
Due to the current concerns and widespread COVID-19 pandemic, companies are in the midst preparing for business disruptions that can last for at least a few weeks—if not longer.
Preparations include creating a disease outbreak response plan, preparing for event cancellations, enforcing a more stringent cleaning process for offices, and cross-training employees in case some get sick or need to take care of family members who are.
COVID-19: The Facts and Possibilities
The guidance cited seems to fit our intuitions, but is it really sound advice? Let’s consider the facts about COVID-19:
- It is highly contagious, with each infected person on average infecting 3-5 others, and the infection doubling every 4-6 days.
- COVID-19 is deadlier than the flu, especially for older people. Those over 50 have a fatality rate of over 6%.
- In a perfect scenario, we will have a vaccine in late 2021. Realistically, however, we won’t have one until 2023-24. And if we are moderately unlucky, the COVID-19 vaccine will only be as effective as the flu vaccine, capable of 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.
Keeping those points in mind, let’s circle back to the COVID-19 preparation guidance, which assumes an exceedingly optimistic scenario and is anchored on hopes that we will get very lucky. That’s not good advice at all, because what we need is to get ready for a moderately pessimistic scenario.
Our Brain Causes Us to Be Underprepared for Major Disruptions
Humans suffer from dangerous judgment errors called cognitive biases, which are mental blindspots that result from a combination of specific structural features in how our brains are wired and our evolutionary background.
There are three cognitive biases, in particular, that you need to watch out for where the COVID-19 pandemic is concerned:
- Normalcy Bias — The brain causes us to assume things will keep going as they normally have been, and we assess the near-term future based on our short-term past experience. Because of this, we underestimate both the chances of a major disruption happening and the possible impact of one if it does occur.
- Planning Fallacy — We tend to believe that things will always go according to plan. This mental blindspot leads us to be ill-prepared for problems and contingencies.
- Hyperbolic Discounting — This cognitive bias results in us underestimating medium- and long-term outcomes, focusing instead on the short-term. It is particularly bad for evaluating the possible impacts of the COVID-19 pandemic.
You will likely feel uncomfortable while preparing for a realistic, pessimistic scenario. This is because you are going against your gut reactions, which is what you need for you to fight mental blindspots in your business and career.
Prepare for a Realistic, Pessimistic Scenario
Let’s envision a scenario where the COVID-19 becomes like the flu, a seasonal illness that comes every September and lasts through March, with a vaccine that reduces the chance of illness by 50%.
Your company will need to make major changes to remain operational. Consider taking the following steps:
- If your business relies on human-to-human contact, you will need to explore different ways of shifting your business model to a more virtual one in serving your clients.
- Forward-looking companies are already encouraging their employees to work from home due to the COVID-19 pandemic. You should, too.
- Switch your relationship management and networking to virtual venues.
- Shift your team meetings and other corporate events to virtual forums.
- Anticipate that there will be major disruptions to your supply chains, particularly to your service providers.
- Expect that there will be a variety of event cancellations and travel changes.
- There will be changes even in social norms. Assess how these possible changes will affect your business model and staff.
Follow these broad guidelines depending on your company’s requirements. Keep in mind the cognitive biases associated with COVID-19 when you revise your strategic plans, and do the same revision with major project plans.